Downturn

With a few western exceptions, swing prices Monday continued the downturn that had started in weekend deals. The market continued to be depressed by the lack of major cooling load outside Florida and parts of the West; in addition, Friday’s screen drop of 13.2 cents was extended by an expiration-day decline of 21.2 cents in the July contract.

Reflecting the recent years of economic downturn and ever-widening state budget deficits, California’s annual growth in natural gas demand exclusive of load for power generation is projected to be under 1% annually over the next 10 years, according to the California Energy Commission staff’s draft energy demand report, 2003-2013, released Feb. 12.

Reflecting the recent years of economic downturn and ever-widening state budget deficits, California’s annual growth in natural gas demand exclusive of load for power generation is projected to be under 1% annually over the next 10 years, according to the California Energy Commission staff’s draft energy demand report, 2003-2013, released Feb. 12.

For those who believe the worst is over, think again. The wholesale energy industry, which has lost 88% of its market value in the past year, has not hit bottom yet, according to several energy executives. It could be as short as four, or as long as seven years, before the wholesale sector earns market confidence again, and most assuredly, an entire new set of players will be in the game.

For those who believe the worst is over, think again. The wholesale energy industry, which has lost 88% of its market value in the past year, has not hit bottom yet, according to several energy executives. It could be as short as four, or as long as seven years, before the wholesale sector earns market confidence again, and most assuredly, an entire new set of players will be in the game.

Most points registered double-digit losses ranging from a little more than a dime to about a quarter Monday. The exceptions of declines less than a dime tended to cluster in the Rockies and California, while significantly larger plunges of more than 30 cents and 80 cents were recorded at the Florida citygate and San Juan Basin respectively.

NUI Corp. said the downturn in energy marketing led to a third quarter loss from continuing operations of $2.6 million, or ($0.17) per share, including the effect of an additional 1.725 million shares of common stock issued in March. For the nine months ended June 30, NUI reported earnings from continuing operations of $22.9 million, or $1.57 per share, compared to $27.9 million, or $2.11 per share last year. The lower fiscal year-to-date earnings resulted primarily from weather that was 20% warmer than the corresponding period of 2001 and 22% warmer than normal, which severely impacted margins in the utility distribution services business, NUI’s largest segment, and lower earnings from energy trading during the third quarter. Management recently revised downward earnings guidance to $1.50-1.60 per share for fiscal 2002. Based on expected improvement in all of NUI’s business segments, except for energy trading, which is not predicted to experience more than minimal growth, the company initiated fiscal 2003 earnings per share guidance of $1.90 to $2.00 per share. “As 2002 continues, it is becoming evident that we have been caught in the middle of a `perfect storm,'” said CEO John Kean Jr. “While we did not play a role in creating it, we nevertheless are forced to ride it out, which we will. …[W]e are operating two businesses, energy trading and telecom, which the financial markets view with skepticism and disfavor at this time. Nevertheless, they are solid, profitable businesses for us. As our history of close to 150 years has taught us, it is dangerous to react to short-term trends.”

NUI Corp. said the downturn in energy marketing led to a third quarter loss from continuing operations of $2.6 million, or ($0.17) per share, including the effect of an additional 1.725 million shares of common stock issued in March. For the nine months ended June 30, NUI reported earnings from continuing operations of $22.9 million, or $1.57 per share, compared to $27.9 million, or $2.11 per share last year. The lower fiscal year-to-date earnings resulted primarily from weather that was 20% warmer than the corresponding period of 2001 and 22% warmer than normal, which severely impacted margins in the utility distribution services business, NUI’s largest segment, and lower earnings from energy trading during the third quarter. Management recently revised downward earnings guidance to $1.50-1.60 per share for fiscal 2002. Based on expected improvement in all of NUI’s business segments, except for energy trading, which is not predicted to experience more than minimal growth, the company initiated fiscal 2003 earnings per share guidance of $1.90 to $2.00 per share. “As 2002 continues, it is becoming evident that we have been caught in the middle of a `perfect storm,'” said CEO John Kean Jr. “While we did not play a role in creating it, we nevertheless are forced to ride it out, which we will. …[W]e are operating two businesses, energy trading and telecom, which the financial markets view with skepticism and disfavor at this time. Nevertheless, they are solid, profitable businesses for us. As our history of close to 150 years has taught us, it is dangerous to react to short-term trends.”

Despite the economic downturn, electric demand on New York’s Long Island is still growing at an annual rate of 100 MW per year, and supply on the large, heavily populated island opposite Manhattan will remain tight this summer, according to Long Island Power Authority (LIPA) Chairman Richard M. Kessel.