The D.C. Circuit Court of Appeals remanded Friday a FERC
decision approving a 20-year cap on bids for Tennessee Gas Pipeline
capacity that are considered under the net-present-value approach.
The Process Gas Consumers Group (PGC), which includes industrial
gas users, challenged the Commission order, arguing that it failed
to engage in "reasoned decision-making" by allowing the cap on the
NPV bids. ".....[W]e find FERC's reasoning on the cap to be
unpersuasive and largely conclusory," the court opined [No.
98-1075]. The court said it didn't "quarrel" with the goal behind
the Commission's approval of the NPV capacity-allocation method for
Tennessee, "but [we] remind FERC of its admitted need to balance
the goal with its duty to prevent exploitation of Tennessee's
monopoly power. FERC appears to have forgotten the latter....." PGC
also took issue with FERC's decision allowing Tennessee to apply
NPV to shippers attempting to change primary receipt and delivery
points, and the court agreed with industrials on this point. The
court ordered the Commission to "better explain or modify" its
approval of both issues.
Coastal Corp.'s exploration and production unit, Coastal Oil and
Gas Corp., announced Friday the acquisition of 31,000 net acres in
South Texas, Louisiana and Wyoming from an undisclosed seller. In
total the properties have a combined 98 wells that produce 26
MMcf/d. Most of the acreage is in South Texas. Added with Coastal's
recent purchase of Titan's Gulf of Mexico assets (see Daily GPI,
May 21), Dave Arledge, CEO of Coastal, said the company has
increased daily gas production by 7% over last year's figures.
Dominion Resources and Consolidated Natural Gas said an amended
joint proxy statement reflecting the revised terms of the merger
agreement was filed last Thursday with the Securities and Exchange
Commission. Dominion amended the terms of the original merger
agreement May 11, offering a mixture of stock and cash to provide
shareholders of Consolidated Natural Gas $66.60 in value. The
original transaction that had been agreed to in February offered
only stock. In addition, special meetings for both companies'
shareholders to approve the merger have been set for June 30. The
joint proxy also notes the post-merger business plan projects that
earnings per share for Dominion will increase 9%/year from an
estimated $3.31 in 2000 to $4.66 in 2004 for the combined entity.
The current annual dividend for Dominion is $2.58 per share.
Dominion's targeted payout ratio of dividends to earnings is
70%-75% and is expected to be achieved within two years after the
merger is completed.
Potomac Electric Power announced a reorganization of its
non-regulated subsidiaries into two major operating groups to
aggressively compete for new market share in the telecommunication,
electric, natural gas and energy services industries. As part of
the reorganization, a new unregulated company, Pepco Holdings,
Inc., was created as the parent of Potomac Capital Investment Corp.
and Pepco Energy Services, Inc. John McCallum, 49, was promoted to
CEO and President of Potomac Capital Investment Corp. Edward R.
Mayberry, 51, was promoted to CEO and President of Pepco Energy
Services, a newly created company that will serve as the parent for
Pepco Services and Pepco Connections, as well as three other newly
organized companies to be known as Pepco PowerChoice, Pepco
Building Services and Pepco Gas Services. This group of companies
will market energy products (electricity and natural gas) and
services (including energy efficiency contracting, consulting
services, construction management, and facilities operation and
maintenance) to current Pepco customers and to businesses and
institutions throughout the mid-Atlantic region.
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