Baker Hughes and Schlumberger plan to create a new seismicventure called Western GECO that would combine and own the seismicacquisition assets, data processing assets, and multi-clientseismic libraries and other assets of their existing subsidiariesWestern Geophysical and GECO-Prakla. The transaction is expected tobe completed before the end of the year and is subject toregulatory approvals. Upon formation of the venture, Baker Hugheswould receive from Schlumberger $500 million in cash. Thetransaction would also allow Baker Hughes to make certain workingcapital and asset reductions valued at $100 million. Baker Hughesand Schlumberger would own 30% and 70% of the venture,respectively. The companies have made filings under theHart-Scott-Rodino Antitrust Improvements Act of 1976, and areresponding to requests for additional information from theDepartment of Justice. In addition, Baker Hughes and Schlumbergerintend to make additional filings with regulatory authorities incertain European and other countries.

Peabody Group, the world’s largest coal company, sold itsCitizens Power unit to a subsidiary of Edison International, aswell as selling its third-party power contracts. Peabody, owned byLehman Merchant Banking Partners, is expected to net about $100million from the two transactions, using the money to pay downdebt. Citizens Power, one of the top 10 power marketers in theUnited States, traded 92.3 MM MW hours in 1999. It will be mergedinto an Edison Mission Energy subsidiary, Edison Mission Marketing& Trading (EMMT). Edison Mission Energy (EME), a merchant powerplant, has more than 13,200 MW, and the merger is consideredpivotal to improving EME’s marketing capabilities in U.S. powermarkets. “Edison Mission Energy has developed a strong generationpresence in several of the most attractive U.S. power markets,”said CEO Alan J. Fohrer. He said the merger should give EMMT acompetitive advantage. EMMT will be based in Boston, and willoperate in the former Citizens Power headquarters there. CitizensPower President Mark Maisto will continue run the company.

PG&E Corp.’s National Energy Group entered into an agreementwith Duke Energy North America to purchase the company’s AttalaEnergy facility. Attala is a 500 MW natural gas-fired merchantgeneration plant located in central Mississippi. The plant which isstill under construction, is expected to be in commercial serviceduring the summer of 2001. The plants output will be delivered intothe Entergy wholesale market. “This purchase makes us an early andwell-positioned entrant into the region’s power market,” said GregKelly, vice president Marketing and Business Development of theNational Energy Group’s Eastern Region. The companies expect theacquisition to be completed by the end of September pendingregulatory approval.

Conoco and online trading firm HoustonStreet Exchange are in theprocess of forming a joint venture to design, develop and market aweb-based version of Conoco’s automated mid and back office energytrading activities for the global energy market. The new venturewill develop technology based on Conoco’s existing Crude OilInformation Network (COIN), an automated service which providespricing, contracting, scheduling, settling and benchmarking ofphysical crude oil trades. The companies believe that theautomation process can save energy companies a sizeable amount ofmoney. HoustonStreet will help develop COIN into an online programthat will be available on the web through an application serviceprovider. The name of the joint venture will be released at a laterdate.

The Georgia Public Service Commission voted 5-0 last Tuesday tocrack down on marketer billing problems by issuing a Notice ofProposed Rulemaking that would not hold customers to payments onbills that are more than 90 days late. The NOPR also would requirethat bills be 90% accurate and list charges in a uniform fashion.The commission received more than 3,000 complaints about billingjust during the month of August. Billing problems also have beenbehind several retail marketer bankruptcies in the state. The PSCinvites pubic comment on the NOPR, which is available on theInternet at the PSC’s web site: https://www.psc.state.ga.us/. Afinal vote on the matter is scheduled for November.

North Carolina Natural Gas, a subsidiary of CP&L Energy, isselling its propane operation to Jenkins Gas and Oil Co., NorthCarolina’s largest independently-owned propane gas company with35,000 customers. NCNG’s propane division totals nearly 12,000.

St. Louis, MO-based AmerenEnergy Marketing entered into a powersupply agreement with the not-for-profit Illinois Energy Consortium(IEC). The consortium supplies power for schools, colleges anduniversities. IEC acts as an aggregator of retail electric loads,and disperses the savings between its members. 500 schoolfacilities and 120 school districts throughout southern and centralIllinois are covered under the agreement which will go into effecton Sept. 18.

