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Enron Mail |
Canadian Pwr, Gas Mkts Benefiting From Enron's Woes
Dow Jones Interactive November 9, 2001 FERC orders state to pay its power bills San Diego Union Tribune November 9, 2001 Legal group's suit seeks to overturn power deals SF Gate News November 9, 2001 GAS PROCESSING FACILITIES PLANNED FOR CANADA, VENEZUELA Dow Jones Interactive November 12, 2001 Canadian Pwr, Gas Mkts Benefiting From Enron's Woes CALGARY -(Dow Jones)- Canadian natural gas and power exchanges are gaining strength as market unease over U.S. energy giant Enron Corp.'s (ENE) financial woes increases and traders look to alternative vehicles, insiders said Thursday. Buyers and sellers are turning more to Alberta's power and natural gas exchanges as they shun the increasingly wobbly Enron. "We see this as an opportunity to capture some of the market EnronOnLine had," WattEx president Sheldon Fulton told Dow Jones Newswires. "It has also resulted in reinforcing the need for transparent pricing mechanisms and forward price curves," he said. Enron, a Houston-based market-mover accounting for a quarter of North American power and gas trades, has seen its credit ratings downgraded and its share price slashed since mid-October over uncertainty about its complex financial structure. In response, energy companies in Canada have changed their strategies. Some, like PowerEx, British Columbia Hydro's marketing arm, reduced Enron's credit limit on day trades and dropped any long-term financial deals with the troubled company. Others are keeping their strategies to themselves, commenting only that Enron's position as a major player makes it important for the entire industry to see a positive resolution to its woes, and maintain market liquidity. "We continue to do business with Enron," said Jennifer Pierce, manager of public affairs for Duke Energy in Houston. "We will continue to monitor activities as they go on and deal with credit guidelines that are established with them." And some are not dealing with Enron at all. "We are not doing anything with (Enron)," a trader with a major natural gas pipeline said. "There are a lot of players out there." Spot deals on Alberta's Natural Gas Exchange hit 1.6 billion cubic feet Thursday, volumes that were up but not record-breakers, NGX vice-president Gary Gault said. "It's tough for us to tell if the increase is due to Enron's problems," Gault said. "But there is no question there are credit issues in the market right now over them." Alberta's NGX and Enron recently started joint submissions of near-month and daily traded volumes on a real-time basis to the NGX-owned Canadian Gas Price Reporter Index. The move created a more realistic view of the Alberta market, traders said, as Enron's near-month volumes were consistently higher than the Canadian exchange. "This has obviously created a lot more interest in other trading vehicles," one source said. "But this is just like when a big bank gets into trouble - the whole economy is affected." Enron is in talks with rival energy company Dynegy Inc. (DNY) for a cash infusion or possible merger. The embattled company also restated four and a half years of earnings Thursday. FERC orders state to pay its power bills SACRAMENTO -- Power generators called "gougers" and worse by state officials are getting help from federal regulators to collect about $1.2 billion they are owed by the state. And in another energy-related development, a conservative legal-action group, the United States Justice Foundation in Escondido, filed a lawsuit to overturn $45 billion worth of long-term power contracts obtained by the state. The state has not been paying generators for last-minute power purchases made by the Independent System Operator since January to maintain adequate power levels in the California grid. The ISO, which is controlled by appointees of Gov. Gray Davis, has been sending the bills for the purchases to the financially troubled utilities, even though the state began buying power for utility customers in January. The Federal Energy Regulatory Commission on Wednesday ordered the ISO to bill the state power-purchasing agency, the Department of Water Resources, and to report the amount owed in 15 days and schedule payment within three months. "We certainly intend to comply with that order," said Greg Fishman, an ISO spokesman. Fishman said the ISO has not been sending the bills for last-minute power to the water department because of a previous federal requirement that was interpreted to mean that the bill should be sent to the user of the electricity, in this case the utilities. In addition, he said, the water department has not been willing to pay bills unless it receives detailed information about the price and seller of power that had been withheld in the past to preserve a competitive market. It was not clear yesterday whether the bills that the ISO will begin sending the water department will contain the specific information that department says it needs to make a payment. "If the bill is adequate, we will pay it," said Oscar Hidalgo, a water department spokesman. "If we get a bill that is an aggregate bill, a lump sum, a generator could come to us a month from now and say, 'You never paid me.' " As it operates the grid, the ISO routinely makes last-minute purchases because the exact amount of power needed to maintain adequate levels in the grid cannot be predicted and purchased in advance. Pacific Gas and Electric contended earlier this year that the state was trying to reduce its power costs by sending the bill for last-minute purchases to the utilities. Hidalgo said the estimate that generators are owed about $1.2 billion for providing last-minute power is based on the unpaid bills that the utilities sent back to the ISO. The federal commission said it was acting to "prevent difficulties for the ISO in obtaining future energy" and to ensure the prompt payment needed for a proper marketplace. "What a comedy of errors," said Gary Ackerman of the Western Power Trading Forum, a generator group. "That's a good way to make friends -- not pay them $1 billion." Two generators, Mirant and Reliant, have filed a complaint with the FERC contending that the ISO gives preferential treatment to the water department that undermines generators required by the FERC to provide last-minute power to the ISO. Among other things, the generators say the ISO gives the water department advance notice of a power shortage, which allows the department