FW: Energy Market Report

Subject: Energy Market Report - 01/30/02

Energy Market Report
Wednesday, January 30, 2002

*See attached pdf file.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 30, 2002 for January 31, 2002

Peak(Heavy)
Low Change High Change
NW/N. Rockies 18.90 0.00 20.50 1.00
Mid-Columbia 18.90 0.00 20.50 1.00
COB 21.25 0.25 22.95 0.95
N. California 23.50 0.00 25.25 1.00
Midway/Sylmar NA NA NA NA
S. California 23.75 0.75 25.50 0.50
Mead 25.00 0.50 26.25 -0.25
Palo Verde 23.00 -0.50 26.00 0.50
Inland SW 23.00 -0.50 26.25 -0.25
4-Corners 23.75 0.75 26.75 1.50
Central Rockies 20.75 0.25 23.50 0.50
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Off-Peak(Light)
Low Change High Change
NW/N. Rockies 17.75 0.75 18.75 -0.25
Mid-Columbia 17.75 0.75 18.75 -0.25
COB 18.00 0.25 19.50 0.75
N. California 19.00 0.75 21.00 1.25
Midway/Sylmar NA NA NA NA
S. California 18.50 0.75 21.00 0.50
Mead 18.25 1.25 21.00 2.00
Palo Verde 14.75 0.00 17.00 0.50
Inland SW 14.75 0.00 21.00 2.00
4-Corners 15.00 0.00 17.00 1.00
Central Rockies 13.00 1.00 14.50 0.75
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Going Short for the Shortest Month

Day-ahead electricity prices in the Western U.S. were mostly higher
Wednesday on continued cold weather. Some traders also said that rising
spot gas prices lent support to the daily power market. "The worst of this
cold snap appears to be over, but the market will likely take a day or so to
react," believed one marketer. According to Weather Derivatives, heating
demand throughout the West was forecast to fall to below-normal levels over
the coming weekend, and the latest six-to-ten from the NWS was calling for
mostly normal temperatures from February 5 through 9. February contracts
were trading a buck or two below the dailies at all of the major Western
hubs on Wednesday. "Historically, February has been a lighter load month
than January, and that's why we're heading into the new month with a short
position," said one matter-of-fact trader. In other industry news,
Wednesday's AGA inventory report showed that U.S. gas stocks fell 111 bcf
last week, right in line with most industry estimates. Total U.S.
inventories of 2.294 tcf were still 1.053 tcf, or 85 percent, above last
year. Of the 111 bcf taken out of storage last week, 19 were drawn in the
Western Consuming region. Total inventories in the West stood at 360 bcf,
or 71 percent of full. Western stocks were at 222 bcf the same week a year
ago, and have averaged 265 bcf over the past five years.

Peak power prices in the Northwest rose marginally for Thursday delivery,
despite a general sense that the worst of the cold snap was over. "We were
a little surprised to see prices rise today because it is supposed to begin
warming up, and we are fairly bearish heading into February," said one
Washington-based trader. Heating demand in the region was forecast to
steadily drop from 119 percent of normal on Thursday, to 99 percent of
normal on February 6. Flow forecasts for Chief Joseph were revised upward
again on Wednesday, coming in at 115 kcfs Thursday, 110 kcfs Friday, 80 kcfs
Saturday, 65 kcfs Sunday, 110 kcfs Monday and Tuesday, and 105 kcfs next
Wednesday. In unit news, Bridger #4 (520 MW) was shut Wednesday morning due
to a plugged boiler. While no ETR was given for the Wyoming-based unit,
sources familiar with thermal plants said such a problem is usually fixed in
48 hours or less. While Colstrip #3 (700 MW) remained down with no official
ETR, some parties believed it would not return until February 9.