Denver-based independent Western Gas Resources Inc. said itwould sell its Arkoma gathering system for $10.5 million to anundisclosed buyer. The system consists of 74 miles of gas gatheringlines in the Arkoma Basin of eastern Oklahoma, and gas throughputvolumes averaged 11 MMcf/d for the first six months of 2000.Western said it would recognize an after-tax gain on the sale ofnearly $4 million, or $0.12 per share of common stock for the thirdquarter of 2000.

TradersNews Energy, based in Houston, launched a wholesale powerindustry hourly pricing index for the Cinergy trading hub. Theindex was developed in response to traders’ requests for ways tohedge their risks against the market’s volatility. The first ofseveral hourly indices is expected to become a benchmark forfinancial hourly trading and for hedging instruments such as swapsand spreads. The TNI also will allow traders to extrapolatelong-term pricing and determine power replacement costs. The indexwill track the range and weighted average price of trading done foreach on-peak hour, Monday through Friday. If no trades are reportedfor an hour, “indicative” pricing, derived from the tightestbid/ask spreads for that period, will be provided. The index isavailable at www.tradersnewspower.com.

Koch Energy Trading’s new web site KochEnergy.com went live,offering a wide range of features and in-depth information toselect Koch customers. “KochEnergy.com provides customers withinsight into the energy markets through a wide range ofinformation,” said Rob Smith, e-commerce leader for Koch EnergyTrading. “The goal of this site is to enhance our customers’decision-making process on energy risk management strategies.”Digital services provider Delinea helped in constructing the site.The company’s customers will be able to access trade information,including hedge analysis designed by Koch. Customers also will beable to study and evaluate the effectiveness of different hedgingstrategies. The web site also will feature selected OTC prices fromKoch Energy Trading, weather forecasts from Koch’s meteorologists,real-time news feeding on various topics, charting tools to viewthe proprietary historical price archive of Koch Energy Trading andreal-time energy prices from NYMEX.

CMP Group, the parent company of Central Maine Power Co., saidthat Energy East Corp. completed its $1.2 billion buyout of theMaine utility company. The U.S. Securities and Exchange Commission,the last governmental agency whose approval was required, signedoff on the deal last Thursday. Under the agreement, Energy Eastpurchased all CMP’s common stock for $29.50 a share and assumed$271 million in preferred stock and long-term debt. The merger wasannounced in June 1999. Energy East has about two milliondistribution customers, including 1.4 million electric customersand 600,000 natural gas customers.

Conectiv sold a portion of its Conectiv Services unit to UGICorp. The sale involves the commercial and residential servicesunits located in southeastern Pennsylvania and northern Delaware,which employ 460 people. Terms of the sale were not disclosed. Themove continues Conectiv’s previously announced plan to exitbusinesses it no longer considers strategic, seek a partner for itstelecommunications business and its plan to focus on its corebusinesses. In July, Conectiv announced the sale of its ConectivThermal joint ventures in California and Nevada and the MechanicalDivision of Conectiv Services. Conectiv acquired a total of 21firms with annual revenues of $140 million since 1996 as part ofits efforts to build Conectiv Services into a full-service heatingand cooling business. UGI’s ongoing objective is to grow earnings6%-10% per year, increase its dividend 3% per year, grow itsdomestic AmeriGas Propane and utility operations and invest inrelated and complementary businesses. The company has continued toinvest in its regional gas marketing and HVAC service businessesand in European propane distribution.

With winter fast approaching, the Ohio Consumers’ Council (OCC)is advising residential consumers that increased cost in naturalgas pricing will correspond to higher monthly bills. The council isalso informing consumers that taking part in a natural gas choiceprogram may help consumers to save money. “If there ever was a timeto shop for a natural gas supplier, this is it,” said Robert S.Tongren, OCC. Although prices from an alternative supplier will behigher than previous years, consumers still have the opportunity tobeat the price offered by their local natural gas utility.” Ohio’sresidential customers are invited to call 1-877-PICKOCC to learnmore about customer choice programs from companies such as ColumbiaGas, East Ohio Gas and Cincinnati Gas and Electric.

