FW: Energy Market Report

Subject: Energy Market Report - 02/05/02

Energy Market Report
Tuesday, February 5, 2002

*See attached pdf file.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
February 5, 2002 for February 6, 2002

Peak(Heavy)
Low Change High Change
NW/N. Rockies 19.75 0.75 20.75 0.50
Mid-Columbia 19.75 0.75 20.75 0.50
COB 22.00 0.25 23.50 0.75
N. California 24.25 0.25 26.25 1.50
Midway/Sylmar NA NA NA NA
S. California 24.00 0.00 25.50 -0.50
Mead 24.00 0.50 24.75 -0.50
Palo Verde 22.50 -0.50 23.50 -0.75
Inland SW 22.50 -0.50 26.75 0.75
4-Corners 23.00 -0.25 23.25 -0.75
Central Rockies 19.00 0.00 22.50 -0.50
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Off-Peak(Light)
Low Change High Change
NW/N. Rockies 19.25 2.00 20.25 0.25
Mid-Columbia 19.25 2.00 20.25 0.25
COB 20.00 2.00 21.00 1.50
N. California 20.25 0.50 21.50 0.50
Midway/Sylmar NA NA NA NA
S. California 20.00 1.50 22.95 1.70
Mead 19.50 1.50 21.00 1.00
Palo Verde 16.00 1.00 17.25 -0.25
Inland SW 16.00 1.00 21.00 1.00
4-Corners 17.00 1.00 19.00 0.50
Central Rockies 14.00 -0.50 17.00 -0.25
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Take the Money and Run

Peak power prices for Wednesday delivery were mostly steady across the West
on Tuesday, largely due to a stagnant spot gas market and near-normal
temperatures. "Prices were trading in very narrow ranges at most of the
hubs today, and that made for a lackluster session," complained one
marketer. NYMEX Henry Hub contracts for the front months closed lower on
Tuesday despite cold Northeast temperatures, likely due to more moderate
forecasts for next week, and on some technical selling. March slipped 4.3
cents to close at 2.074$/mmBtu, while April shed 3.2 cents to end at
2.152$/mmBtu. Most 2003 and 2004 contracts finished up slightly. The EIA
recently said that it expects U.S. natural gas inventories to end the first
quarter at a record 1.46 tcf. The low point for U.S. gas stocks at the end
of the winter heating season has averaged about 920 bcf over the past eight
years. Weekly draws of 144 bcf would be needed over the nine remaining
weeks of withdrawl season to lower inventories to a more normal 1.0 tcf.
Not a likely scenario since draws for the nine-week period have averaged 63
bcf over the past five years. In other industry news, lawyers for Ken Lay
have refused to accept a subpoena from a congressional committee requiring
his appearance at public hearings. Mr. Lay's lawyers said they did not know
their client's whereabouts and could not accept any subpoenas on his behalf.
Peggy Peterson, a spokesperson for the House financial services committee
said, "He [Lay's lawyer] tells us he does not know of Lay's whereabouts,
which we find quite puzzling to say the least. Even if Lay is forced to
appear by a subpoena, many parties believe he would likely plead the Fifth
and not testify.

Heavy load energy costs in the Northwest were steady to slightly higher than
levels reported a day ago. Amid continuing cold overnight temperatures,
light load goods traded slightly higher, and in a narrower range. Flow
forecasts for Chief Joseph were little changed, coming in at 110 kcfs
Wednesday and Thursday, 105 kcfs Friday, 75 kcfs Saturday, 60 kcfs Sunday,
115 kcfs Monday, and 110 kcfs next Tuesday. No news was good news on the
unit front Tuesday, with no new significant outages reported. According to
Weather Derivatives, heating demand in the region was forecast to average
115 percent of normal through February 12, with the greatest demand expected
during the latter part of that period.

With little news, close-to-normal temperatures, and steady spot gas prices
at the SoCal border, day-ahead electricity prices edged up slightly in the
Golden State on Tuesday. Heavy load transactions at NP15 went through from
24.25 up to 26.25$/MWh, with the bulk of deals done in the 24.25 to
24.75$/MWh range and the high end reached late. Light load goods maintained
their recent strength, trading from 20.25 to 21.5$/MWh. NP15
balance-of-February saw action around 22.75 to 23.25$/MWh. "I think some
traders had the March jitters, light and heavy firmed up some there today,"
commented one California player. SP15 off-peak saw the most strength on
Tuesday, with deals going through as high as 22.95$/MWh for Wednesday
delivery. There was little change in the generation landscape on Tuesday.
Pittsburg #7 (682 MW) returned to service from a maintenance outage that
began February 2. Alamitos #3 (320 MW) ramped up to 240 MW, on its way back
from an outage that began January 26. Forecasts for Wednesday called for
highs at southern load centers to reach the mid-60s, down slightly from
Tuesday's levels, with overnight lows in the upper-40s. The state capital
anticipated a high of 58 degrees and a low of 36 degrees. The most current
six-to-ten from the NWS predicted normal temperatures from February 11 to
15.

In the Southwest, peak power prices for Tuesday delivery were flat to
slightly lower to a day ago as weather conditions in cities such as Phoenix
were described as "beautiful, sunny, and in the 70s." Heavy load energy at
Palo Verde ranged from 22.5 to 23.5$/MWh, with unconfirmed trades heard as
high as 24$/MW. Mead commanded a premium to PV, but most of that energy was
reportedly bound for the Golden State. In unit news, Coronado #1 (395 MW)
returned to full power Tuesday, following tube leak repairs that began back
on January 25. Meanwhile, Coronado #2 (385 MW) slipped into a planned
maintenance outage slated to last until February 10. Weather Derivatives
forecast heating demand in the desert region to average a mere 85 percent of
normal through February 10, and the latest six-to-ten from the NWS was
calling for mostly normal temperatures from February 11 through 15.

