Cutting

Pacific Gas and Electric applied to the California PublicUtilities Commission (CPUC) to reduce electric rates at the end ofthe electric rate freeze, but no later than March 31, 2002. Thestate law that governs the restructuring of California’selectricity market, AB 1890, gave residential and small businesscustomers a 10% rate reduction on Jan. 1, 1998 and froze rates atthat level. The state law also provided investor-owned utilities atransition period to recover stranded costs. That transition periodends March 31, 2002, or when the past investment costs have beenrecovered, whichever comes first. At that time, the rate reductionswill go into effect.

The Portland Natural Gas Transmission System (PNGTS) andTransQuebec &amp Maritimes Pipeline (TQM) held a ribbon-cuttingceremony last week at the U.S./Canada border to announce completionof the first high-capacity gas pipeline to serve northern NewEngland. Commercial operations, however, are not expected to beginuntil Saturday, March 6. And PNGTS probably will not betransporting its full certificated capacity of 178,000 MMBtu/duntil the end of the year, said spokesman John Flumerfelt, becauseseveral of the power plants and paper mills to be served by thepipeline are not complete.

The Portland Natural Gas Transmission System (PNGTS) andTransQuebec & Maritimes Pipeline (TQM) held a ribbon-cuttingceremony yesterday at the U.S./Canada border to announce completionof the first high-capacity gas pipeline to serve northern NewEngland. Commercial operations, however, are not expected to beginuntil March 6. And PNGTS probably will not be transporting its fullcertificated capacity of 178,000 MMBtu/d until the end of the year,said spokesman John Flumerfelt, because several of the power plantsand paper mills to be served by the pipeline are not completed.

BP Amoco added another 3,000 to the heap of 7,000 job cutsalready announced in the wake of the merger of British Petroleumand Amoco and in the midst of depressed oil and gas prices. Thenewest job cuts will be worldwide, and it is not yet known how manywill be in the United States. Last week the company also announcedreplacement cost operating profit for 1998 of $6,437 million, off39% from $10,583 in 1997.

Cinergy Corp. has moved to integrate its purchase of ProducersEnergy Marketing, LLC (ProEnergy) with its own commodity marketingoperation, cutting some ProEnergy executives and planning theintegration of its smaller Houston office into the larger ProEnergyfacilities in Houston.

Amoco said yesterday it would consolidate its U.S. explorationand production management offices in Houston to cut costs andincrease competitiveness. About 660 E&P management, technicaland administrative jobs in Denver and New Orleans will be affected.Many of the positions will be relocated to Houston, but Amoco saidthere will be some jobs eliminated as well.

Unocal Corp., like most other producers struggling againstdepressed oil and gas prices, said Wednesday it expects to cutcapital spending by 30 to 40% in 1999 from this year’s level. Inaddition, the company is targeting cash expense reductions of $150million, of which about $100 million has already been identified.

Baker Hughes said operating earnings before one-time charges forthe third calendar quarter will be roughly half of the 36cents/share Wall Street consensus. Baker Hughes, which merged withWestern Atlas last month , said continuing declines in activity inthe Western Hemisphere, emerging softness in several EasternHemisphere markets and modest price erosion due to activitydeclines are the reason.