TodaysGas Storage Report, Energy Prices & News

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Enerfax Daily
NORTH AMERICA'S FREE POWER AND GAS INFORMATION SOURCE
Thursday, June 7, 2001 No. 756
Today's Gas Storage Report, Physical & Futures Power & Gas Prices and Today=
's Energy News in one daily publication for free

PHYSICAL GAS PRICES
| Gulf/Eastern Region | |
| Agua Dulce | 3.64 |
| ANR SE | 3.67 |
| Carthage TG | 3.70 |
| Chicago Citygate | 3.83 |
| Columbia Gulf Onshore | 3.68 |
| Dominion TTT South(CNG S. Point) | 3.95 |
| Henry Hub | 3.76 |
| Houston Ship Channel | 3.78 |
| Katy Hub | 3.75 |
| NGPL - Midcontinent | 3.63 |
| NGPL STX | 3.64 |
| NGPL TX/OK | 3.70 |
| Niagara | 3.88 |
| Sonat Tier 1 | 3.65 |
| TCO IPP Pool | 3.90 |
| Tetco ELa | 3.66 |
| Tetco M-3 | 4.01 |
| Tetco STX | 3.58 |
| TGP Zone 0 | 3.62 |
| TGP Zone 1 | 3.68 |
| TGT Zone SL | 3.69 |
| New York Citygate | 4.02 |
| Transco Station 65 | 3.78 |
| Transco Zone 6 (NY) | 4.02 |
| Trunk ELa | 3.63 |
| Western Region | |
| California Border | 7.79 |
| El Paso Permian | 3.59 |
| El Paso San Juan | 2.89 |
| Waha Hub | 3.71 |
| Canadian/Rockies Region | |
| Nova/Aeco (in C$/GJ) | 4.12 |
| Dawn Hub/Union | 3.87 |
| Northwest Stanfield | 3.12 |
| Wyoming Pool | 2.60 |
| Opal/Kern River | 2.63 |
| PGT-Malin | 3.27 |
| Sumas | 2.99 |
NATURAL GAS STORAGE REPORT
Week Prev 5
Ending Prev Prev Year Year
| Region | 6/01/01 | Week | Diff | % Full | Year | % Full|Average
| Prod | 439 | 410 | 29 | 46% | 377 | 40% | 443
| East | 694 | 624 | 70 | 38% | 653 | 36% | 686
| West | 265 | 247 | 18 | 52% | 322 | 63% | 270
| Total | 1398 | 1281 | 117 | 42% | 1352 | 41% | 1399
_______________________________________________
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---------------------------------------
GAS FUTURES
Henry Hub
12 Month Strip 4.0124 -0.0739
18 Month Strip 3.9757 -0.0581
| Month | High | Low | Close | Change |
| JUL | 3.915 | 3.730 | 3.801 | -0.091 |
| AUG | 3.991 | 3.830 | 3.888 | -0.087 |
| SEP | 4.031 | 3.875 | 3.928 | -0.086 |
| OCT | 4.065 | 3.920 | 3.970 | -0.084 |
| NOV | 4.242 | 4.110 | 4.153 | -0.079 |
| DEC | 4.350 | 4.350 | 4.333 | -0.071 |
| JAN | 4.480 | 4.370 | 4.403 | -0.071 |
| FEB | 4.370 | 4.250 | 4.293 | -0.071 |
| MAR | 4.210 | 4.040 | 4.130 | -0.069 |
| APR | 3.840 | 3.770 | 3.780 | -0.059 |
| MAY | 3.780 | 3.670 | 3.710 | -0.059 |
| JUN | 3.829 | 3.760 | 3.760 | -0.059 |
PHYSICAL POWER PRICES
| | High | Low | Average |
| | $/MWh | $/MWh | $/MWh |
| Cinergy | 26.00 | 22.25 | 23.00 |
| ECAR | 30.00 | 26.70 | 28.85 |
| ERCOT | 36.50 | 35.50 | 35.95 |
| Entergy | 34.25 | 32.00 | 33.15 |
| TVA | 25.00 | 24.50 | 24.65 |
| ComEd | 28.50 | 25.50 | 27.10 |
| PJM West | 28.20 | 27.25 | 27.60 |
| Main | 31.25 | 26.00 | 28.30 |
| MAPP | 27.00 | 22.00 | 23.90 |
| Palo Verde | 105.00 | 74.00 | 96.00 |
| Mid C | 65.00 | 53.00 | 59.00 |
| COB | 65.00 | 57.00 | 61.00 |
| 4 Corners | 75.00 | 70.00 | 72.50 |
| Mead | 80.00 | 80.00 | 80.00 |
| NP 15 | 80.00 | 65.00 | 73.75 |
| SP 15 | 90.00 | 60.00 | 78.90 |
_______________________________________________
POWER FUTURES
| Month | COB | Change | PV | Change |
| JUL | 160.00 | -45.00 | 173.00 | -49.00 |
| AUG | 197.00 | -43.00 | 220.00 | -32.00 |
| SEP | 131.00 | -14.00 | 131.00 | -16.00 |
| OCT | 148.00 | +0.00 | 95.00 | +0.00 |
| NOV | 95.00 | +0.00 | 75.00 | +0.00 |
| DEC | 145.00 | +0.00 | 75.00 | +0.00 |
| JAN | 95.00 | -50.00 | 70.00 | +0.00 |
| FEB | 145.00 | +15.00 | 60.00 | +0.00 |
| MAR | 145.00 | +60.00 | 60.00 | +0.00 |
| APR | 62.00 | +0.00 | 55.00 | +0.00 |
| MAY | 62.00 | +0.00 | 55.00 | +0.00 |
| JUN | 62.00 | +0.00 | 75.00 | +0.00 |
| Month | Entergy | Change | Cinergy | Change |
| JUL | 87.50 | -5.50 | 78.00 | -5.50 |
| AUG | 81.50 | -4.00 | 69.75 | -3.75 |
| SEP | 42.40 | -0.60 | 36.25 | -0.35 |
| OCT | 36.25 | -0.75 | 34.05 | -0.60 |
| NOV | 36.25 | -0.75 | 34.05 | -0.60 |
| DEC | 36.25 | -0.75 | 34.05 | -0.60 |
