Approval

AmerGen Energy Co. agreed to buy Illinois Power Co.’s Clinton(IL) Power Station pending regulatory approval. The agreement tosell the nuclear station moves Illinois Power parent Illinova Corp.closer to meeting a condition of its recently announced merger withDynegy Inc.

In a key move last week, the Federal Energy RegulatoryCommission endorsed an innovative hourly firm transportation (HFT)service that will enable a gas pipeline to quickly respond to thepeaking needs of power generators. With this action, Reliant EnergyGas Transmission – which proposed the service – becomes the firstpipe to move away from the traditional daily and monthlytransportation markets.

Shareholders for both El Paso Energy and Sonat Inc. announcedoverwhelming approval of the two companies’ proposed mergerThursday. For Sonat, representatives for 86% of the company’soutstanding shares voted in a special shareholders’ meeting, andthe merger was approved by 98%. El Paso Energy’s stockholders alsoapproved the merger at a meeting held Thursday. Out of 93 millionEl Paso shares that voted, 95% voted in favor of the merger. Underthe terms of the $6 billion agreement, which was announced in March(see Daily GPI, March 16), Sonat stockholders will receive oneshare of El Paso Energy common stock for each share of Sonat commonstock exchanged in the merger. El Paso will issue 110 millioncommon shares to complete the transaction after the deal closes.Sonat said it expects the regulatory reviews of the proposed mergerto be completed during the third or fourth quarter of this year.

The Gas Research Institute has offered a proposed budget of $98million for approval by the Federal Energy Regulatory Commission tofund research and development projects for 2000. The funding wouldcover $72.6 million for 43 Core projects, widely beneficial to theentire industry and gas users and $25.4 million for 22 Non-Coreprojects targeted to specific activities and major market segments.In addition to the FERC-directed portion of the budget, GRIanticipates receiving about $53 million in cofunding from industryand govenrment sources in 2000. The filing Tuesday marked the thirdyear of the seven-year transition to an all-voluntary R&Dprogram. In 2001 the funding through FERC will drop to $70 million,then $60 million in 2002-2004. At the end of that period thefunding will be voluntary.

Wyoming Interstate’s proposed $78 million Medicine Bow Lateralin the Powder River Basin won preliminary approval from FERC lastweek. In a draft order, the Commission said the pipeline, whichwould provide 260,000 Dth/d of new firm take-away transportationcapacity for Wyoming producers, would be in the public interest,subject to a final order following environmental review.

Wyoming Interstate’s proposed $78 million Medicine Bow Lateralin the Powder River Basin won preliminary approval from FERCyesterday. In a draft order, the Commission said the pipeline,which would provide 260,000 Dth/d of new firm take-awaytransportation capacity for Wyoming producers, would be in thepublic interest, subject to a final order following environmentalreview.

In an effort to smooth the way for FERC approval of its mergerwith MidAmerican, CalEnergy sold a 50% stake in power generationsubsidiary CE Generation LLC to El Paso Energy last week for $259.6million, including $236.1 million in cash and $23.5 million in debtand other payments. CE Generation is the holding company for 14U.S. power plants with capacity to produce 896 MW of electricity.

The only non-affiliated shipper that has signed up for firmtransportation service on the Maritimes &amp Northeast Pipelineproject clearly is regretting it now. Boston Gas told FERC lastweek a request by Maritimes in January to amend its pipelinecertificate, eliminate about 140 miles of laterals in Maine andraise its mainline rates 61% because of the loss of numerous U.S.markets shows a lapse in rationality.

Westcoast Energy Inc. last week challenged BC Gas’ request for an abbreviated approval process for the Southern Crossing pipeline proposal and called for a full public review of the re-filed proposal by BC Gas to build a $350 million pipeline across Southern British Columbia. Westcoast maintains the Southern Crossing project is too expensive and that there are other alternatives.