Patrick O'Neill and Jessie Norris
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Western Generating Unit Outages

Current Begins Ends Reason
CAISO units <250/6715 total NA NA
planned/unplanned*
Alamitos #5/480/gas 01-Feb-02 ? planned
Alamitos #6/480/gas 20-Jan-02 ? planned
Bridger #3/520/gas 04-Feb-02 07-Feb-02 repairs
Bridger #4/520/gas 04-Feb-02 07-Feb-02 maintenance
Colstrip #3/700/coal 11-Jan-02 10-Feb-02 repairs
Coronado #2/385/coal 05-Feb-02 10-Feb-02 maintenance
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
Navajo #2/750/coal 02-Feb-02 25-Feb-02 maintenance
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
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)

February 5, 2002 for February 6, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 22.75 2.75 26.00 2.00
Western PJM 24.75 -0.15 25.75 0.45
Into Entergy 21.00 0.75 23.00 1.00
Into TVA 23.00 2.00 25.00 1.00
ERCOT 19.25 0.75 20.25 0.90
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Amid cold temperature forecasts, particularly in SERC, peak power prices
rose across the Eastern Interconnect on Tuesday. "It was good to see some
strength in the dailies, however short-lived it may be," said one Cinergy
player. Firmer prices were seen in Balance-of-February and the March/April
contracts as well, despite another lackluster day in gas. NYMEX Henry Hub
futures edged down again on Tuesday. March fell 4.3 cents to close at
2.074$/mmBtu, while April lost 3.2 cents to end at 2.152$/mmBtu.

Amid much higher real-time prices, peak electricity prices edged up just
slightly in the Mid-Atlantic on Tuesday. Western PJM goods for Wednesday
delivery were bought and sold between 24.75 and 25.75$/MWh. Traders mostly
expected prices to drop off with warmer forecasts for the end of the week.
LMPs reached a lofty high of 115$/MWh early Tuesday morning, but averaged
35.09$/MWh through 15:00 EST. High temperatures were expected to warm into
the mid-40s on Wednesday and continue there through Saturday. The latest
six-to-ten called for above-normal temperatures from February 11 to 15.

With unit outages and winter weather, heavy load energy costs made robust
gains in the Midwest on Tuesday, to the delight of sellers. "People have
really found their faith today. Balance-of-Feb was up over a buck and
March/April surged a bit as well," crowed one trader. Into Cinergy edged up
all day, trading between 22.75 and 26$/MWh, while Balance was heard from
21.1 to 21.35$/MWh and March/April saw action up to 21.25$/MWh. Power
sellers were concerned with the higher transmission rates they were seeing
from the newly operating MidwestISO on Tuesday. "I'm seeing a base rate of
4$/MWh, and if you add in ancillary costs of 50 cents and recovery of old
costs at 2.5$/MWh, transmission is costing nearly 7$/MWh, compared to about
4$/MWh before. That's going to hamper movement in and out of Cinergy, and
increase volatility in the market," predicted one in-the-know seller. In
unit news, sources said Beaver Valley #2 (833 MW) has been off-line since
February 4. Traders also said Cook #2 could be back as early as February
16, while the Rockport unit (1,300 MW) was expected to remain down into
mid-March. High temperatures were predicted to warm slightly into the
upper-30s for Wednesday, and the most current six-to-ten continued to
forecast above-normal temperatures from February 11 to 15.

Bullish weather conditions sent day-ahead electricity prices higher in the
Southeast and Texas on Tuesday. "I saw some buyers today that have been out
of the market for a while," commented one SERC player. Into TVA on-peak
pieces traded from 23 to 25$/MWh, with off-peak pieces equally strong from
16 to 19$/MWh. Unlike northern hubs, Entergy dealers reported a weaker
balance-of-the-month market on Tuesday. Wednesday forecasts called for well
below-normal temperatures across SERC and Texas, with highs mostly in the
mid-30s to mid-40s. The mercury was expected to climb into normal territory
by Saturday and the up-to-date six-to-ten predicted above-normal
temperatures from February 11 to 15.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 06-Feb-02 NW1 to NP15 0.00 0.00
NW3 to SP15 0.00 0.00
AZ3 to SP15 0.00 14.00
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 18.50 19.50 21.50 22.50 23.25 24.25
March 15.50 17.00 21.00 22.00 22.25 23.25
April 15.75 17.25 22.00 23.00 22.25 23.25
May 15.00 16.50 23.50 24.50 NA NA
Q2 '02 15.50 17.00 24.00 25.00 23.50 24.50
Q3 '02 28.50 30.00 37.50 38.50 36.50 37.50
Q4 '02 27.50 29.00 27.25 28.25 28.50 29.50
Q1 '03 27.25 28.75 NA NA 30.50 31.50
Cal '03 29.00 30.50 33.25 34.25 35.25 36.25

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 04-Feb-02 25.04 23.25 9.98 19.25 5.21

BPA's Offer for 02/07/02.

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 2.074 -0.043
Apr 2.152 -0.032

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 1.92 1.97
So. Cal Border 2.14 2.19
San Juan 2.03 2.08
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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.