| JAN | 38.75 | -0.50 | 37.25 | -0.50 |
| FEB | 38.75 | -0.50 | 37.25 | -0.50 |
| MAR | 35.50 | -0.25 | 34.25 | -0.50 |
| APR | 35.50 | -0.25 | 34.25 | -0.50 |
| MAY | 40.50 | -0.75 | 38.75 | -1.00 |
| JUN | 51.25 | -1.50 | 48.50 | -1.00 |
POWER FUTURES
| Month | PJM | Change |
| JUL | 76.50 | -5.50 |
| AUG | 69.00 | -4.00 |
| SEP | 39.00 | -0.70 |
| OCT | 36.00 | -0.60 |
| NOV | 36.00 | -0.60 |
| DEC | 36.00 | -0.60 |
| JAN | 41.40 | -0.60 |
| FEB | 41.40 | -0.60 |
| MAR | 37.00 | -0.25 |
| APR | 37.00 | -0.25 |
| MAY | 39.50 | -0.50 |
| JUN | 49.50 | -0.50 |
NATURAL GAS OPTIONS
| | Closing | Days |Implied ATM |
| Month | Price | Left | Volatility |
| JUL | 3.801 | 21 | 58.11% |
| AUG | 3.888 | 51 | 59.43% |
| SEP | 3.928 | 84 | 60.30% |
| OCT | 3.970 | 112 | 60.39% |
| NOV | 4.153 | 143 | 60.07% |
| DEC | 4.333 | 175 | 60.01% |
Today's Power Bulletins
* Enron to Supply 60% of Chicagos Electricity Needs
* Amerens Central Illinois Public Service Unit Sells $150 Million of 1st Mo=
rtgage Bonds
* Munder Power Plus Fund Invests in Unregulated, Independent Power Producer=
s, Integrated Oil and Other Energy Companies
* Global Coal Producers Operating Mainly from Australia Stage Stunning Win =
Over the Past Year to Take Control of World Coal Market from Japan for 1st =
Time
* Japan Pits Surging China Coal Against Australia
* California PUC May Soon Suspend Energy Choice for Consumers; Hearing Sche=
duled for June 14th
* Midwest Generation Agrees to Meet and Negotiate with Local 15, Internatio=
nal Brotherhood of Electrical Workers
* Peabody Energy Reduces Debt by $160 Million Through Bond Tender Completio=
n
* Arpine Investments Begins Unsolicited, $13.75 per Share Mini-Tender Offer=
for Less than 5% of Niagara Mohawk Holdings Shares
* Scott Smith Joins American Electric Power as VP and Chief Risk Officer
* Tenaska Power Services and Omaha Public Power District Expand into ECAR; =
Sign Marketing Agreement with Indiana Municipal Power Agency
* Transmission Plan for 750 MW Bethlehem Energy Center Approved by New York=
ISO
* Pennsylvania Electric Deregulation May be Headed for Failure
Over 50 more gas news stories at http://www.enerfaxgold.com
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Today's Gas Bulletins
* BOC Expert to Discuss Online Supply Strategies at 2nd Annual e-ProCom for=
Oil, Gas & Chemical e-Commerce Conference & Exhibition in Houston June 12t=
h 13th
* Kerr-McGee Gets Antitrust Approval for $1.3 Billion Acquisition of HS Res=
ources
* Benton Oil and Gas to Cut Staff, Take $1.5 Million 2nd Quarter Charge, Re=
locate Company to Houston from Carpinteria, CA
* LNG's Share of US Natural Gas Market Could Triple to More than 10% in 5 Y=
ears as Companies Like El Paso, Texaco and BP Plan to Build About 10 New Pl=
ants
* Lehman Brothers Strongly Recommends Aquila, Mirant and Dynegy, Whose Stoc=
ks Have Recently Plunged as Investors Shifted to Techs
* Emera Pays C$50 million to Buy 8.4% Stake in Sable Offshore Energy Natura=
l Gas Project Off Nova Scotia
* Major Oil Firms Fail to Reach Agreement on Giving Aboriginal People a Sta=
ke in Huge Natural Gas Pipeline Proposed from Mackenzie Delta Region of Nor=
thwest Territories
Over 50 more power news stories at http://www.enerfax.com=20
__________________________________________________
Natural Gas Futures and Cash Continue Lower
Natural gas futures on the NYMEX dropped lower after the AGA announced natu=
ral gas inventories jumped 117 Bcf last week, well above market expectation=
s. The July contract fell $0.091 to $3.801 per MMBtu and August dipped $0.0=
87 to $3.888 per MMBtu. The AGA reported storage levels at 1,398 Bcf, virtu=
ally identical to the 5-year average, and 46 Bcf more than a year ago. Last=
years injection was 78 Bcf and the 5-year average injection of 81 Bcf for =
the comparable weeks. The large build was driven by a lack of demand on Mem=
orial Day and mild weather. Warmer weather is expected to affect much of th=
