Monday PM May 12th, 2008

The Grant County, Washington, Public Utility District is getting $11.8 million from three California utilities in an Enron-related settlement. PUD commissioners voted last week to accept the resolution of claims over unpaid power sales during the energy crisis of 2000-01. Officials say electricity prices skyrocketed during that period—partly because of manipulation by Enron. PUD General Manager Tim Culbertson says the claims involved more than $17.5 million from Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric. California groups argued that power prices should have been reduced to levels set by the Federal Energy Regulatory Commission. PUD lawyers argued that as a public utility it was exempt from oversight by the panel.


Three former Greenwich NatWest bankers sentenced for their roles in an Enron-related scheme have entered prison to begin serving their 37-month sentences. David Bermingham began his sentence in Lompoc, California on Friday. Giles Darby and Gary Mulgrew have started their jail terms in prisons in Texas and Pennsylvania. Their plea bargains include a stipulation that the U.S. government will support their request to serve the majority of their sentences in the UK. The three were extradited to Houston in July 2006 amid much public protest. They pleaded guilty to entering into a scheme with former Enron CFO Andy Fastow, investing in an off-balance sheet vehicle after leaving NatWest, and without informing the company. Fastow is serving a six-year sentence in Louisiana.


An Energy Department report concludes that wind turbines can produce a fifth of the nation's annual electricity needs within about two decades. That's about the same share of electricity produced today by nuclear power. Wind energy currently accounts for only about one percent of the nation's electricity. The government report says by 2030 wind energy could account for 300,000 megawatts of power, or about 20 percent of the total electricity generated. The report envisions more than 75,000 new wind turbines, many of them larger than what is in use today, and expansion of transmission systems to move power from high-wind areas to other parts of the country. Texas is the nation's leader in wind-generated power.


Mailing a letter costs one penny more this week, with the price of a first-class stamp rising to 42 cents. But folks who planned ahead and bought those "forever'' stamps for 41 cents each can still use them without extra postage. Forever stamps are now also up to 42 cents. Prices are expected to be adjusted again next May, according to the U.S. Postal Service. The cost to mail a post card will also went up a penny, to 27 cents. Other new rates: large envelope, two ounces, $1, up three cents; certified mail, $2.70, up five cents; first-class international letter to Canada or Mexico, 72 cents, up three cents; first-class international letter to other countries, 94 cents, up four cents; priority mail flat-rate envelope, $4.75, up 25 cents; Express mail flat-rate envelope, $16.50, up 25 cents. Postage rates last went up in May 2007, with a first-class stamp jumping two cents to 41 cents.


The allegations of mining company Asarco against its Mexican parent involve claims that the most valuable assets were stripped. Opening statements have begun in civil court in Brownsville in Asarco's multi-billion dollar civil lawsuit against its Mexican owners. Asarco is seeking more than $10.5 billion from Americas Mining in the form of the return of a stake it had in two lucrative Peruvian copper mines. Asacro also seeks $1.7 billion in dividends it collected in recent years from those mines. Both companies are subsidiaries of Grupo Mexico, a mining conglomerate headed by German Larrea. Grupo Mexico acquired Asarco in 1999. Asacro attorney Irvin Terrell, in opening statements, described parent Grupo Mexico as a greedy company that did all it could to strip Asarco of its "crown jewel." That was a controlling stake in Southern Peru Copper. Terrell says the leaders of Grupo Mexico knew that transferring Asarco's most valuable asset to Americas Mining would leave the company with a gaping hole in its cash flow. Asarco, which operates three mines and a smelter in Arizona, as well as a copper refinery in Amarillo, filed for bankruptcy in 2005.


There's no shortage of economic reports due this week. Tomorrow, the government reports on April retail sales as well as business inventories. Wednesday, the Labor Department releases the Consumer Price Index for April. Industrial production comes on Thursday, with building permits and consumer sentiment due on Friday.


 

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