Industry Briefs

Maritimes & Northeast Pipeline LLC signed an agreement with Newington Energy, an affiliate of Consolidated Edison, to provide natural gas transportation service to a 525 MW power plant currently under construction in Newington, NH. Newington Energy broke ground on the natural gas-fired facility in September. Maritimes plans to construct and operate gas transmission facilities, including interconnecting piping and metering, from the existing lateral pipeline on Newington Energy's property to the plant. When the plant is completed in 2002, it will generate enough power to supply electricity to more than 700,000 homes in New England.

California's population increased to 34,818,000 on Jan. 1, according to new figures released by the state Department of Finance. The annual growth of 611,000 and 1.8% is a sizable increase over the previous year's growth of 574,000 and 1.6%. By comparison, Bangladesh's growth rate has dropped to 1.3%. "It's no wonder that we have energy blackouts," said Ric Oberlink, spokesperson for Californians for Population Stabilization (CAPS). "It's no wonder that we have horrendous traffic jams as well as sprawl that gobbles up open space and wildlife habitat." According to the California Energy Commission, per capita consumption of electricity in the state has been flat for over two decades. The average amount of power used by each person in the year 2000 was 7,368 kWh, almost identical to the 7,292 kWh used in 1979. Meanwhile, the state's population increased by over 10 million people --- a figure equal to the combined populations of Ireland, Uruguay, and Costa Rica. Total consumption of electricity in California increased almost 50% because the population increased by almost 50%. "Politicians want to blame anyone but themselves, but the simple fact is that it's more a matter of too many people, rather than not enough energy," Oberlink said. "A Stage 3 alert occurs when operating reserves drop below 1.5% --- a figure lower than the state's annual rate of population growth." The Department of Finance projects that California's population will grow to 60 million by 2040. Nearly all of the population growth in California is due to immigration. "Conservation is most definitely the primary short-term solution," said Oberlink. "But over the long term, we have to stop population growth. If we reduce consumption by 25% while our population grows by 25%, we're back where we started and we'll be faced with a choice between more blackouts or more power plants --- and the environmental destruction they cause."

Pure Resources Inc. announced last Wednesday that its subsidiary, Pure Resources II Inc., has successfully completed its initial tender offer and subsequent offering period for all of the outstanding shares of Hallwood Energy Corp. common stock at a price of $12.50 per share and all the outstanding shares of Series A Cumulative Preferred Stock of Hallwood Energy at a price of $10.84 per share. As of May 15, Pure Resources reported that it had accepted for payment approximately 86% of Hallwood Energy's common stock and 81% of the company's Series A Cumulative Preferred Stock. Pure Resources first reported the $268 million acquisition of Hallwood Energy in early April. The companies said completion of the merger would occur as soon as practicable. Pure Resources is an independent exploration and production company that develops and produces oil and natural gas in the Permian Basin, the San Juan Basin, the Gulf Coast, and the Gulf of Mexico. Denver-based Hallwood Energy is a public oil and gas company with properties primarily located in the Permian Basin, the San Juan Basin, South Texas and onshore South Louisiana.

Covanta Energy Corp. reported that the California Energy Commission (CEC) has unanimously approved its application for certification on its proposed 500 MW Three Mountain Power project. The decision, which was announced at a CEC business meeting in Sacramento, CA, grants Covanta a license to construct and operate the natural gas-fired, combined cycle facility to be located in Burney, approximately 45 miles northeast of Redding, CA. Project construction is expected to begin in the fall of 2001, with commercial operations expected to commence in late 2003 or early 2004, the company said.

The U.S. Bankruptcy Court approved Pacific Gas and Electric Company's motion to confirm that the funds collected by the utility for public purpose programs, including energy efficiency, low income, research and development and renewable generation programs, are not part of the bankruptcy estate and can be used to honor pre-petition obligations incurred in connection with the programs. In addition the court also allowed the utility to pay its pre-petition portion of property taxes. Under the public purpose programs, the utility owes $37 million to consumers who have requested rebates and to contractors who have performed work in customers' homes and businesses to make them more energy efficient. The ruling ensures that the $260 million now in the energy efficiency accounts will be fully available for payments for these programs. As a result of the ruling, Pacific Gas and Electric will be able to immediately pay up to $41.2 million, its portion of property taxes prior to April 6, the day it filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The company's total property tax payment was $78.5 million, and it paid the post-petition portion of $37.3 million on April 10.

