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Shaking down in Oregon and Iowa

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Now that Zond has merged with giant Enron Corp of Dallas, the companies have sold their interest in a wind power development project at Vansycle in the state of Oregon to ESI, the unregulated subsidiary of Florida Power & Light. Zond Corp, now part of Enron Renewable Energy Corp, had just bought the Vansycle asset for $1.35 million from bankrupt Kenetech Windpower and was to sell the power to Oregon utility Portland General Electric (PGE). But since Enron is proposing to merge with PGE it was decided to sell Vansycle. "It was felt it would look better if we were not doing business with a future sister company," says Hap Boyd of Zond, of which founder Jim Dehlsen remains as "chairman emeritus" and a director, as well as a director of Enron Renewable Energy Corp.

Enron and PGE's merger efforts are not proceeding smoothly. St Valentine's was no sweetheart day for the proposed mega-marriage. On February 14 at a public meeting, the state Public Utilities Commission told Enron that more price reductions within the state than the $12 million over four years that Enron has suggested were needed before approval of the deal would be considered. Since then another settlement proposal has been submitted by Enron and PGE and was due to be heard on February 25. The merger is thought to be worth $3.2 billion.

Meantime, Zond Corp was still negotiating with Iowa utility MidAmerican Energy Co in mid February to build a sizeable wind plant in Iowa. The utility has requested bids for 45 average megawatts (aMW) of renewables, of which 75% -- or about 112 MW of installed wind -- at most could be from one technology. The Iowa Utilities Board had previously asked both MidAmerican and IES Utilities to sign contracts for projects under its Alternative Energy Production (AEP) law by February 9, but neither utility had apparently done so.

Ironically, MidAmerican had filed a petition to the Federal Regulatory Energy Commission (FERC) to block the law's implementation. But on January 29, the FERC issued a ruling upholding the right of the state to require a minimum amount of renewables from utilities. But it overturned Iowa's attempt to establish a price for the power purchases. The AEP had required a price of $0.0602/kWh for 105 aMW of alternative energy, the equivalent of just over 300 MW of installed wind capacity.

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