FW: Energy Market Report

Subject: Energy Market Report - 01/31/02

Energy Market Report
Thursday, January 31, 2002

*See attached pdf file.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 31, 2002 for February 1 and 2, 2002

Peak(Heavy)
Low Change High Change
NW/N. Rockies 19.00 0.10 21.00 0.50
Mid-Columbia 19.00 0.10 21.00 0.50
COB 21.75 0.50 24.50 1.55
N. California 23.50 0.00 27.00 1.75
Midway/Sylmar NA NA NA NA
S. California 24.00 0.25 27.45 1.95
Mead 24.00 -1.00 26.25 0.00
Palo Verde 23.50 0.50 26.50 0.50
Inland SW 23.50 0.50 27.25 1.00
4-Corners 23.25 -0.50 24.50 -2.25
Central Rockies 21.50 0.75 23.75 0.25
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Off-Peak(Light)
Low Change High Change
NW/N. Rockies 17.50 -0.25 19.00 0.25
Mid-Columbia 17.50 -0.25 19.00 0.25
COB 18.00 0.00 19.25 -0.25
N. California 20.25 1.25 22.50 1.50
Midway/Sylmar NA NA NA NA
S. California 20.00 1.50 22.75 1.75
Mead 19.75 1.50 20.50 -0.50
Palo Verde 16.75 2.00 19.50 2.50
Inland SW 16.75 2.00 20.50 -0.50
4-Corners 16.25 1.25 18.00 1.00
Central Rockies 14.00 1.00 16.00 1.50
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SW Left Out in the Cold

Peak power prices in the Western U.S. rose for the typically-discounted
Friday/Saturday package on continued strong weather-related demand and
new-month buying. While temperatures in the Northwest have already begun to
ease, the Southwest was forecast to remain firmly entrenched in heating
demand country through Sunday. Slightly stronger spot gas prices may also
have lent support to the dailies. Balance-of-February contracts were still
trading below the dailies, but most players believed spot electricity prices
would fall to meet the balance next week as warmer weather prevails. In
other industry news, the General Accounting Office (GAO) said Thursday that
it would sue the White House to try to force Vice President Cheney to
release documents detailing contacts between corporate executives and the
administration's energy task force of which Cheney was the chairman. David
M. Walker, the comptroller general of the United States and director of the
accounting office, said he intended to ask a federal judge to order Mr.
Cheney to give Congress the identities of energy industry executives who
helped the Bush administration formulate a national energy policy last year,
detailing the subject that each executive discussed with task force members.

The average price paid for day-ahead heavy load energy in the Northwest rose
marginally Thursday on the last remnants of the region's most recent cold
snap, as well as increased demand from the south. Temperatures had begun to
abate on Thursday, and the region's major load centers were forecast to
return to normal territory by Saturday. The much-anticipated release of the
February Early Bird Water Supply Forecast from the Northwest River Forecast
Center showed that supplies in the region had risen from the previous report
issued on January 9, but remained mostly below normal on the Columbia and
Snake Rivers. April through September supply forecasts at The Dalles rose
from 93 to 97 percent, while Grand Coulee gained one percent to 95 percent
for the same period. "The report may show that water supplies are still
below normal, but there's still plenty of time to beef up these numbers, and
we're already leaps and bounds ahead of where we were at this time last
year," said one Northwest trader. In unit news, a quasi-official ETR for
Colstrip #3 (700 MW) emerged on Friday, calling for the unit to be back up
between February 5 and 7. Since we are talking about a Colstrip unit here,
we have opted to err on the side of caution and go with the 7th.

Despite the expectation of gradually easing temperatures over the weekend,
day-ahead power prices firmed up for the Friday/Saturday package in the
Golden State. "Gas came up a little and new month jitters had everyone on
edge," joked one California trader about the day's action. SP15 saw the
most strength, with heavy load deals heard between 24 and 27.45$/MWh.
Similarly, NP15 peak goods changed hands from 24 to 27$/MWh, with the bulk
of transactions in the 25 to 26$/MWh range. Traders said BOM was, not
unexpectedly, still trading at a discount to the dailies. In political
news, Governor Davis formally requested a FERC investigation into alleged
price manipulation by Enron last summer. Specifically, the Governor accused
Enron of pushing prices up on long-term contracts. The CPUC reached an
agreement with the DWR, which would allow the department to issue bonds to
repay the California general fund for power purchases it has made. To date
the DWR has bought $10 billion worth of electricity, and expects that total
to reach $18 billion by the end of the year. On the generation front,
Alamitos #4 (320 MW) joined off-line sister units #3 and #6 off-line on
Thursday. Smaller units Huntington Beach #3 (225 MW) and Southbay #4 (222
MW) also exited the grid for unplanned and planned maintenance,
respectively. Friday and Saturday forecasts called for highs to linger in
the low-50s mid-state and the low-60s in the south, with overnight lows
expected to be in the chilly 34 to 41 degree range. Predictions for the new
week called for near-normal conditions, and the latest six-to-ten called for
normal temperatures from February 6 to 10.