Amid continued below-normal forecasts for Thursday and stronger natural gas
values at the SoCal border, day-ahead electricity prices for delivery on the
last day of January gained ground in the Golden State. Traders noted that
spot gas and light load prices were particularly strong. "I was surprised
that gas was strong today. The forecasts are warming gradually though, so
gas should start to ease soon and electricity prices should fall off," said
one California trader. Prices at COB settled higher on Wednesday, with
heavy load deals heard between 21.25 and 22.95$/MWh and light load changing
hands from 18 to 19.5. "We saw an opportunity to make some money at COB
today," said one Western dealer. February COB lingered about 2$/MWh cheaper
than the dailies, with peak products heard trading near 20$/MWh and off-peak
pieces reportedly going through from 16.75 to 16.95$/MWh. Similarly,
front-month deals at NP15 were heard about a dollar cheaper than the
dailies, near 22.75$/MWh for heavy load goods. CAISO reported little change
in the overall generation landscape on Wednesday, with a difference of less
than 100 MW off-line to a day ago. Of note, San Luis (326 MW) exited the
grid for planned maintenance. Thursday temperatures were expected to reach
highs in the low-60s at southern load centers, and about 50 degrees at
mid-state. The five-day forecast called for gradual warming, with
temperatures still expected to be about four degrees below normal on Sunday.
The most current six-to-ten predicted normal temperatures from February 5 to
9.

While peak power prices in the Southwest dipped by 50 cents on both the high
and low ends, the bulk of deals were done at slightly higher levels than on
the previous day. Continued cold weather and rising spot gas values were
the main factors lending support to the dailies on Wednesday. Starting on
Friday, heating demand in the desert region was forecast to drop sharply,
dipping to below-normal levels by February 3. Peak electricity prices at
Palo Verde ranged from 23$/MWh early, to a late-session high of 26$/MWh,
while February contracts were heard around the 21.65$/MWh mark. Light load
goods for Thursday delivery traded from 14.75 to 17$/MWh, while February off
peak was seeing action near the 14.7$/MWh level. There were no new outages
of consequence to report in the Southwest on Wednesday, but looking further
ahead, Palo Verde #2 (1,270 MW) was scheduled to shut for spring maintenance
from March 16 through April 20. Weather forecasts called for gradual
warming over the coming weekend, and the latest six-to-ten from the NWS was
predicting normal temperatures from February 5 through 9.

Patrick O'Neill and Jessie Norris
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Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/6390 total NA NA
planned/unplanned*
Alamitos #3/320/gas 26-Jan-02 ? planned
Alamitos #6/480/gas 20-Jan-02 ? planned
Big Creek Project/1020/hydro 28-Jan-02 ? @710MW, planned
Bridger #4/520/coal 30-Jan-02 1-Feb-02 repairs*
Colstrip #3/700/coal 11-Jan-02 ? repairs
Corondado #1/395/coal 25-Jan-02 29-Jan-02 tube leak
Encina #4/303/gas 12-Jan-02 ? unplanned
Etiwanda #4/320/gas 21-Jan-02 ? planned
Four Corners #5 09-Jan-02 14-Mar-02 maintenance
Grand Coulee #19/600/hydro 10-Dec-01 March repairs
Haynes #6/341/gas 07-Jan-02 ? planned
Helms PGP #2/407/hydro 01-Oct-01 ? planned
Hyatt/Thermalito/933/hydro 02-Oct-01 ? @665 MW,
unplanned
Moss Landing #7/739/gas 29-Dec-01 ? planned
Ormond Beach #1/725/gas 28-Dec-01 ? planned
Ormond Beach #2/750/gas 05-Oct-01 ? @350 MW,
unplanned
Pittsburg #6/317/gas 22-Nov-01 ? planned
San Luis PGP/326/hydro 30-Jan-02 ? planned*
Scattergood #3/445/gas 22-Jan-02 ? maintenance

Future
Navajo #2/750/coal 02-Feb-02 25-Feb-02 maintenance
Palo Verde #2/1270/nuclear 16-Mar-02 20-Apr-02
maintenance*

For unit owners refer to pdf version.
*Indicates a change from previous EMR.
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Eastern Markets Pre-Scheduled Firm Power Prices ($/MWh)

January 30, 2002 for January 31, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 16.00 -1.00 18.50 -0.80
Western PJM 21.20 0.20 22.20 0.70
Into Entergy 16.00 1.00 17.50 0.35
Into TVA 16.00 0.25 18.00 1.25
ERCOT 18.50 1.00 19.25 -0.15
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Amid expectations of continued warm weather through Friday and a natural gas
storage report within industry estimates, spot electricity prices were
mostly steady across the Eastern Interconnect on Wednesday. Saturday
predictions called for below-normal temperatures, a break in the bearish
weather pattern that has been depressing demand and prices for much of
January. The AGA weekly natural gas storage report listed a draw of 111
bcf. NYMEX Henry Hub natural gas futures were mixed, with March picking up
1.3 cents to close at 2.08$/mmBtu, while April slipped 0.3 cent to end the
day at 2.147$/mmBtu.

