The former CEO of Enterprise Products Partners LP is forming a new private midstream partnership with the backing of Kayne Anderson Energy Funds. Robert G. Phillips, who was president, CEO and a director of Enterprise Products Partners — one of the largest publicly traded midstream partnerships in the country — will head Crestwood Midstream Partners LLC. Phillips was chairman of the general partner of GulfTerra Energy Partners LP until September 2004 when the company merged with Enterprise; he resigned from Enterprise in May. Crestwood, to be based in Houston, will begin with a total equity commitment of $150 million from Kayne Anderson. Kayne Anderson Energy Funds manages $1.85 billion of capital for investment in the energy industry, and it invests private capital in high-growth midstream, exploration and production and oilfield services companies.
Rapid City, SD-based Black Hills Corp. announced that the Wyoming Public Service Commission (PSC) granted rate increases to its Cheyenne Light, Fuel & Power utility, authorizing hikes of $4.4 million and $6.7 million for natural gas and electric retail rates, respectively. The new rates are effective Jan. 1. Capital investments approved in the decision will allow the expansion and maintenance of both the gas and electric distribution systems, the company said. This will help the Cheyenne utility take care of continued population and demand growth in its service area. The increase includes authorization for a 10.9% return on equity, with a capital structure established at 54% equity and 46% debt. The new electric rates include putting into its rate base the company’s 90 MW coal-fired Wygen II generation plant that is now in what Black Hills called “the final stages of construction and testing.”
Citing an increase in its wholesale natural gas prices, San Francisco-based Pacific Gas and Electric Co. (PG&E) forewarned customers that winter gas bills are headed upward with the December retail bills estimated to be 5% higher than the same month last year. December’s wholesale gas prices were up 14.5% at 8.82 cents/th, compared with 7.70 cents/th in November, the utility said. PG&E said gas prices across the United States have increased since November as customer demand has followed a typical eve-of-winter pattern. PG&E added the caveat that gas prices this winter could rise or fall, depending on factors such as “weather and market conditions,” but it has worked to protect customers from severe price spikes through smart purchasing decisions, financial hedging against price spikes, and using its extensive pipeline and storage infrastructure to help lower gas purchase costs. The utility said it is again is offering customers several options to try to manage their winter gas costs. They include rebates on more efficient equipment, and the 10/20-Plus Winter Gas Savings program offering customers 20% discounts on their next monthly bill when they reduce usage in the previous month by at least 10%. The utility also offers various financial assistance options to help eligible customers with high winter gas bills that can be found on the utility website under “winter” www.pge.com.
Transcontinental Gas Pipe Line (Transco) filed an application at FERC to build a pipe and compression expansion of its system in Pennsylvania and New Jersey to serve natural gas markets in the Northeast. The Sentinel expansion would increase Transco firm transportation capacity by 142,000 Dth/d, said Transco, a subsidiary of Williams. Phase 1 of the project would provide 40,000 Dth/d by a target date of Nov. 1, 2008, while Phase II would provide 102,000 Dth/d of additional capacity by Nov. 1, 2009, the company noted. The proposed expansion would increase total system capacity on the 10,500-mile Transco pipeline to about 8.3 Bcf/d. Transco said the expansion is designed to meet the needs of various customers in the Northeast region, particularly utility companies and electric generators. The project calls for the addition or replacement of approximately 18 miles of pipe at various locations in Pennsylvania and New Jersey, as well as compressor facility modifications at Station 195 in Delta, PA. Transco said it plans to build four new sections of pipe (loops) and replace an existing segment of pipeline. The pipeline expects to begin construction of the Phase I facilities in the summer of 2008, and the Phase II facilities in spring 2009.
In the midst of a proposed merger with a consortium of private equity firms in which rates were deemed unaffected, Bellevue, WA-based Puget Sound Energy (PSE) filed a $231.3 million general rate case with the Washington Utilities and Transportation Commission. The primary reason cited for the filing was large infrastructure investments by PSE this year and last year that it needs to recover in future retail natural gas and electric utility rates. PSE’s filing asks for the new rates to be effective Nov. 1 next year. If approved as requested, the rate hikes would mean a $174.5 million, or 9.5%, boost in electric rates, and a $56.8 million, or 5.31%, increase in natural gas rates. The Puget Energy utility said a typical general rate case takes 11 months to process by the Washington state regulators. In announcing its proposed merger with a consortium of private investors led by Macquarie Infrastructure Partners last October, PSE CEO Stephen Reynolds and his Australian-led private investment partners said they wanted to create a “sustainable model” for the energy industry to allow electric and natural gas utilities to come up with staggering new capital funding levels to meet future infrastructure needs. Reynolds specifically said the deal would not require any change in the rates for PSE.
DTE Energy has agreed to sell a portion of its Barnett Shale natural gas properties in Texas to an undisclosed third party for $260 million. The properties include 153 Bcf of proved and probable reserves on 11,000 net acres in the core of the play. DTE, which is based in Detroit, agreed in May to sell all of its Antrim Shale gas properties in Michigan to Atlas Energy Resources LLC for $1.225 billion (see NGI, May 28). The company in 2006 restructured its nonutility operations to simplify its earnings structure and redeploy cash for its utilities and midstream operations (see NGI, Nov. 13, 2006). The company has retained 44,000 acres in the western part of the Barnett Shale for “continued development.” It has 108 gross producing wells on its western Barnett acreage, primarily in Jack, Erath and Parker counties in Texas. The transaction is expected to close in January.
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