e nation over the next several days, limiting the upside reaction. The hot =
weather in the southwestern states will begin to expand into Texas and the =
central Plains this weekend extending into the Southeast next week. Look fo=
r the market to continue lower today under the weight of the 117 Bcf inject=
ion. But, with the summer heat and the hurricanes beginning to show up, it =
is becoming increasingly dangerous to short the market. The next key level =
of technical support is $3.60, with $4.00 and $4.20 offering resistance. Na=
tural gas for next day delivery across the US dropped $0.15 $0.25 per MMBtu=
, except out west where prices tumbled over $1.00. Canadian spot prices tum=
bled about $0.50 per MMBtu. Natural gas for next day delivery at the Henry =
hub lost $0.23 to $3.76 per MMBtu.
__________________________________________________
North American Gas Storage Conference
Storage 2001 - 2002:
Source of Stability or Chaos?
June 22, Houston
Find the answers at Ziff Energy's natural gas storage conference. A blockbu=
ster roster of industry leaders from the utility, trading, pipeline and sto=
rage sectors in each of the North American storage regions will present tim=
ely, relevant information you can use. This conference will assist you in m=
aking critical decisions about your natural gas storage strategy for peakin=
g and the remaining seasonal base fill. The game has changed - storage stra=
tegy has been kicked up a notch from buying for seasonal fill to real-time =
risk management.
Session 1 Supply Shortage or Storage Inefficiencies: Last Winter's Saga
El Paso Corporation - Byron Wright, VP
Energy Information Administration, DOE - Jim Thompson, Industry Analyst
Keyspan Energy - David Manning, Senior VP, Corporation Affairs
Axia Energy - David Modesett, VP
Session 2 The Changing Storage Paradigm:
Dynamic Storage Service vs Seasonal Fill
AEC Storage & Hub Services Inc. - Rick Daniel, President
Williams Energy Marketing & Trading - Blake Herndon, Director, Risk Managem=
ent
NiSource Inc. - T.J. Aruffo, VP Energy Supply Services
Enron North America - Paul Bieniawski, Director
Duke Energy Gas Transmission - David Nightingale, VP MHP
Session 3 Pricing it Right and Reducing Risk:
Can We Expect Stability or Chaos in Winter 2001 - 2001?
Aquila Energy - Mark Cook, VP The Exchange Center Conoco Gas and Power Mark=
eting - Brad King, VP Storage
Sempra Energy Trading - Dan Guertin, Meteorologist
For more information or to register visithttp://www.ziffenergyconferences.c=
om , call 1-800-853-6252,
or email us at gasconference@ziffenergy.com=20
________________________________________________
Enron's Dabhol Takes MSEB to Court
Enron's Dabhol Power has filed a petition before the Bombay high court chal=
lenging the jurisdiction of Maharashtra State Electricity Regulatory Commis=
sion in trying to resolve a dispute between it and an Indian state utility =
that has threatened nearly $3 billion worth of foreign investment. MSEB beg=
an defaulting on its payments six months ago to Dabhol saying that its powe=
r was too costly. It also cancelled its purchases and said it would be unab=
le to lift output from the second phase. Dabhol filed for arbitration
and issued a preliminary notice to cancel its contract with MSEB. The dispu=
te has already affected India's image among foreign investors. Global credi=
t rating agency Moody's said last week the dispute has raised concerns over=
whether India would be able to fulfill its contractual obligations. Foreig=
n lenders want to cancel their loans worth $600 million to the project whil=
e the local lenders are against it.
________________________________________________
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Restructuring Today reports the twists, plans, failures, strategies, shocks=
, absurdities, new sales and buying methods in what's becoming American's b=
iggest industry.
