El Paso Corp. has hedged almost 75% of its projected natural gas production at a Nymex price of $3.85/Mcf ($3.63/MMBtu) for September through December. Next year, about 60% of its production will be hedged at $4.19/Mcf ($3.95/MMBtu), and in 2003, about 35% is hedged at $4.19/Mcf ($3.95/MMBtu). The Houston-based company expects that its realized natural gas price will be about 30 cents/Mcf less than the Nymex price because of transportation costs and regional price differences. In an earnings update, the company estimated that a 10-cent change in the annual spot price for natural gas in 2002 would result in only a $0.02 per share change in earnings, adding it "remains comfortable with existing earnings guidance" putting it at $3.30/share this year. A 15% earnings increase is expected in 2002. The earnings are in line with First Call/Thomson Financial estimates of $3.33 a share this year and $3.84 in 2002.
Without admitting guilt, Spokane, WA-based Avista Energy has agreed to pay $2.1 million to settle charges that it manipulated prices on electricity futures contracts at the New York Mercantile Exchange. Two traders also were fined $160,000, the U.S. Commodity Futures Trading Commission (CFTC) said Tuesday. The CFTC launched an investigation into the Avista Corp. subsidiary last year concerning price manipulations that allegedly occurred more than two years ago. Thomas Johns, Avista Energy's former vice president of trading, and Michael Griswold, a former energy trader, consented to the entry of an order that settled the investigation, CFTC said. The CFTC imposed cease and desist orders against Avista Energy, leveling a $2.1 million civil penalty against the company. Griswold was ordered to pay a $110,000 fine, while Johns was ordered to pay a fine of $50,000. The CFTC also imposed an 18-month trading ban on Griswold and a 12-month trading ban on Johns. Avista Energy, Griswold and Johns also agreed to cooperate in any further investigations and proceedings related to additional investigations. Still to come is action on a 10-count complaint against William H. Taylor of Houston, Avista Energy's former vice president of trading strategies; Robert S. Kristufek of Chicago, a former Avista Energy trader; and Anthony J. DiPlacido of Bellmore, NY, a Nymex floor broker. CFTC has charged them with participating in the manipulative scheme, and a public hearing will be held on those charges. Copies of the complaint and the orders are found on the CFTC web site at www.cftc.gov.
Calgary-based TransAlta, which set a 15% return-on-equity requirement for its non-regulated businesses, has sold a gas-fired generating plant located near Fort Nelson, BC to BC Hydro for $13.3 million (C$20.5 million). TransAlta commissioned the plant in April 1999, and the entire 45 MW output was already contracted to BC Hydro. TransAlta, Canada's largest non-regulated electric generation and marketing company, set its return-on-equity requirement to remain a low-cost operator, said Ian Bourne, CFO. He said the Fort Nelson plant did not meet the company's expected returns, "nor have the medium-term prospects to do so." Bourne added that the sale's proceeds will be used to finance other projects, but he did not elaborate. Pending regulatory approval, the Fort Nelson plant sale is expected to close early next year.
Capstone Turbine Corp., based in Chatsworth, CA, lowered its third quarter sales expectations for its 30 kW and 60 kW microturbine units, with CEO Ake Almgren noting that a "large portion" of its sales occurred in the last half of the second quarter, with the "trend appearing to continue in the third quarter." Almgren said Tuesday that it was difficult for the company to forecast the level of sales in the third quarter, and said "we have not yet begun to see a pickup in our order flow like we experienced in the latter part of the second quarter." He added that sales in the first half of the third quarter, which ends Sept. 30, have "lagged substantially" behind previous quarters. The third quarter results will be announced Oct. 25. "We believe our microturbines do provide an attractive economic proposition for many of our potential customers in California and elsewhere, in light of the relatively high utility electricity rates that are being projected for the future," Almgren said. "But during a period of economic slowdown, the capital investment required to achieve those benefits may have become a more significant factor for some customers...Over the long term, we remain optimistic about our prospects for growth."
The North American-based subsidiary of Tractebel SA, headquartered in France, said Thursday it has begun construction on two gas-fired power plants with 1,225 MW of total generating capacity in the states of Washington and Texas, with both expected to be online by 2003. Tractebel Project Development Inc., based in Houston, plans to build the $360 million Chehalis Power Project on a 31-acre site in Lewis County, WA, which is halfway between Seattle and Portland, OR. The 550 MW natural gas facility will use a multiple cell air condenser to minimize water use, and energy generated will be sold directly into the Northwest Power Pool. The $350 million Wise County Power Project, a 720 MW combined-cycle gas facility, will be built on 15 acres of a 272-acre site near the Dallas/Fort Worth Metroplex, and will serve North Texas.
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