Decision

FERC made no decision Wednesday on whether billions of dollars in long-term western wholesale power contracts negotiated in 2000 and early 2001 should be scrapped or altered because of market manipulation in the short-term or spot market. The Commission vaguely indicated that the contracts should be sent back to a settlement judge.

California state leaders are “not overly optimistic” they will get the $9 billion in refunds on high-priced power they claim Californians are owed when the Federal Energy Regulatory Commission rules Wednesday, so they’re prepared to carry the fight to the 9th Circuit Court of Appeal.

UBS AG and Bank of America (BofA) want FERC to take a second look at a recent decision in which the federal agency agreed to allow the banks in the power marketing business to acquire public utility securities, but placed a ceiling of 1% on their holdings of equity securities and funded debt of other public utilities.

While seeking a “global” solution to its credit crunch, PG&E Corp.’s merchant energy unit Friday hit the bottom of the credit ratings as its defaulted on debt payments involving nearly $500 million and faces another $900 million of debt due in the first quarter next year that its executives say it can’t make the payments on.

A new decision by a Financial Accounting Standards Board (FASB) task force to revoke a prior ruling that allowed the use of controversial mark-to-market accounting for energy-related contracts won’t result in as “big a hit” on the industry as some might think, said FERC’s chief accountant. Companies already sharply reduced the value of their contracts in response to the downturn in the market over the past year, he noted.

The decision last week by a Financial Accounting Standards Board (FASB) task force to revoke a prior ruling that allowed the use of controversial mark-to-market accounting for energy-related contracts won’t result in as “big a hit” on the industry as some might think, said FERC’s chief accountant. Companies already sharply reduced the value of their contracts in response to the downturn in the market over the past year, he noted.

Tulsa, OK-based Oneok Inc. went where no man has gone before in second quarter 2002 earnings, marking a 56% increase for its marketing and trading operations segment, which, combined with solid returns in distribution, led to a gain in net income of 64% over the second quarter last year.

FERC has agreed to allow UBS AG to sell energy, capacity and ancillary services at market-based rates, a decision that follows on the heels of UBS Warburg Energy, a U.S.-based unit of UBS, last month purchasing the North American natural gas and power trading business of Enron Corp.

Maryland Sen. Barbara A. Mikulski has denounced FERC’s post-Sept. 11 attack decision to allow Williams to proceed with the planned reactivation of its Cove Point liquefied natural gas (LNG) import terminal in Lusby, MD, because, she says, it would permit “flammable” LNG to be imported to a site within four miles of a nuclear plant in the state.