Consolidated Edison (Con Edison), which was awarded a $439,999 pipeline safety research contract by the U.S. Department of Transportation (DOT), will work together with Witten Technologies and Electromagnetic Instruments to develop a 3-D digital mapping system for identifying steel and plastic underground equipment, and detecting leaks. Commissioned by Con Edison, Boston-based Witten produced underground images of lower Manhattan in August 2001 and January 2002 through a ground-penetrating technique called radar tomography. A piece of equipment similar to satellite radar is placed on the back of a truck, which drives directly over the site taking 3-D pictures of utility infrastructure six feet below the surface. Con Edison’s research contract is one of seven awarded by DOT, totaling $1.6 million. Additional DOT awards for a second phase of the program are pending.

With its transmission assets no longer considered vital to its growth, Detroit-based DTE Energy agreed to sell subsidiary International Transmission Co. (ITC) for $610 million in cash to affiliates of Kohlberg Kravis Roberts & Co. (KKR) and Trimaran Capital Partners LLC. ITC owns DTE’s system of nearly 3,000 miles of high-voltage electric transmission lines and associated facilities and easements. These transmission assets were formerly owned and operated by Detroit Edison, DTE’s electric utility subsidiary. Under the terms of the pending agreement, ITC will seek Federal Energy Regulatory Commission approval to cap the transmission rates charged to Detroit Edison’s customers at the current levels until Dec. 31, 2005; thereafter, such rates will be subject to adjustment by FERC.

Certain features unique to the Pacific Northwest specifically need to be customized within the wholesale electricity market to be managed effectively by the standard market design (SMD) changes envisioned by FERC, according to a report by Standard & Poor’s (S&P). Analyst Swami Venkataraman, based in San Francisco, said the key differences between the Pacific Northwest and the Mid-Atlantic states will make the implementation of the SMD difficult. Through FERC’s SMD, Northwest utilities would no longer “enjoy the firm, fixed-price, long-term transmission rights that they currently procure from the Bonneville Power Administration, and others,” although Order 888 contracts “are likely to be grandfathered.” With the current system, Northwest utilities have firm, fixed-price transmission contracts for their native load and “generally rely on the OASIS system for short-term transmission needs only. Moreover, both are available under fixed FERC-approved tariffs. Thus, utilities in the Northwest enjoy low-cost hydropower, as well as fixed-price transmission access.”

The Public Utilities Commission of Ohio (PUCO) last week signed off on Vectren Energy Delivery of Ohio’s (VEDO) selection of Interstate Gas Supply Inc. (IGS) as the alternative natural gas supplier for the company’s Percentage of Payment Plan (PIPP) customers. In August, the commission approved the implementation of the VEDO natural gas customer choice program, which allows customers to purchase natural gas from a competitive supplier at an agreed upon price with Vectren continuing to deliver the gas to their home or business (see NGI, Sept. 9) . The program also allows for customers to join governmental aggregating groups, which pool residents together to negotiate a better natural gas rate. As part of the original approval of the program, PUCO directed Vectren to find an alternate provider for their PIPP customers. In compliance, Vectren bid out its PIPP customer class on an aggregated basis. Through a formalized process, Vectren solicited proposals from suppliers to deliver natural gas to VEDO on behalf of the PIPP customer class. Vectren acknowledged that IGS was the sole bidder. The agreement began Dec. 1 and will terminate March 31, 2003. Vectren filed an application at the commission in late June for permission to create the customer choice program. Under a phase-in approach to ensure that the necessary business systems and information technology are in place, 45,000 customers (15%) will be eligible for participation in the choice program beginning Jan. 1, 2003. On April 1, 2003, 100,000 customers (33%) will be eligible for participation. On Sept. 1, 2003, 100% of the service territory will have the option of choosing a competitive marketer.

Plains Resources Inc. formally approved the previously announced tax-free spin-off of its oil and gas exploration and production business, Plains Exploration & Production Co. (PXP), and established Dec. 11 as the date on record for the spin-off. Under its spin-off plans, Plains Resources will distribute 100% of the shares of the common stock of PXP, on a pro rata basis, to Plains Resources’s stockholders as of the record date. Plains Resources stockholders at the end of trading Dec. 11 will automatically participate in the distribution. The effective date for the distribution will be December 18. Going forward, PXP has been approved to list its shares of common stock on the New York Stock Exchange under the symbol “PXP”. Plains Resources will continue to trade on the New York Stock Exchange under its existing symbol “PLX”. On the distribution date of Dec. 18, each Plains Resources stockholder will receive one share of PXP common stock for each share of Plains Resources common stock held as of the record date. Immediately prior to the distribution, Plains Resources will make a $40 million capital contribution to PXP and repay a $7.2 million note payable to PXP. The net effect is expected to be a $47.2 million increase in PXP’s stockholders equity and a commensurate reduction in its bank debt, Plains Resources said. After the spin-off, PXP will be an independent oil and gas company primarily engaged in the upstream activities of acquiring, exploiting, developing and producing oil and gas in its core areas of operation: onshore California, primarily in the Los Angeles Basin, and offshore California in the Point Arguello unit, and the Illinois Basin in southern Illinois.

©Copyright 2002 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.