FERC Chairman James J. Hoecker said the Commission will open anew office, called the Office of Energy Projects, which will havethe engineering and environmental expertise to certificate new gaspipelines and authorize and monitor hydroelectric projects. The newoffice will include the functions formerly conducted by the Officeof Hydropower Licensing and most of the certification functions ofthe Office of Pipeline Regulation. Another new office, the Officeof Markets, Tariffs and Rates (OMTR), also will handle some of thecertification duties. “Energy Projects and Markets, Tariffs andRates effectively represent two major and distinct areas of theCommission’s technical expertise and statutory responsibility,”Hoecker said, adding that Energy Projects will focus on siting andenvironmental aspects of projects while OMTR will focus onpromoting competition and protecting against market power.

Chevron Corp. warned investors yesterday that its second quarterearnings will take a hit from severance costs and a recent fire atits Richmond, CA, refinery. CEO Kenneth Derr said the fire wouldshave $100 million from second quarter earnings and the companywould eat $150 million because of severance charges. Chevron iscutting 2,500 jobs, or about 7% of its workforce, as part of a$500 million cost-reduction initiative launched during the fourthquarter of last year that is expected to be completed by the end ofthis year. Derr, however, said he expects significant productionimprovements this year and an improving return on capital. Chevronexpects to meet its volume growth targets of 8-9% for internationalliquids and 4-4.5% for worldwide production on an oil equivalentbasis. The production growth will help it meet the 12% return oncapital employed that Chevron expects will put it in the No. 1position among its peers in total shareholder return over the nextfour years. The company recently broke off merger talks with TexacoInc. but Derr said the company remains on the watch for key assetsand will be able to compete effectively against the “supermajors”by increasing production and reducing costs.

The Reliant Energy Wholesale Group signed an agreement to sell60 MW of capacity and energy to the Alabama Electric Cooperative.The power will be supplied from the Sabine cogeneration plant,which is under construction near Orange, TX. Sabine is ownedjointly by Reliant Energy and Air Liquide America Corporation. Inaddition to producing electricity, the facility will providevirtually all of the power and steam needs for Bayer Corporation’ssynthetic rubber manufacturing facility in Orange. The project isscheduled for completion in October. The power sales to AEC willbegin Jan. 1, 2000 and continue for three years. Energy sales plusdemand charges for this transaction are estimated at $40 millionover the three-year period. AEC, headquartered in Andalusia, AL, isa generation and transmission cooperative providing wholesaleelectricity to 21 member owners in 39 counties in South and centralAlabama and 10 counties in Northwest Florida. Members distributeenergy to more than 340,000 residential, commercial and industrialcustomers.

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