Consent

A top-ranking FERC official last week dismissed suggestions thatthe Commission was dragging its feet on key pipeline projects thatwould ship natural gas to the Northeast – namely the proposedMillennium, SupplyLink, MarketLink and Independence lines. “…[W]elove new pipelines,” said Richard O’Neill, director of the Officeof Economic Policy, “but we don’t want these new pipelines to turninto stranded costs.” Also, he cited environmental concerns.

“Following the screen”-a market catch-phrase that hasn’t been asmuch in vogue in recent weeks as it used to be-regained popularityMonday as cash prices had little else on which to base modestfirming. New quotes ranged from essentially flat in the Californiaand Northeast markets to as much as a nickel or so higher at pointssuch as the Chicago citygate and El Paso-San Juan (Blanco). Withweather in most areas staying mild and the storage situation stillbearish, it’s hard to see where else beside futures that cash couldhave derived any strength, sources said.

A top FERC official dismissed any hint the Commission wasdragging its feet on key pipeline projects that would ship naturalgas to the Northeast – namely the proposed Millennium, SupplyLink,MarketLink and Independence lines. “…[W]e love new pipelines,”said Richard O’Neill, director of the Office of Economic Policy,”but we don’t want these new pipelines to turn into strandedcosts.” Also, he cited environmental concerns.

Implementation of a mandatory capacity auction, as proposed byFERC in its mega-notice of proposed rulemaking (NOPR), couldjeopardize the opportunity for natural gas to gain a greater shareof the prized electricity market in the future.

As the winter that wasn’t winds down, gas in storage will haveto come out like a lion during March if capacity holders are tomeet cycling requirements. Even if temperatures remain warmer thannormal the market should expect six weeks of relatively strongwithdrawals because many storage capacity owners must bring levelsdown to about 25% full.

Reliant Energy, formerly Houston Industries, has purchased theretail gas marketing assets of Commonwealth Energy Systemsubsidiary COM/Energy Marketing for an undisclosed sum. The assetsprimarily are made up of contracts with more than 2,000 energycustomers in Massachusetts, Rhode Island and Connecticut, twooffices in Massachusetts and a 10-person marketing team.

Despite three of Atlanta Gas Light’s nine gas customer poolssurpassing the Georgia Public Service Commission’s (GPSC)requirements to become fully competitive, the GPSC is uncertainabout moving forward with the customer assignment process becauseof planned legislation that would declare Atlanta Gas Light’s (AGL)entire service territory competitive possibly as early as thisfall.

Texas Land Commissioner David Dewhurst last week presented aplan to a special senate committee on electric utilityrestructuring that would allow the land commissioner to convert thestate’s oil and gas earned from public lands into electricity andsell it to Texas schools, state agencies, and local governments.

Retail gas unbundling in California is “currently beingundermined” by Dynegy Marketing and Trade’s withholding of asignificant portion of firm transportation capacity on El PasoNatural Gas from the market, the head of the California PublicUtilities Commission (CPUC) said last week. As a remedy, CPUCPresident Richard A. Bilas called on FERC to implement regulationsprohibiting the “hoarding” of pipeline capacity and to investigateallegations of anticompetitive conduct, which he contends wasevident in the Dynegy-El Paso arrangement.