Public Service Co. of New Mexico (PNM) is warning its customers of potentially higher natural gas prices this winter, anticipating a continued steady rise in wholesale costs that the Albuquerque, NM-based combination utility has seen since last spring. Compared to last winter when prices never exceeded 28 cents/therm, PNM said they could range between 35 and 50 cents/therm this winter. The utility said it has hedged against gas price spikes by buying most of its supplies on a longer term, fixed-price basis. The supply portfolio saved its customers about $27 million in the price-spike period of winter 2000-2001, a PNM spokesperson said. Energy prices generally could rise considerably if the winter is colder-than-normal, the utility spokesperson said. And another factor bidding to influence price is the situation in the Middle East. If the U.S. is at war there, prices could be increased substantially. In preparation, PNM is urging it customers to take various energy-saving steps to mitigate against winter price spikes.

Duke Energy last Wednesday priced its public offering of 54.4 million shares of common stock at $18.35 per share. The public offering, first announced early Wednesday, is expected to raise approximately $1 billion in gross proceeds, and will be used to repay a short-term unsecured loan for the $8.05 billion purchase of Canadian pipeline operator Westcoast Energy completed earlier this year. The common stock is expected to be issued Oct. 1 under the company’s existing shelf registration with the Securities and Exchange Commission. Duke also will grant the underwriters an option for up to 30 days to purchase an additional 8.175 million shares of common stock to cover over-allotments. Net proceeds would repay commercial paper incurred by financial subsidiary Duke Capital Corp. for the Westcoast purchase. The sole book running lead manager for the offering will be Morgan Stanley & Co. Inc.

Calgary-based Canadian Superior Energy Inc. kicked off a major gas drilling initiative designed to bring in supply from several newly established areas of northwestern and west-central Alberta and northeastern British Columbia. Company President Greg Noval said drilling will begin later this week on 25 wells in the Ladyfern, Chinchaga and Pine Creek areas of Alberta. Further drilling in Alberta will also take place in the Giroux Lake, Windfall, Boundary Lake and Bison Lake areas. In northeastern British Columbia, high-impact exploration is also planned for the Umbach, Altares and Parkland areas, where the company has acquired acreage over the last several months. “The new drilling program is targeting reserve based accumulations of Cretaceous, Jurassic and Devonian natural gas and it is geared toward providing the company with substantial new production volumes at attractive prices, given the recent significant drop in rig utilization and oil field service cost in Western Canada,” Noval said. The multi-well drilling program in Western Canada will complement the company’s strategy of developing large holdings offshore Nova Scotia.

Western Gas Resources completed the sale of the Toca natural gas processing plant and natural gas liquids fractionator in St. Bernard Parish, LA, to an affiliate of Enterprise Products Partners LP for $32.2 million in cash. The processing plant has a capacity of 160 MMcf/d and the fractionator can separate 14,200 b/d of mixed natural gas liquids into propane, normal butane, isobutane and natural gasoline. The purchase also includes storage and truck, rail and barge loading facilities, which support the complex. Western does not expect to recognize a material gain or loss on the sale. The proceeds will be used initially to reduce amounts outstanding under the company’s revolving credit facility.

Reliant Energy Inc. established 0.79 as the distribution ratio for the previously declared distribution of Reliant Resources Inc. common stock to the shareholders of Reliant Energy. Holders of record of Reliant Energy common stock as of Sept. 20 will receive 0.79 of a share of Reliant Resources common stock for every share of Reliant Energy common stock they own. Distribution of the Reliant Resources stock will be the final step in Reliant Energy’s separation into two companies. As part of the separation, Reliant Energy already has reorganized into a new holding company, CenterPoint Energy Inc., which will continue to conduct business under the Reliant Energy name until the spin-off is complete.

Houston-based Vector Energy Corp. said it is currently reviewing its inventory of behind pipe reserves to determine the best candidates for enhancement. “I believe our first project may be our Wilson Lease in Nueces County, TX,” said Sam Skipper, CEO of Vector. “This lease has not been a consistent producer for us in recent months, but a review of the lease indicates that with an expenditure of less than $10,000 we could very easily increase production to the range of 300 to 500 Mcf/d. I anticipate performing this work within the next two to three weeks as weather and equipment availability permit.” The company said it continues to work toward commencing production at Mustang Island, which could begin as soon as next week or be delayed for as much as ninety days depending on the approval process.

South Jersey Industries‘ deregulated subsidiary, South Jersey Energy (SJE), said that the company has reached 60,000 residential customers, far surpassing its 2002 year-end goal. The company has increased its customer base by 88% since the end of 2001 when it reported 32,000 residential customers, making it the most successful energy marketer in New Jersey. SJE President Edward Graham cited many factors to explain the company’s “explosive” growth. “Consumers are attracted by the guaranteed savings we offer on their utility bill,” said Graham. “With the heating season approaching, consumers will be looking for ways to save money on their energy costs. This is why we continue to add between 500 and 1000 new customers every week.” He added that consumers who choose SJE as their natural gas supplier save on average about $40 each year on their heating bill.

Betting that wholesale natural gas prices will be lower in the upcoming winter heating season, Avista Corp.’s utilities have asked Idaho regulators to decrease natural gas rates for its 59,000 customers in the state by an average of 15.5%, effective Nov. 1. It would be the first decrease for Avista gas utility customers in the state since 1997, following six rate increases that collectively more than doubled the average bill for residential customers over the period. Avista, based in Spokane, WA, said it also plans to file a gas rate decrease for its customers in its headquarters state of Washington. Earlier, it filed for two gas decreases in Oregon totaling 22.3% and one in California for 16.2%. The utility said that if the Idaho Public Utilities Commission grants the decrease as outlined, residences and small businesses will see about a $10/month drop in their bills, or about 15%. Large commercial customers will get slightly larger decreases in the 16.4% to 17.3% range. Avista said its overall gas revenues from Idaho will drop by about $10 million annually. Overall, Avista said it is still under-collected by about $8.7 million for past wholesale gas costs, but that the figure has come down substantially from last year when it stood at about $22.3 million due to the wholesale price spikes of early 2001. Longer term, the company warned, however, that natural gas retail rates may not continue to go down because the company expects a spike upward in wholesale prices in the winter of 2003-2004.

Cleco Corp., which serves more than 200,000 customers across Louisiana, said Tuesday it will cut up to 200 of its 1,350-member workforce as part of an overall plan to strengthen its position ” in an industry defined by continuing low power prices and weak demand.” The staff reductions in the Pineville, LA-based company will be achieved through a combination of “enhanced retirement” and severance packages, Cleco said in a statement. The reductions also will require a one-time restructuring charge in the fourth quarter; the total charge “will depend upon the ultimate mix of enhanced retirement and severance costs,” it said. “The prolonged and unprecedented downturn in the power industry required us to make some tough decisions,” said CEO David Eppler. “We are taking the necessary steps to reassess our company’s direction and redesign our organization in order to best protect and grow our shareholders’ value.” Eppler explained that the energy services company’s immediate focus will be on growth in the wholesale generation business to extract value from existing plants. Besides its regulated utility, Cleco also operates a non-regulated midstream energy business with approximately 2,100 MW of capacity.

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