Caught

FERC will issue a final report on the results of its high-profile investigation into manipulation of energy prices in western markets either by the end of the year or in mid-February 2003 at the latest, Chairman Pat Wood told energy analysts and executives last week.

The financial pressure cooker is on high, and energy companies caught in the soup are scrambling to avoid getting burned. Early last week the kitchen got too hot for Dynegy Corp.’s Chairman and CEO Chuck Watson, who after 17 years, was immediately replaced by a top ChevronTexaco executive. By week’s end, El Paso Corp. and Williams Cos. had begun drastic financial measures to cool the credit rating agencies and investors. CMS Energy Corp. also joined in, moving to catapult what remains of its exploration and production division (see related stories).

New York was caught off guard by the spring heat wave last week that pushed temperatures into the 90s for three straight days driving power demand up to summer levels at a time when as much as 10,415 MW of generation and a significant amount of transmission capacity was down for maintenance. Temperatures in the city hit record highs of near 90 on Tuesday, 95 on Wednesday and 92 on Thursday. Monday and Friday temperatures reached the 80s.

Natural gas futures dipped then rallied Wednesday afternoon, as bulls and bears were caught in a tug-of-war on the news that 111 Bcf was pulled from underground storage facilities last week. With that, March completed its debut as prompt month at $2.08, up 1.3 cents for the session and 5 cents off its $2.03 low notched just 20 minutes prior at 2:10 p.m. EST. Estimated volume was average at 80,499.

Argentina’s economic “restoration plans” that include a devaluation of the currency announced on Jan. 6 will impact a number of companies with operations in South America, including Sempra Energy, Duke Energy and other private-sector investors in utility and energy projects in South America’s third largest economy.

Caught between a bullish short-term weather outlook and a bearish long-term storage situation, traders in the gas pit at Nymex played it safe Friday, electing not to press prices too much in either direction ahead of the weekend. With that the February contract finished the session at $2.204, up 1.9 cents for the day, but down 7.1 cents for the week. Estimated volume was a little less than average, with just 75,087 contracts changing hands.

Caught between bearish weather forecasts and slightly supportive technical features Friday, natural gas futures took the path of least resistance and shuffled mostly sideways to close out the week. The January contract settled at $2.568, up 0.3 cents for the session, but down 13.3 cents for the week. Estimated volume confirmed the quiet trading activity as only 65,069 contracts changed hands.

After spending the first two weeks of July in a mini uptrend, natural gas futures broke beneath major support last week, as traders continued to factor in the blistering pace of storage refills and normal- to below-normal temperatures. The August contract was hit with heavy selling Monday, and then again Wednesday through Thursday, pressuring prices to new 14-month lows and dashing bulls’ hopes that a bottom had been achieved. August moved mostly sideways on Friday to close at $2.955, up a modest 1.6-cent for the day but down a whopping 29.5 for the week.

Reliant Energy Inc. and Mirant Corp., both caught up in the California energy saga, Tuesday reiterated their earnings forecasts for the rest of the year, indicating that despite the continuing charges, countercharges, lawsuits and falling stock prices, they will meet or beat Wall Street estimates.