Analysis

One of California’s most diligent economic analysis/forecasts published by the Los Angeles County Economic Development Corp. (LAEDC), a nonprofit economic development group with increasing statewide reach, indicated in its latest weekly economic outlook for the region and state that energy this summer could be a worrisome component of the state’s sagging economy. It particularly targeted the potential ill-effects of high natural gas prices, which could be felt more severely in the East than the West, the forecast noted. “The current cool weather will not last forever,” wrote economist George Huang in LAEDC’s forecast for the week of June 9-15. “When the mercury goes up, electricity grid operators get nervous.” He credited last year’s relatively cooler summer in California for preventing blackouts, adding “we may not be so lucky this summer.”

Consultants at Energy and Environmental Analysis Inc. (EEA) expect gas storage levels to drop to near record lows at 600 Bcf by the end of the traditional withdrawal season under normal weather conditions because of an alarming decline in U.S. natural gas producing capacity.

Consultants at Energy and Environmental Analysis Inc. (EEA) are predicting that given normal weather, natural gas storage levels will drop to near record lows at 600 Bcf by the end of the traditional withdrawal season because of an alarming decline in U.S. natural gas producing capacity. However, an oil and gas engineer with the Energy Information Administration said he isn’t buying any “sky is falling” scenarios. He said productive capacity is very near where it has been historically.

With adequate liquidity now an increasing focus of credit analysis in the energy industry, Dominion Resources Inc. (BBB+/Stable/A-2) is a “good example” of a company with improving liquidity, according to Standard & Poor’s (S&P) in a new report released Friday.

With financial and regulatory results on the upswing, Spokane, WA-based Avista Corp. received a thumbs-up report from Merrill Lynch, which returned investment ratings on the gas and electric utility holding company to “neutral.” Merrill Lynch’s Sam Brothwell attributed the outlook to the absence of anything negative from an ongoing federal investigation of Avista’s energy trading and second quarter earnings that exceeded expectations.

Consultants at Energy Security Analysis Inc. said they expect a short-lived dip in gas prices sometime this month to be followed by a gradual strengthening in prices this summer because of increases in gas-fired generating capacity and a recovering economy. However, ESAI said it does not believe prices will catapult back to $10/MMBtu anytime soon.

The summer forward power price curve for both PJM and New York City is currently being significantly overvalued, Energy Security Analysis Inc. (ESAI) concludes in its latest “North American Power Market Watch.”

The latest Energy Security Analysis Inc. (ESAI) survey of power plant projects indicates that only 19,000 MW of the close to 100,000 MW of projects in the development queues of the New England, New York and PJM ISOs are likely to be completed by 2006.

Bruce Henning of Energy and Environmental Analysis Inc.(EEA) told a Senate committee last Thursday that while the financial failure of Enron Corp. caused some disruptions in the natural gas and electricity markets, the disruptions remained “relatively minor.”