Shiningbank Energy Income Fund, based in Calgary, said it hadentered into an agreement to acquire a package of long-life naturalgas producing properties and undeveloped land in west-centralAlberta for US$47.7 million. Current daily production from theproperties is estimated to be 9 MMcf of gas and 250 BOE and naturalgas liquids for total daily production of 1,750 BOE. All of theacquired gas production will be sold on the spot market, bringingShiningbank’s gas sales portfolio to about 45%. The propertiesinclude a mix of operated and non-operated assets in Dunvegan,Belloy, Anselmo, Barrhead and Penhold areas. Shiningbank alreadyowns working interests in the Anselmo and Penhold properties, andhas adjacent operations at Barrhead. Also included in theacquisition is an estimated C$2.9 million of undeveloped land -about 33,000 net acres – in west-central Alberta.

The Los Angeles Department of Water and Power (LADWP) will beproposing the largest incentives for energy-efficiency programs incity history to help reduce peak load next summer. Upon review bythe city council, LADWP proposes to offer incentive payments of upto $400 per kWh of energy savings to commercial and industrialcustomers who install high-efficiency chiller units by June 2001.The $14 million program also would boost incentives for installingheating and lighting systems from $250 to $400.

The Federal Energy Regulatory Commission changed the date of itspublic meeting on California’s power market woes to Sept. 12. Themeeting will be held at 9 a.m. at the San Diego Concourse in theCopper Room , 202 C Street in San Diego, ground zero for the powermarket problems in California. The meeting will allow interestedparties to state their views on the market situation in California.Additional information is available from FERC’s Office of ExternalAffairs at (202) 208-0870 and the Commission web site:www.ferc.fed.us.

TXU Electric, a wholly owned subsidiary of TXU, received apartial ruling from the Texas District Court of Travis Countyregarding its appeal of a financing order of the Public UtilityCommission of Texas (PUCT). The PUCT order authorizessecuritization of regulatory assets under Senate Bill No. 7, Texaslegislation that restructures the electric industry and authorizesretail competition. Securitization of regulatory assets is a tooladopted by the bill to provide a low-cost way for the electricindustry to transition to a competitive environment. The districtcourt gave a partial ruling reversing that part of PUCT’s financingorder that used regulated asset life (up to 40 years) for purposesof present-valuing the benefits of securitization. The court ruledthat present-value period based on asset life did not conform tothe applicable statute. Instead, it believed that a present-valueperiod based upon stranded cost and regulatory asset recoveryperiod should have been used by PUCT. The court did not set a valueperiod to be used, but said that PUCT could, for example, use thealternative 12-year discounting period contained in its financingorder with the amount to be securitized by TXU Electric increasedto $1.3 billion from $363 million. A final ruling from the court isdue Sept. 5.

Southern California Edison (SCE) in an attempt to ease the powercrunch this summer, settled on an agreement with Thermo Ecotek thatwill allow the utility to lease and return to operation a 120 MWnatural gas-fired power plant that currently sits idle. SCE plansto have the plant fully operational by early September to help withthe late summer demand peak. “We’re trying to do everything we canto bring solutions to the power supply dilemma in California,” saidStephen E. Frank, CEO of SCE. “That includes exhausting localalternatives, negotiating new agreements, and effectively managingevery available generating asset that can benefit consumers.” The”standby” plant was operated by Massachusetts-based Thermo Ecoteklast summer, but has been idle this entire summer to date.

Minnesota Power has started doing business as Allete, a name thecompany says better reflects its evolution from a utility to a morediversified corporation. The company’s regulated electric businesswill continue to be called Minnesota Power. “With diverse,profitable and growing businesses operating in 39 states and eightCanadian provinces, we are clearly more than Minnesota and morethan power,” said Chairman Ed Russell.Shareholders will be asked toformalize the name change during the company’s annual meeting nextMay 8. The company will begin trading on New York Stock Exchangeunder the ticker symbol ALE.

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