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Enron weighs in against BGE

THE BALTIMORE SUN

WASHINGTON - Enron Corp., the largest wholesale marketer of natural gas and electricity in North America, said yesterday that it opposes Baltimore Gas and Electric Co.'s lawsuit to block the Department of Defense from privatizing utilities at military installations across the country.

More specifically, Enron officials said they support U.S. Army plans to outsource utility distribution systems at five military bases in the Washington area.

BGE is the second utility company to file suit in federal court to block such outsourcing. Colorado Springs Utility filed a similar suit last year in Denver.

But Enron officials say BGE, and other local utilities, merely want to maintain a monopolistic hold on the utility market and prevent competitors from entering their territory.

"We don't think there is any basis to BGE's position," said Thomas E. White, vice chairman of Enron Energy Services. "The real point is these people don't want to see a long-term competitor take any sort of interest close to their service territory."

White said Enron will intervene in the BGE lawsuit, but did not say how the company will do that.

Officials from BGE declined to comment yesterday.

White said Enron will submit a bid on the Army's Request for Proposals to privatize the electric, natural gas, water and sewer systems at Fort Meade in Anne Arundel County; Fort McNair in Washington; and Fort Myer, Fort Belvoir and Fort A. P. Hill in Virginia.

Last year, Enron became the first nonlocal utility company to win a competitive contract when it was awarded a 10-year deal to upgrade, operate and maintain all utility systems at Fort Hamilton in New York. The Army officially transferred ownership of all utilities to Enron in December.

Other proposal requests have been issued since the Defense Department has ordered that all military installations privatize their utility systems by Sept. 30, 2003. Enron, as part of its expansion into new markets, is talking to other military bases in all branches nationwide.

But in a complaint filed in U.S. District Court in Baltimore last week, BGE claimed that the privatization is illegal because it fails to follow state utility laws, as required by federal law and Defense regulations.

The crux of the problem, BGE officials have said, is that the Army is soliciting bids from organizations that aren't licensed to handle utilities in the state. BGE says that, in Maryland, it is the only utility company authorized by the state Public Service Commission to provide electricity and natural gas distribution in the Fort Meade area. Enron, however, said federal laws supersede state laws when it comes to governing federal enclaves, such as military bases.

White also said that even if privatization goes through, it would not affect the supplier - in this case, BGE is the supplier at Fort Meade - of electricity, gas or water at each base. The winning bidder would operate the facilities, invest money in modernizing the utility systems and maintain its assets on the base.

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