Another

Yet another gas futures contract could be coming down the pipe,this time in Chicago where a bounty of Canadian gas expected fromNorthern Border and Alliance Pipeline has Peoples Gas Light &ampCoke thinking its system could host the contract’s delivery point.

California is learning the hard way that yet another earlyoffshoot of more competitive energy markets is the arcane world oftrying to police the activities between state-regulated utilitiesand their unregulated affiliates operating in the gas and electricmarkets. Nearing the end of its first year of dealing with thisissue, California is experiencing, at best, an uneasy peace betweenstate regulators and the state’s three major investor-owned utilityholding companies.

California is learning the hard way that yet another earlyoffshoot of more competitive energy markets is the arcane world oftrying to police the activities between state-regulated utilitiesand their unregulated affiliates. Nearing the end of its first yearof dealing with this issue, California is experiencing, at best, anuneasy peace between state regulators and the state’s three majorinvestor-owned utility holding companies.

Yet another example of gas-power convergence shows up in NGI’sranking of the top gas and power marketers based on third quartervolumes. Three of the top five marketers of each commodity and sixof the top 10 appear on both lists.

Yet another example of gas-power convergence shows up in NGI’sranking of the top gas and power marketers based on third quartervolumes. Three of the top five marketers of each commodity and sixof the top 10 appear on both lists.

Mobil is yet another major producer hit by lower oil and gasprices in the third quarter. Despite cost reduction efforts,earnings were off sharply. Mobil reported third quarter 1998estimated operating earnings of $497 million, a decline of $410million, or 45%, from the record $907 million earned in the sameperiod last year. Net income declined 43% to $509 million from $892million in the third quarter of 1997. “This quarter saw virtuallyall of our businesses experience sharp declines in industryfundamentals,” said CEO Lucio A. Noto. “Despite our self-helpefforts, earnings and cash generation are down significantly thisyear.”

In another case the FERC is going to have to defend its policyof not requiring pipelines to flow through penalty revenues, theU.S. Court of Appeals ruled Friday in remanding a case involvingNorAm Gas Transmission (No. 97-1607). The 2-1 decision in Amoco v.FERC, with Judge Randolph concurring in part and dissenting inpart, did not object to NorAm’s raising penalty rates, but it doesask for an explanation of why the Commission believes penaltyrevenues will be so insignificant as to warrant no consideration.In the year prior to NorAm’s rate filing the pipeline had collected$1.8 million in penalty revenue. The court noted FERC appeared tobelieve that because penalty rates were raised, the incidence ofpenalties would decrease. But “even if a lesser number of penaltiesare imposed, the increased penalty rate might result in a grossincrease in penalty revenue. Moreover – and this is the keyimponderable – whether a shipper will be willing to incur thepenalty depends on his cost in securing alternative supplies in atight market.”

In another case the Federal Energy Regulatory Commission isgoing to have to defend its policy of not requiring pipelines toflow through penalty revenues, the U.S. Court of Appeals ruledFriday in remanding a case involving NorAm Gas Transmission (No.97-1607). The 2-1 decision in Amoco v. FERC, with Judge Randolphconcurring in part and dissenting in part, did not object toNorAm’s raising penalty rates, but it does ask for an explanationof why the Commission believes penalty revenues will be soinsignificant as to warrant no consideration. In the year prior toNorAm’s rate filing the pipeline had collected $1.8 million inpenalty revenue. The court noted FERC appeared to believe thatbecause penalty rates were raised, the incidence of penalties woulddecrease. But “even if a lesser number of penalties are imposed,the increased penalty rate might result in a gross increase inpenalty revenue. Moreover – and this is the key imponderable -whether a shipper will be willing to incur the penalty depends onhis cost in securing alternative supplies in a tight market.”

At Massachusetts’ Eastern Enterprises, “consolidation” is theword of the day, and of the days to come. Fresh from itsacquisition of Essex County Gas, the Boston Gas parent Monday saidit will buy nearby Colonial Gas Co. at a 27% premium to Colonial’sFriday closing price.