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cision are thinking and planning. And those editors cover more seminars tha=
n you can imagine going to (or paying for). They're guided by a network of =
correspondents in state capitals.
Restructuring Today's editors are directed not to write what the news is bu=
t to report what the news means. It may seem opinionated but Restructuring =
Today's analysis is frequently mentioned when we survey readers about what =
they find useful in the daily reports.
Order before June 8 and receive the discounted price of a one year's subscr=
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_________________________________________________
Natural Gas NYMEX Volume
01JLY 50,744
01AUG 7,146
01SEP 5,885
01OCT 5,132
01NOV 4,765
01DEC 3,098
02JAN 6,760
02FEB 4,528
02MAR 5,184
02APR 3,954
02MAY 403
02JUN 337
02JLY 189
02AUG 125
02SEP 285
02OCT 1,191
02NOV 30
02DEC 28
03JAN 52
03FEB 1,130
03MAR 68
03APR 143
03MAY 28
03JUN 27
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BPA Power Contract Rates Up
The BPA says wholesale power rates will be offered at a 150% or greater pre=
mium in October, and that it has achieved 51% of its goal to lower demand f=
or its power. For aluminum producers, that means they would have to pay abo=
ut $50 per MWh for BPA power once their new five-year contract takes effect=
on October 1st. That is a substantial increase over the $24 per MWh smelte=
rs in the Pacific Northwest were used to paying under their expiring five-y=
ear contracts, but much less than the 250% to 300% increase BPA anticipated=
last April. The BPA has been negotiating with industrial customers to redu=
ce their power demand. In return, BPA agrees to pay their employees' wages.=
Most aluminum smelters in the Northwest have already curtailed or stopped =
operating to comply with BPA's request. Customers have until June 22nd to c=
omplete their negotiations for power contracts. On June 29th, BPA will subm=
it power rates to the FERC.
__________________________________________________
_________________________________________________
New Coal Fired Power Plants Making Comeback
New coal-fired power plants are now being planned after a decade in which a=
lmost none were built in the US. But, now 34 coal plants are being planned =
to meet ever increasing power needs across the nation. Energy Secretary Abr=
aham has called for 1,300 new power plants over the next 20 years to meet p=
rojected demand. Electricity demand has more than doubled over the last 20 =
years. Coal currently fires more than half of US electricity production. Th=
e expansion of coal power plants has been put off pollution concerns. Clean=
er burning natural gas produces only 15% of the nation's power, but increas=
ing quickly. Natural gas emits 43% less carbon dioxide than conventional co=
al burning. As a result, 90% of planned power plants are natural gas fired.=
But, now scrubbers that cut up to 90% of sulfur dioxide emissions and grow=
ing amounts of nitrogen oxide. Peabody Group, the largest coal company in t=
he world, is planning a $1.5 billion 1,500 MW Thoroughbred plant slated to =
come online in 2005 in Muhlenberg County, Kentucky. That plant, which Peabo=
dy plans to make an environmental showcase, will be built beside a coal min=
e. Illinois plans to build three coal-fired plants. Last week the state leg=
islature approved a $3.5 billion package of tax incentives and low-cost loa=
ns for the construction of new power plants that can burn high sulfur coal =
from Illinois.
_________________________________________________
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To receive more information or a free demonstration, we invite you to conta=
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________________________________________________
California Power Bill Dead
House Republicans have declared dead a proposed bill to help California avo=
id summer power outages, after Democrats refused to drop demands for wholes=
ale price caps opposed by President Bush. But as power shifts from Republic=
ans to Democrats in the Senate, there is a continued battle over price cont=
rols. The FERC, which has authority to cap prices, also opposes them. Repub=
licans, without more support, simply ran out of time to help California, wh=
ich faces many hours of blackouts this summer. The proposed legislation wou=
ld have also waived some clean air regulations to allow power plants to ope=
rate during peak times, relieved transmission congestion with new lines and=
forced the federal government to cut energy use in its California offices =
20%. The bill-writing session collapsed after California Rep. Waxman sought=
an amendment to stop what he called price-gouging by wholesale power selle=
rs.
______________________________________________
Progas Storage Services, Inc
was recently organized to offer specialized natural gas storage services to=
marketers and end users servicing the upper Midwest and Northeast market r=
egions along the major transmission systems in Indiana, Illinois, Kentucky,=
and Michigan. PGSMI has 10 bcf of potential working capacity which will of=
fer service along TXG, ANR, Midwestern, and is currently evaluating for pur=
chase another 21 bcf of potential working capacity which can be serviced by=
these and other systems in the region. PGSMI also explores for natural gas=
in the Gulf Coast region through a wholly owned subsidiary. Progas intends=
to go public through a route of private industry offerings, and an IPO or =
registration. For more information on services or the company mail to: gast=
orage@aol.com or for AOL mail to gastorage@aol.com ; web site currently und=
er construction at: http://www.progas.net/wip .
The company's executive and administrative office is located in Abilene, Te=
xas with storage operations in Owensboro, KY and exploration operations in =
Corpus Christi, TX.
