Washington state regulators approved a $22.1 million general rate settlement covering Avista Corp.'s 220,000 electricity and 134,000 natural gas customers in the state. The Washington Utilities and Transportation Commission order will be effective Jan. 1, leading to a 7.7% increase for the average residential electric customer and less than 1% (0.6%) for gas customers. Avista will increase funding by $800,000 to two existing assistance programs helping limited-income customers. The general rate increase includes a $22.1 million boost for electric revenues and just short of $1 million ($968,000) for natural gas revenues, but with some slight adjustments ordered by state regulators the overall increase will be close to the $22.1 million level, Avista said in announcing the regulatory decision. Avista's rate-of-return (ROR) was set at 9.11%, with a 40% equity ratio, and its return-on-equity (ROE) was sent at 10.4%. Under an equity-building mechanism, Avista will increase its equity component to 38% by the end of 2008 from its current level at about 31%. Avista serves 330,000 electric and 285,000 natural gas utility customers in three Northwest states (Idaho, Oregon and Washington), but gets about 70% of its annual retail electric and natural gas revenues from the state of Washington.
The Kentucky Public Service Commission has approved an $8.1 million rate hike for the natural gas distribution service of Cinergy Corp. subsidiary Union Light, Heat and Power Co. (ULH&P). The base rate increase request covers investments of $123 million in improvements that ULH&P is making to its system, partially offset by reduced maintenance expenses because the improvements in the gas distribution system will lower the number of leak repairs. ULH&P, which serves 92,000 natural gas customers in six Northern Kentucky counties, filed the rate request in February to continue to recover annual costs associated with the utility's accelerated main replacement program, initiated to improve the reliability and safety of the gas distribution system. ULH&P has replaced 110 miles of cast iron and bare steel pipe through 2005, or about 50% of the cast iron and bare steel mains in its system. ULH&P implemented the rate hike in October, pending commission approval. Typical residential customers will actually see their monthly bills in January reduced to $204.07 from $210.32, based on the approved gas cost adjustments for the month.
Swift Energy Co. is paying $5.75 million in cash to acquire additional interests in the South Bearhead Creek Field in Beauregard Parish, LA, with an effective date of Dec. 1. The purchase includes 6.4 Bcfe of proved reserves, which complement about 21 Bcfe of reserves Swift purchased for $24.3 million earlier in 4Q2005. South Bearhead Creek Field consists of 5,800 gross acres located 50 miles south of Swift's Masters Creek Field and 30 miles north of Lake Charles, LA.
Between now and March retail electric bills for some Southern California Edison Co. customers could be increased three times, the Rosemead, CA-based Edison International utility announced Tuesday, and two of the three rate hikes are attributable to continuing high wholesale natural gas prices. Sempra Energy's Southern California Gas Co. utility said it expects retail gas bills to rise 45% to 55% this winter. The first Edison rate hike -- an average of 9% slated for Jan. 1 -- is caused by a combination of the higher natural gas prices in some state power contracts Edison holds and by a recent California Public Utilities Commission decision to allocate a larger portion of the state contracts' costs last year to Edison's customers. Customers using smaller amounts of power -- about 40% of Edison's residential customers -- will avoid the increase, an Edison utility spokesperson said. A second increase in the range of 5.5% to 6% will be effective in February to recover higher natural gas prices on Edison's own power purchases and for fueling its newly completed Mountainview plant in Redlands, about 70 miles east of Los Angeles. Finally, a third increase is contemplated by Edison to cover the added cost of power plant upgrades and higher maintenance expenses, according to a report in the Los Angeles Times. The size of the increase has not been determined.
The New York Mercantile Exchange Inc. (Nymex) announced that a record 10,000 natural gas calendar spread options contracts were traded on Dec. 15, surpassing the previous record of 6,600 contracts on Oct. 15, 2004. "This record is a further indication that the energy industry continues to see the exchange as a reliable source of risk management, liquidity, and price transparency," said James E. Newsome, president of Nymex.
Comstock Resources Inc. is raising its 2006 capital expenditure budget for development and exploration activities by 67% over the previous year to $200 million. In 2005, the Frisco, TX-based company spent $120 million on E&P. Development projects comprise $179 million of the 2006 budget and $21 million of the budget is allocated to exploration activities. Comstock expects to drill 149 (79.7 net) wells in 2006, including 137 (76.5 net) development wells and 12 (3.2 net) exploratory wells. The company said its East Texas/North Louisiana operating region accounts for the largest portion of the 2006 budget with forecasted expenditures of $134 million. "The increased drilling program will be the primary driver of our production growth that we expect to have next year," said CEO M. Jay Allison. "Given the current strong natural gas prices, we expect that the operating cash flow that we generate will exceed our planned spending for exploration and development projects in 2006."
In yet another example of the majors rebuilding their gas holdings in North America, Shell Canada acquired a stake in 110,000 acres of land at the recent Crown land sales in Alberta and British Columbia. Shell Canada CEO Clive Mather said with this deal the company has "more than tripled our basin-centered gas landholdings this year, providing us additional opportunity to grow our Western Canada gas production." Among the assets acquired were 66,400 acres with unconventional gas resources in the deep basin area near Hinton, AB. In total, Shell Canada acquired a 100% interest in seven parcels for a total price of $99 million. These lands are additional to 58,000 acres acquired in the deep basin of northeastern British Columbia in June 2005. "During 2005 we have invested more than $350 million in additional land to support our growth aspirations," said Mather. At the Dec. 14 sale, the company also acquired an interest in 20,000 acres in the northeastern B.C. foothills offering conventional gas exploration prospects in Triassic, Permian and other deep structures. The company's investment in oilsands also continued. The company has increased its landholdings in Athabasca by more than 50% during 2005.
California-based Berry Petroleum Co. raised its 2006 capital expenditure budget 15% to $160 million, with about 60% of the total going to exploration and production in the Rocky Mountains and Midcontinent assets. The other 40%, or $62 million, will be used to develop Berry's California assets. Berry is targeting production growth of 9% to average about 25,000 boe/d before acquisitions. Production in 2006 is expected to be about 70% heavy oil, 15% light oil and 15% natural gas.
For signing up as the 200,000th Ohio customer of Direct Energy, 82-year-old Flora Bloomfield will receive a year's supply of natural gas for free. The gift will begin with the January 2006 bill, Direct Energy said. Mike Beck, vice president of sales and marketing, said the company had exceeded a "significant milestone in customer growth in Ohio," and wanted to do something to commemorate the success. "The idea we liked best was to provide this customer with relief from the higher heating bills that most of us will face next year." Bloomfield, who is on a fixed income, is expected to save several thousand dollars in 2006 based on her historical gas usage, Direct Energy said.
Stone Energy Corp., under a cloud since it revised downward its proven reserves by 171 Bcfe two months ago, said its bank group has extended its waivers from Dec. 15 to March 31. Additionally, Stone agreed to secure borrowings under its bank credit agreement with a security interest in its oil and gas properties. Stone currently has a borrowing base under the credit agreement of $300 million, $176 million of which is borrowed or committed, leaving $124 million of availability. Stone delayed filing its 3Q2005 10-Q and restated annual financial statements for 2004 until March 31 to enable it to have its reserves independently audited. The Lafayette, LA-based independent announced it would revise downward its reserves and restate some of its financial statements in November. Since then, board member and former CEO D. Peter Canty has resigned, the Securities and Exchange Commission has launched an informal inquiry, and the Philadelphia Stock Exchange also is conducting an inquiry regarding trading activity prior to Stone's reserves announcement.
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