As Phoenix residents continued to bask in overnight temperatures in the
mid-30s, peak power prices continued to rise for the Friday/Saturday combo.
Temperatures were forecast to start warming up beginning on Sunday,
prompting traders to expect falling loads and prices next week. Peak power
at Palo Verde ranged from 23.5 to 26.5$/MWh, with the bulk of deals going
through at the 25$/MWh mark. Light load goods at the Southwest hub gained
as much as 2.5$/MWh with confirmed transactions anywhere between 16.75 and
19.5$/MWh. In unit news, Coronado #1 (395 MW) was still having trouble
returning from a January 25 tube leak outage, but sources familiar with the
Arizona-based unit were confident that it would begin to ramp up at 06:00
MST on Friday (though they weren't willing to put money on it). The latest
six-to-ten from the NWS continued to call for normal temperatures to blanket
the desert region from February 6 through 10.

Patrick O'Neill and Jessie Norris
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Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/7406 total NA NA
planned/unplanned*
Alamitos #3/320/gas 26-Jan-02 ? planned
Alamitos #4/320/gas 31-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 07-Feb-02 repairs*
Corondado #1/395/coal 25-Jan-02 01-Feb-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
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 31, 2002 for February 1, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 17.50 1.50 19.85 1.35
Western PJM 21.70 0.50 22.00 -0.20
Into Entergy 17.60 1.60 20.25 2.75
Into TVA 18.50 2.50 20.00 2.00
ERCOT 18.50 0.00 21.00 1.75
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With the return of ice storms in the Midwest and generally winter-like
conditions to the entire East, peak power prices strengthened on Thursday.
"Prices would have risen even more today, but recent bearish trends have
prompted a wait-and-see attitude among traders," commented one Cinergy
dealer. NYMEX Henry Hub natural gas futures rose on Thursday. March gained
5.8 cents to close at 2.138$/mmBtu, while April climbed 4.3 cents to end at
2.19$/mmBtu.

Expectations of colder weather in the Mid-Atlantic sent day-ahead
electricity prices higher on Thursday. Western PJM goods changed hands
between 21.7 and 22$/MWh, while early deals for Monday delivery were heard
at 24.25$/MWh. Traders said fewer Cinergy imports and more New York exports
were the real movers on Thursday. Forecasts called for little change on
Friday, but substantial cooling over the weekend and into the new week. The
most current six-to-ten from the NWS called for above-normal temperatures
for most of PJM and normal conditions along coast from February 6 to 10.

Amid cold weather and winter storms, heavy load energy costs jumped up in
the Midwest on Thursday. Into Cinergy pieces for Friday were bought and
sold between 17.5 and 19.85$/MWh. "We only saw two trades below 19$/MWh
today, and most of our volume went through very close to the high end,"
commented one market player, an explanation echoed by most Cinergy traders
on Thursday. Talk also centered on the new MidwestISO that will take over
transmission responsibilities on Friday. Pointing to studies by the Edison
Institute and others, most traders thought any changes to the market would
happen gradually, and didn't expect any immediate affects on prices. "The
new rules will focus on generators for now," said one calm ECAR scheduler.
Next week deals also rose on Thursday, and were heard mostly between 20.15
and 20.35$/MWh. "The near term was modestly stronger today," summed up one
trader. In unit news, Rockport (1,300 MW) was reportedly off-line for early
spring maintenance. Also of note, ECAR load estimates were up from
approximately 31,000 for Friday to 34,000 for Monday. Colder conditions
finally rolled into ECAR, with forecasts for Friday calling for temperatures
in the low-30s to mid-40s across most of the region. The mercury was
expected to dip more in the new week, and the latest six-to-ten predicted
mostly above-normal temperatures from February 6 to 10.

Anticipation of a break in the bearish warm weather and rumors of units
coming off for early spring maintenance lent support to SERC and ERCOT spot
prices. Into Entergy deals were heard between 17.6 and 20.25$/MWh, with
prices Into TVA and ERCOT also breaking into the 20s. Strength in the
natural gas markets also cheered traders on Thursday. Texas temperatures
took a dive on Thursday, with the cold front expected to spread into SERC
over the weekend. The updated six-to-ten called for mostly normal
temperatures across SERC and Texas from February 6 to 10.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 01-Feb-02 NW1 to NP15 0.00 0.00
NW3 to SP15 0.00 0.00
AZ3 to SP15 36.22 41.59
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 18.25 19.25 21.75 22.75 23.00 24.00
March 16.00 17.50 21.00 22.00 21.75 22.75
April NA NA 22.25 23.25 22.50 23.50
May NA NA 23.50 24.50 NA NA
Q2 '02 16.00 17.50 24.00 25.00 NA NA
Q3 '02 28.50 30.00 37.25 38.25 36.25 37.25
Q4 '02 28.00 29.50 27.00 28.00 28.50 29.50
Q1 '03 27.00 28.50 28.00 29.00 29.50 30.50
Cal '03 29.00 30.50 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 30-Jan-02 37.19 35.96 15.83 29.75 -12.94

BPA's Offer for 02/03/02 and 02/04/02.

Hours Amount NW delivered COB/NOB delivered
7-22 200MW Market Price* Market Price*
1-6,23,24 200MW Market Price* Market Price*
*Market price will be determined at time of request.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Mar 2.138 0.043
Apr 2.190 0.043

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 2.00 2.05
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.