Progas Storage Services, Inc
8610 S. Hwy 277
Abilene, TX 79606
Ph 915 698 3699
Fx 915 698 2859
_____________________________________________
Study Says More Natural Gas Drilling Restricted
More of the recoverable natural gas in the Rocky Mountains is off-limits to=
drilling than previously thought, according to a new DOE study. A review f=
ound that about 68% of the recoverable supplies in the Greater Green River =
Basin in southern Wyoming and northwestern Colorado, up to 79 Tcf, is eithe=
r closed to drilling or under significant access restrictions. The conclusi=
ons are much higher than a similar 1999 study which said 40% was off limits=
. The US consumes about 23 Tcf of natural gas per year. The studied area co=
vered almost 29 million acres of land with almost 160 Tcf of gas, of which =
16 million acres with 117 Tcf was under federal ownership. Slightly over tw=
o-thirds of the recoverable federal natural gas in the study was either clo=
sed to development or available with restrictions.
______________________________________________
TRENTON/BLACKRIVER "BOOM" IN WEST VIRGINIA
Land and Mineral Development LLC., Vienna, West Virginia, owns 85,000 acres=
of mineral rights in Southeastern West Virginia. The first Trenton/Blackri=
ver production found in the state, was in a well drilled in 1962 by Tidewat=
er Oil Company adjoining our property. We need an industry
partner. Geophysicist report and other information available. The 85000 acr=
es would also make a great gas storage field.
We also have another small storage field for sale near the new Trenton Well=
s.
Email - Driller@wirefire.com=20
Qualified Industry Principals only please.
This is not an offer to sell anything to anyone.
Land and Mineral Development LLC.,
P.O. Box 5370
Vienna, West Virginia, 26105
(304) 295-3333
_______________________________________________
PUC Delay Pushes SCE Toward Bankruptcy
A delay by the California PUC in implementing parts of a state-sponsored $2=
.76 billion rescue plan for Southern California Edison may lead the utility=
into bankruptcy. The PUC will meet today, but had not put on its agenda th=
e regulatory changes which were agreed upon last April by the utility and t=
he governor. If the PUC doesn't implement the changes by Friday, the state =
or the utility could back out of the plan. The political reality is that Ed=
ison is likely going to slouch toward Chapter 11. The legislature has 120 d=
ays to approve the plan which has been faulted as too generous to SCE and o=
f little use to consumers and creditors, while throwing California into the=
power generation business. SCE has a long line of creditors awaiting back =
payments, including at least 30 power generators that have sued it. It only=
takes three to throw the utility into involuntary bankruptcy. Some analyst=
s think that risk is already very high.
_______________________________________________
CAMINUS
ENERGY SOFTWARE
SHOWCASE 2001
HOUSTON, TEXAS
You're Invited
To a four hour exposition of software and services that will set the new st=
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compare your existing system with our latest product offerings.
Thursday, June 14, 2001. 3p.m. to 7p.m.
Houston Petroleum Club
800 Bell Avenue, 43rd Floor
For more information or to register on-line, visit http://www.caminus.com .=
You may invite up to two qualified colleagues to join you.
Nucleus Software . ZaiNet Software
ZaiNet Gasmaster 2 . ZaiNet WeatherDelta
___________________________________________________
NWS Weather Forecast
The latest NWS 6-10 day forecast calls for below-normal temperatures in the=
mid-Atlantic and Northeast, near-normal in the Midwest, and above-normal i=
n the central Plains from Texas into Canada. Near-normal temperatures were =
called for in southern California, while below-normal were forecast for the=
northern end of the state north into Oregon and Washington state.
____________________________________________________
EnerfactsDaily Job Center at http://www.enerfactsdaily.com=20
PGS ENERGY TRAINING
The last public seminars that PGS Energy Training will be offering until Oc=
tober have been scheduled at the Downtown Houston Hyatt Regency on June 12,=
13, 14 &15
For more information, call 412-279-9298 or visit http://www.pgsenergy.com/s=
chedule.html=20
1)Fundamentals of Energy & Electricity Futures, Options & Derivatives
2)Fundamentals of Electric Power Trading
3) Gas-to-Electricity Arbitrage & How to Maximize the Profitability of Elec=
tric Generation Assets
4) Fundamentals of Statistical Analysis for the Energy & Electric Power Mar=
kets
5) How to Value Electric Generation Assets in a Deregulated Market
____________________________________________________
FINANCIAL SUMMARY
The TSE 300 dropped 64.43 points to 8194.39
The CRB Index slipped 0.45 points to 209.76
The US Dollar increased 0.81 points to 119.33
The Dow lost 105.60 points to 11070.24
The S&P 500 slipped 13.54 points to 1270.03
The Nasdaq was down 15.93 points to 2217.73
July NYMEX Crude Oil climbed 0.52 to 27.72
Canadian-US Exchange lost .0081 to 1.5246
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Restructuring Today
Wednesday June 6 2001
Nye thinks Bush may
lead US to retail
power competition
-
But when will Texas
link with North
American grid?