to provide the last-minute power from cheaper out-of-market sources. A hearing on the complaint by Mirant and Reliant has been scheduled for Tuesday by state Sen. Joe Dunn, D-Garden Grove, chairman of the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. Earlier this year, the state negotiated more than 50 long-term contracts to curb soaring wholesale power prices. But critics say the average price of power under the contracts is now about twice as high as power on the spot market. The lawsuit filed by the United States Justice Foundation argues that the contracts are illegal because of violations of contracting policy and antitrust laws. "This lawsuit seeks to invalidate these unfair and illegal contracts and put market forces back to work in the California electricity market," said Gary Kreep, executive director of the nonprofit foundation. Legal group's suit seeks to overturn power deals A conservative legal group filed a lawsuit yesterday that seeks to invalidate the estimated $43 billion worth of long-term electricity contracts signed by the state. The United States Justice Foundation contends that the contracts violate the state constitution for several different reasons, including the fact that they were negotiated in secret by people who may have had conflicts of interest. "Gov. Gray Davis illegally negotiated these contracts in secret," said Sen. Tom McClintock, R-Northridge. "These contracts are the result not of simple misjudgment and incompetence. They are the result of misconduct." The lawsuit, filed yesterday in Sacramento Superior Court, also alleges that by negotiating in secret, the Davis administration violated state's open meetings laws. Davis officials began signing long-term energy contracts last winter as a part of its attempt to reign in energy crisis. They argue that the contracts helped lower wholesale electricity prices in California. The administration came under attack after it was revealed that some of the negotiators also owned stock in the companies they were negotiating with. GAS PROCESSING FACILITIES PLANNED FOR CANADA, VENEZUELA Kvaerner has much to be thankful for, having just received US$36.5 million in contracts from Westcoast Energy for the engineering, design, fabrication, construction and commissioning of a gas processing facility. Last fall, Westcoast Energy's Pipeline and Field Services division announced plans to build a 300 million cubic feet per day (MMcf/d) natural gas pre-treatment facility near its existing Pine River gas plant, located in the northeastern part of the Province of British Columbia. "This facility will process sour natural gas and facilitate the addition of 100 MMcf/d of gas to flow from the Pine River gas plant to markets in the lower mainland of British Columbia and the U.S. Pacific Northwest," according to our source. "The plant will process and ship this gas on behalf of area producers as an addition to the existing Pine River plant and Grizzly Valley gathering system. It will feed into the existing Westcoast Energy mainline that runs from northeastern BC to Huntington at the Canada/U.S. border. Construction began in August, and operations are targeted to begin next summer," the source stated. Meanwhile, Duke Energy is continuing with its strategy to expand its natural gas infrastructure throughout North America, by acquiring Westcoast Energy in an $8.5 billion deal that is scheduled for completion early next year (see Midstream, Oct. 1). The Nov. 5 issue of GPR provided an in-depth view of Duke's efforts to strengthen its position in the North American gas market, why it feels this acquisition fits perfectly with its vision for the future. Canadian Pwr, Gas Mkts Benefiting From Enron's Woes CALGARY -(Dow Jones)- Canadian natural gas and power exchanges are gaining strength as market unease over U.S. energy giant Enron Corp.'s (ENE) financial woes increases and traders look to alternative vehicles, insiders said Thursday. Buyers and sellers are turning more to Alberta's power and natural gas exchanges as they shun the increasingly wobbly Enron. "We see this as an opportunity to capture some of the market EnronOnLine had," WattEx president Sheldon Fulton told Dow Jones Newswires. "It has also resulted in reinforcing the need for transparent pricing mechanisms and forward price curves," he said. Enron, a Houston-based market-mover accounting for a quarter of North American power and gas trades, has seen its credit ratings downgraded and its share price slashed since mid-October over uncertainty about its complex financial structure. In response, energy companies in Canada have changed their strategies. Some, like PowerEx, British Columbia Hydro's marketing arm, reduced Enron's credit limit on day trades and dropped any long-term financial deals with the troubled company. Others are keeping their strategies to themselves, commenting only that Enron's position as a major player makes it important for the entire industry to see a positive resolution to its woes, and maintain market liquidity. "We continue to do business with Enron," said Jennifer Pierce, manager of public affairs for Duke Energy in Houston. "We will continue to monitor activities as they go on and deal with credit guidelines that are established with them." And some are not dealing with Enron at all. "We are not doing anything with (Enron)," a trader with a major natural gas pipeline said. "There are a lot of players out there." Spot deals on Alberta's Natural Gas Exchange hit 1.6 billion cubic feet Thursday, volumes that were up but not record-breakers, NGX vice-president Gary Gault said. "It's tough for us to tell if the increase is due to Enron's problems," Gault said. "But there is no question there are credit issues in the market right now over them." Alberta's NGX and Enron recently started joint submissions of near-month and daily traded volumes on a real-time basis to the NGX-owned Canadian Gas Price Reporter Index. The move created a more realistic view of the Alberta market, traders said, as Enron's near-month volumes were consistently higher than the Canadian exchange. "This has obviously created a lot more interest in other trading vehicles," one source said. "But this is just like when a big bank gets into trouble - the whole economy is affected." Enron is in talks with rival energy company Dynegy Inc. (DNY) for a cash infusion or possible merger. The embattled company also restated four and a half years of earnings Thursday.
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