Calpine Corp. has entered into an agreement to build, own and operate a 1,030 MW natural gas-fired electricity generating facility to be located in Berrien, MI. The proposed Berrien Energy Center is Calpine's first Michigan development project and will represent an investment of more than $500 million, with a target commercial operation date of 2004. Calpine entered into the agreement with Boston-based CME North American Merchant Energy, which had initiated development efforts for the project. "The Berrien Energy Center further reinforces Calpine's presence in the East Central Area Reliability [ECAR] Council power market and adds a significant level of geographic diversity to our ongoing market area development efforts. The site offers excellent access to high-capacity electric transmission and a variety of options for natural gas transportation, which will help us optimize both power sales opportunities and cost-effective fuel procurement," said Calpine Senior Vice President Bob Alff. The Berrien Energy Center will use three advanced technology combustion turbines in combined-cycle with a single steam turbine, representing 800 MW of base load capacity, with the ability to produce up to 1,030 MW during periods of peak demand. The project will interconnect with American Electric Power's 345 kV transmission system and ANR's natural gas pipeline facilities. Berrien is Calpine's third announced development project in the large ECAR power market.

Calpine Corp. subsidiary Canada Power Holdings Ltd. (Calpine) has entered into a letter of intent to acquire and assume operations of two Canadian power generating facilities from British Columbia-based Westcoast Energy. Calpine will add 275 MW of strategic gas-fired generation to its Canadian power portfolio. It is proposing to acquire the facilities for US$255 million. The acquisition is expected to close in the third quarter. The assets include Island Cogeneration. Calpine will own a 100% interest and operate this 250 MW gas-facility in Campbell River, BC, on Vancouver Island, which is expected to start operation in June 2001; and a 50% stake in Whitby Cogeneration, which is a 50 MW facility located in Whitby, ON.

CMS Energy's marketing unit, CMS Marketing, Services and Trading (CMS-MST), signed long-term contracts to provide wholesale electric power supplies to six municipally-owned utilities in Michigan. The contracts cover $90 million worth of electricity over their term and require CMS-MST to supply the full electricity requirements of the municipal utilities in Bay City, Chelsea, Eaton Rapids, Hart, Portland and St. Louis, MI, over a five-year period beginning Jan. 1, 2002. The total peak electric demand for the six utilities in the first year is expected to be 100 MW. CMS-MST was chosen through a competitive bid evaluation following a request for proposals. The six municipal utilities together serve a total of 33,000 electric customers.

Tenaska Energy completed non-recourse project financing for the Tenaska Central Alabama Generating Station, an 885 MW combined-cycle, natural gas-fired generating plant. The facility, Tenaska's second in Alabama, is to be constructed in Autauga County, 35 miles northwest of Montgomery. Construction will begin in June, with operations expected in spring 2003. The Tenaska project has an energy conversion agreement with Coral Power LLC for the entire electrical production of the station near Billingsley, AL. Under the long-term agreement, the Tenaska facility will convert fuel owned and supplied by Coral into electricity, which Coral will market throughout the Southeast region's wholesale power market.

The Woodlands, TX-based Mitchell Energy & Development Corp. reported early last week that the previously announced secondary offering of Class A Common Stock has closed. Under the offering, founder and CEO George P. Mitchell sold 4,681,200 shares at $53.00 per share, including an over-allotment of 181,200 shares purchased by the underwriters. The move follows comments Mr. Mitchell made last Wednesday regarding interest in purchasing the company from potential buyers. Analysts said last week that with Mitchell selling some of his personal stock, the company would be more attractive to outside investors.

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