First of several articles
Erle Nye, TXU CEO, has taken over the reins at EEI from John Rowe, the Exel=
on co-CEO. The two spoke to the press at EEI's annual meeting in New Orlea=
ns yesterday.
They had briefed the vice president when he was putting together the White =
House's new energy policy.=20
Does Nye think Bush will lead a national switch from monopoly to competitio=
n in electricity as he did in Texas.
Bush believes in it and led the move to open up Texas, Nye said, and when t=
he time is right, he expects the president to take the leadership to open u=
p retail markets.=20
Nye speaks for the investor owned electric industry but as a Texas grid own=
er at TXU he knows a lot about ERCOT.
We asked him when Texas (ERCOT) will hook up to the North American grid. =
=09It's already connected for up to 600 mw, Nye replied, but it's a DC tie =
and the power is easy to control.=20
His short answer was that ERCOT will build more ties to the east and west w=
hen it's worth doing. It won't happen until there's a strong financial dri=
ver. The grid grew up around load, he reminded, and between the huge easte=
rn and western interties exists a large nothingness where load is small or =
non-existent.
If a need arises for another connection between ERCOT and SPP he knows exac=
tly how much it will cost for another DC line because they've done that.
If someone has to build six 345 or higher kv lines at major interconnection=
points, then Nye has to ask what the investor gets in return.=20
The president talks of it like the Interstate Highway system, Nye noted wit=
h some skepticism.
Is not Nye's view based on fear of FERC jurisdiction?=20
"We're all going to be subject to FERC anyway," Nye asserted.=20
"If you want to make it subject to FERC, pass a law," Nye advised.=20
Will FERC favor the connection, he asked rhetorically.
Nye predicts FERC would look at a connection proposal "under today's circum=
stances" and determine that a lump of investment that large can be better s=
pent somewhere else.=20
At the bottom line on the question of connecting the East and West there ha=
s to be a way to make some money, Nye reminded. And any time would be DC, =
he assumes, since AC power flow is too hard to control.=20
"The idea of a national grid is premature," he predicted, but it will happe=
n when the economics justify it.
"... when the rate of return justifies it."
We asked Nye what is a good rate of return in today's world.
For transmission, what is a return that would motivate investment in the gr=
id?
"North of 11.5-12% to do what's important and it would need to be more in a=
more challenging environment.=20
"If it's real easy to do and anybody can do it, you can get by with the low=
er return," Nye added.=20
Williams' CEO Keith Bailey asks why he should invest for a small return whe=
n he can get 20+% in broadband, we noted.=20
Nye noted that broadband has more risk too.=20
Nye respects departing EEI chairman John Rowe and intends little change in =
management style at EEI. He shares Rowe's positive view of where the indus=
try is headed and should go, he said. Rowe is more competition minded than=
earlier EEI top leaders and Nye is even more pro-competition than Rowe.
Nye believes in the Texas retail power competition bill and is keyed up to =
do well when the market really opens for all Jan 1. Nye tells us he'll be =
active on behalf of EEI members and will be "accessible."
He expects "to lead the industry in those areas where we are collectively t=
ogether and hopefully compromise on those areas where we may have some diff=
erent views."=20
EEI has come a long way over the decade or so that we've been writing about=
it.=20
How does Nye perceive that difference?
He finds Tom Kuhn and staff sensitive to changes in the industry and in the=
views of members, Nye replied.
"The industry is obviously going through a remarkable transition ... and ge=
nerally speaking it's all positive, positive for the nation, for the consum=
ers and for our shareholders," Nye observed of the growing competition.
EEI has been "very progressive in moving staff into the areas that are more=
important and in reducing efforts in those areas that are less important, =
less valuable to the membership and being responsive, he added.
Nye has seen large members drop out of EEI - especially in California where=
some members have said:
"We've sold the generation and are not doing marketing, so EEI isn't quite =
the organization for us."
The association has set up a dues structure to lure transmission only and g=
eneration only companies.=20
Does Nye see the investor-owned electric utilities breaking up over the yea=
rs to come?
He expects various firms to take different paths -- with "some disaggregat=
ion of the traditional integrated form."
Nye knows EEI members represent a spectrum of views but views can be consis=
tent if not identical.=20
EEI members have always had differences based on differing business plans a=
nd asset configurations.
But the industry has "an absolute need for an industry association to repre=
sent those critical views.
"At the end of the day we all recognize that we have much in common and the=
refore we need to speak collectively and with one voice," Nye added.
Tauzin's attempt at
Calif price cap
compromise fails
---
Barton drops action
on Calif help bill
House Energy & Commerce Committee, Billy Tauzin, R-La, was to bring his hig=
hly divided committee back together this morning to win support for HR 1647=
, the Electricity Emergency Relief Act to help California.=20
The measure has been blocked by partisan differences on wholesale price con=
trols. Thus, Tauzin canceled the meeting before it started.
