Aspects

May 28, 2003

Dynegy Inc. reported a devastating third-quarter loss of $1.8 billion ($4.92/share) last Wednesday, warned of more writedowns in the fourth quarter, failed to offer any earnings guidance going forward, and finally stunned investors and analysts with no conference call to explain.

While other aspects of California’s year-old energy woes have settled into well-defined trench warfare that centers on supply, demand and price issues in Sacramento and Washington, D.C., the state’s two largest investor-owned utilities limp along, pulled by the ebb and flow of politics and the courts with no clear path for restoring their financial independence, although Gov. Gray Davis wants the state to exit its current electricity buying role by the end of next year.

Canada’s National Energy Board has begun the public comment period on the environmental aspects of an application by Westcoast Energy Inc. to extend the Grizzly Raw Gas Transmission System and to construct the Weejay Lateral in British Columbia and Alberta. The comment period ends June 27.

Lost in the higher profile aspects of California’s chronicpage-one headlines surrounding its energy crisis is the statelegislature’s inclusion of a ban on retail direct access powerdeals, dealing the few remaining nonutility power retailers whatcould be a death blow unless a corrective legislative solution isfound. That corrective action was pursued last week when the headof the state Senate energy committee, state Sen. Debra Bowen,proposed to reinstitute retail energy sales (SB 27X) as part of themeasures being tossed around in the second month of a special statelegislative session called by the governor to address theemergency.

Two new California laws to begin addressing aspects of theworsening electricity crisis were signed late Thursday by Gov. GrayDavis within hours of their passage by the state legislaturemeeting in a special emergency session called earlier in the month.They are expected to ease concerns among creditors, marketparticipants and the beleaguered investor-owned utilities in thestate.

The U.S. Court of Appeals for the D.C. Circuit upheld the mostsignificant aspects of FERC Orders 888 and 889 in a ruling releasedon Friday. “Finding few defects in the orders, we uphold them innearly all respects,” the court stated in its decision(Transmission Access Policy Study Group, et al. v. FERC No.97-1715).

FERC last week awarded Southern LNG Inc. a preliminarydetermination (PD) on the non-environmental aspects of its proposalto build new facilities and re-activate its liquefied natural gasterminal on Elba Island, GA to handle imports equaling 330 MMcf/d.

FERC has awarded Southern LNG Inc. a preliminary determination(PD) on the non-environmental aspects of its proposal to build newfacilities and reactivate its liquefied natural gas terminalfacility on Elba Island in Georgia.