While revised loads and forecasts met with skepticism from traders in the
Mid-Atlantic on Wednesday, day-ahead electricity prices climbed slightly
higher. "Loads and temperatures were revised upwards today. There's
supposed to be some colder weather for the weekend, but bullish forecasts
have been pushed back all month, so we'll see if the cold actually
materializes this time," commented one PJM player with a wait-and-see
attitude. Western PJM goods for Thursday delivery changed hands between
21.2 and 22.2$/MWh, with the bulk of deals done around 21.6$/MWh. LMPs
gradually increased from 09:00 through 11:30 EST reaching a high of 44$/MWh,
but averaged only 20.17$/MWh through 15:00 EST. In unit news, sources said
Keystone #2 (850 MW) returned to the grid on Wednesday, back from a two-day
maintenance outage. High temperatures were expected in the upper-40s to
low-50s on Thursday, with overnight lows in the 35 to 42-degree range. The
latest six-to-ten called for above-normal temperatures from February 5 to 9.

Peak power prices settled lower in the Midwest on Thursday, as continued
bearish fundamentals took their toll on the ECAR market. Into Cinergy
pieces were bought and sold between 16 and 18.5$/MWh, with the low end
reached in late trade. No new outages were reported on Thursday, although
traders continued to speculate that many marginal units were off-line for
load following. Temperatures were predicted to be slightly warmer on
Thursday. However, the mercury was expected to drop about 15 degrees on
Friday. The most current six-to-ten predicted above-normal temperatures
from February 5 to 9.

With stronger than expected natural gas values, heavy load energy costs
edged higher in the Southeast on Thursday. "Prices were bouncing around
quite a bit today. It was hard to figure out where things were," commented
one Entergy dealer. Other sources said spring maintenance would start to
affect the market soon, as operators push repairs forward in light of low
prices and warm weather. Into Entergy trades were heard between 16 and
17.5$/MWh, mostly in the 16s, while February changed hands from 18.35 to
18.5$/MWh. Texas power remained steady, firming up a buck on the low end.
The bulk of Into TVA deals were done with a 17 handle, but early trades were
heard as low as 16$/MWh. The updated six-to-ten called for mostly normal
conditions in SERC and Texas from February 5 to 9.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 31-Jan-02 NW1 to NP15 0.00 0.00
NW3 to SP15 0.00 0.00
AZ3 to SP15 0.00 25.24
LC1 to SP15 0.00 0.00
SP15 to NP15 0.00 0.00

OTC Forward Peak Electricity Contracts in $/MWh

Mid-C PV SP-15
Bid Ask Bid Ask Bid Ask
BOM NA NA NA NA NA NA
February 16.75 18.25 21.50 22.50 22.50 23.50
March 15.00 16.50 20.50 21.50 21.50 22.50
April 15.25 16.75 21.75 22.75 NA NA
Q2 '02 15.50 17.00 24.00 25.00 23.50 24.50
Q3 '02 28.50 30.00 37.00 38.00 36.25 37.25
Q4 '02 27.00 28.50 27.00 28.00 28.50 29.50
Q1 '03 27.00 28.50 NA NA 29.50 30.50
Cal '03 28.50 30.00 32.50 33.50 34.25 35.25

Represents the most recent bid/ask spread obtainable
by the Energy Market Report.

Alberta Power Pool Index (C$/MWh)

Peak(14) Peak(16) Off-Peak Flat Change
for 29-Jan-02 56.99 53.91 17.53 42.69 12.89

BPA's Offer for 02/01/02 and 02/02/02.

Hours Amount NW delivered COB/NOB delivered
7-22 200MW Market Price* Market Price*

*Market price will be determined at time of request.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Mar 2.080 0.013
Apr 2.147 -0.003

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 2.03 2.08
So. Cal Border 2.14 2.19
San Juan 1.99 2.04
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Economic Insight, Inc. - 3004 SW First, Portland, Oregon 97201,
Telephone (503) 222-2425, Internet e-mail emr@econ.com -
Copyright, Economic Insight, Inc. 2002.