A bit later Joe Barton, R-Tex, chairman of the Subcommittee on Energy & Air=
Quality, announced a switch in strategy, dropping the subcommittee-adopted=
measure.=20
The Democrats assumption of power in the Senate may have been a key factor =
in his decision since Chairman Jeff Bingagman, D-NM, could prevent action o=
n the bill Barton had gotten through his subcommittee.=20
Majority Leader Richard Gephardt has been chilly to the bill without price =
controls. Some provisions have been adopted by the feds and the California=
government, Barton added, citing fixing Path 15, boosting financial help f=
or the poor and better treatment of QFs.=20
Barton opined that by the time he could get a compromise adopted it would b=
e too late for any benefit this summer.=20
His strategy now is to focus on the longterm provisions in the Bush nationa=
l energy policy.
Bingaman, the new Democratic chairman of the Energy & Natural Resources Com=
mittee, intends to block the Bush energy and environment program and start =
afresh.=20
Bingaman is hotly in favor of wholesale energy price caps in California and=
is co-sponsor of a bill to impose them.
But he cautions that he'd rather see FERC put them in place. Bingaman is c=
autious about Bush's interest in easing regulations on power plants.
He has introduced legislation to cut emissions to curb global warming.
The 57-year-old Senator says he's going to try to sit with Republicans and =
work out some middle ground.=20
He's already reportedly made some progress on renewables, wind power and en=
ergy production tax credits.
Can we double energy
efficiency by 2010?
The Assn of Energy Engineers (AEE) favors a comprehensive energy technology=
strategy and the one they want could double the energy efficiency of build=
ings by 2010, slash carbon emissions in half, and save $100 billion a year,=
said Albert Thumann, the group's executive director.
You can see their energy policy at www.aeecenter.org.
AEE asked its 8,000 members whether the administration's national energy po=
licy would encourage new supply and 98% said it should.
Then 69% said environmental regulations shouldn't be eased to build new pla=
nts, though.
While 75% of the non-profit's members felt nuclear power should be encourag=
ed, the report criticized the Bush plan for not promoting conservation and =
energy efficiency.
The White House energy plan cuts R&D funding for energy efficiency technolo=
gies by $160 million and relies heavily on oil and gas exploration and buil=
ding new power generation stations at the expense of the environment, AEE s=
aid.
Tauzin pictures
wide-spread
blackouts
Rep Billy Tauzin, chairman of the Energy & Commerce Committee dramatically =
warned EEI of a looming energy crisis larger than almost anyone's envisione=
d so far.
The entire US may be in for California-scale blackouts if natural gas produ=
ction isn't increased and new electric plants aren't built fast.
The country is "very close" to the beginning of a national energy crisis th=
at endangers, among other things, the nation's high-tech infrastructure.
He echoed dire warnings sounded earlier by the administration, saying that =
the country needs "1,300 to 1,900" new power plants just to stay even with =
a projected 45% rise in electric demand over the next two decades.
Democratic Sen Mary Landrieu of Louisiana said she's bullish on continued e=
nergy deregulation in the states, despite California's woes.
She called for new investment in renewable energy. An advocate of nuclear =
power, she expressed disappointment of incoming Democratic Senate leaders w=
ho oppose the Yucca Mountain nuclear repository.
Use DG as risk
management tool?
XENERGY sees distributed generation as a growing risk management tool, a sa=
fety net to protect against wholesale price spikes, rolling blackouts and i=
ntermittent power quality issues. They really studied DG to the point wher=
e they're selling the study for $10,000.=20
It's Distributed Power Technology Markets 2000. It lists barriers to the n=
ew technology such as inability of some customers to get into load manageme=
nt programs, lack of understanding of load management benefits, lack of nee=
ded metering.
With it comes a database of 100 companies with interests in DG and load man=
agement, including utilities, manufacturers, technology companies and other=
s. Contact is Francis Cummings at 781-273-5700.
PG&E gets time to
negotiate deals
with QF creditors
Judge Dennis Montali has granted Calpine's request to postpone until July 5=
a hearing to decide whether the state's largest QF generator can be releas=
ed from its contract with Pacific Gas & Electric so it can sell at market p=
rices.=20
PG&E has three weeks to negotiate QF contracts before the federal bankruptc=
y judge decides whether to let small generators out of their long-term cont=
racts at prices that once were above market but now are below.
Bankruptcy law provides for the bankrupt to review its contracts and persua=
de the judge to let it do what it would like to do with each.
PG&E has thousands of contracts. If the utility keeps the contract, it fac=
es paying the QF a court approved amount going forward and a settlement on =
past debts.=20
The total owed may be in the hundreds of millions of dollars. Montali deni=
ed a QF creditor's committee motion for an immediate decision.
Avoiding cascading
failure at TVA
If the security grid coordinators around the country can't share informatio=
n about what's happening on the transmission networks, congestion problems =
will worsen, predicted Vikram Budhraja, CEO of Electric Power Group.
One of the most seriously congested pathway in America last summer was disc=
overed running north to south through TVA.
Over 1,000 transactions were cancelled from May to September last year and =
even more are expected this year.
If that load isn't controlled, Budhraja warned the eastern interconnection =
is vulnerable to a cascading network failure.=20
Budhraja chairs CERTS (Consortium for Electric Reliability Technology Solut=
ions) and the group has just put the finishing touches on software that can=
track congestion on the TVA path and NERC will be installing it within the=
next few days.
The 1996 WSCC outage could have been prevented if information had been trad=
ed between control areas better, he said.=20
Murkowski vows to
fight electricity
price caps policy
It was Frank Murkowski's last day as chairman -- for now -- of the Energy &=
Natural Resources Committee.
His final message as the chairman yesterday was that the minority Republica=
ns will not supports caps for electricity prices in California.
The Alaska Republican may now seem to fade into the background but for all =
we know, control of the Senate may bounce back and forth as members come an=
d go during this session of Congress.=20
Republicans, vowed Murkowski, will fight any effort to include price contro=
ls in the comprehensive energy policy engendered by the president and now b=
eing hashed out in committee.=20
Sen Jeff Bingaman, D-NM, the incoming chairman, will allow dozens of new am=
endments to come before the committee, prompting Murkowski to call the Demo=
crats approach to an energy policy "piecemeal."=20
Democrats don't plan to boost production.
For Murkowski that's a mistake made in the 1992 Energy Policy Act and an er=
ror in judgement about to be repeated, Murkowski argued.=20
The elements pushing production were stricken from the 1992 law but mandati=
ng low flush toilets did get included, the senator reminded.=20
Bush's energy plan had "a lack of balance'' with not enough emphasis promot=
ing conservation, energy efficiency and development of renewable wind, sola=
r and geothermal energy sources, Democrats charged Monday.
The majority members don't want to deal with the nuclear waste issue and th=
at kills any hope to spur new nuclear plant construction, Murkowski groused=
.
Setting the tone for the new committee makeup, the ex-chairman passionately=
argued against wholesale price caps claiming they nix new investment by se=
verely limiting return on investment. If the controls are high enough -- l=
ike a $1,000 -- maybe that would be acceptable but nothing as low as what t=
he Democrats want, he said.
Now that the "Bush FERC" is in place, Congress isn't needed to tinker with =
price controls, he concluded.=20
The current energy bill is a good legacy for Chairman Bingaman to use in cr=
afting "meaningful" legislation, Murkowski suggested.=20
Texas residents
may be staying away from electric choice. IOUs have signed up only about 6=
0,000 residentials so far while 265,000 are eligible for the pilot. Busine=
ss customers have flocked into the pilot totaling 839,053 of an eligible 1,=
329,259 -- 63%.
Selling stable prices
works for NewPower
in California
Yes, the California market is open for retail gas competition. It's been o=
pen for maybe a decade but few have found the market attractive until now.=
=20
NewPower is going in selling a two-year fixed price package that really app=
eals in today's world of price spiking.=20
The fixed price insulates customers from price spikes in the volatile Calif=
ornia marketplace.
NewPower's Terry Cohen relates that the firm expects to sign up 16,000 cust=
omers. They'll have the opportunity to lock in gas at 98? a therm, compare=
d to an average PG&E price last January of $1.40 a therm.
The LDCs change their price monthly with a filing to the PUC=20
based on what their costs have been.
NewPower's deal is available to retail customers in 37 northern California =
counties, including San Francisco and Sacramento.
Before the announcement, New Power already had 600,000 gas and electric cus=
tomers in 19 markets.=20
5 stories in 1 minute:
Pat Wood to chair
FERC now: Patrick Henry Wood was sworn in as a FERC member in Texas yester=
day. Vice President Dick Cheney told Fortune magazine that Wood will be de=
signated chairman by the president.=20
Gas competition
ends in Wisc: Wisconsin Gas found out what it wanted to know about retail =
competition by way of a five-year pilot program and is now going back to be=
ing a conventional regulated monopoly. The 1,838 residentials and 1,647 co=
mmercial customers revert to the utility after having been served at one po=
int by nine suppliers and now four as the program ends. The biggest findin=
g we assume was that you lose customers. Costs of the program were subsidi=
zed. Had they been passed on to consumers, prices would have been higher, =
the gas company figures, and we seriously question.
Mark Dempsey has been named West Virginia president for American Electric P=
ower. The former AEP public policy vice president has been with AEP for 25 =
years.
Energy views cost
Bush bigtime: Voter doubts over President Bush's environmental and energy =
policies is hurting his approval rating, down eight points to 55% in May. H=
alf the voters polled criticized those policies.
Sempra would
store gas in
Baja California: Sempra and El Paso Energy are among companies reportedly =
hoping to take advantage of California's power crunch by building or partne=
ring in liquid natural gas terminals in Baja California. Sempra soon is to=
announce a $350 million project between Ensenada and the US border. Sempr=
a owns America's largest gas distributor, Southern California Gas.=20
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