Drop

Providence (RI) Energy Corp. blamed a warm winter and a sharpdrop in oil prices for diminished earnings for the year ended Sept.30. Net income declined to $6.4 million, or $1.09 per share, from$7.8 million, or $1.35 per share, in fiscal 1997. However,operating revenue from the company’s non-regulated business grewmore than five-fold to $33 million.

The gas market actually did pretty well last year considering itwas the warmest year on record, but it may take an ice age toreduce the surplus storage gas bequeathed to 1999. Spotdelivered-to-pipeline gas prices averaged $2.02/MMBtu in 1998, down41 cents, or 17%, from 1997. Some points faired better than othersand the West generally did better than the East. Canada actuallycame out ahead.

Legislation with drop-dead dates for 100% gas and electricderegulation continued to march through the New Jersey GeneralAssembly Friday, as the state senate’s Economic Growth Committeeagreed to send a bill to both the senate and assembly floors for avote on Tuesday. If passed, the bill would force the state’s gasindustry to allow supply competition statewide starting Dec. 31 andstatewide electric generation competition starting Aug. 1. For itto become law, the bill needs to win a simple majority in bothhouses.

Here today; gone tomorrow was the prevailing mentality in thefutures arena yesterday when the coldest temperatures of the yearwere more than offset by forecasts calling for a warm-up by earlynext week. And as has been the case for most of the month, it wascash prices that not only led the way for the futures market, butalso notched a larger change on the day-where the January contracttrickled down, 2.2 cents to settle at $1.925, cash prices sank by adime on many pipes.

SaskEnergy and Enbridge Consumers Gas last week dropped out ofthe competition for a distribution franchise in Nova Scotia once itbecame clear the provincial government would allow industrialcustomers to apply for direct connections to the Maritimes andNortheast Pipeline. Their departure leaves only Sempra Atlantic Gasand Maritimes NRG competing for province-wide distributionfranchise rights and seven small municipal agencies competing forsite-specific franchises.

SaskEnergy and Enbridge Consumers Gas last week dropped out ofthe competition for a distribution franchise in Nova Scotia once itbecame clear the provincial government would allow industrialcustomers to apply for direct connections to the Maritimes andNortheast Pipeline. Their departure leaves only Sempra Atlantic Gasand Maritimes NRG competing for province-wide distributionfranchise rights and seven small municipal agencies competing forsite-specific franchises.

Traders had to think about the unthinkable Friday: Gulf Coastgas trading for less than a dollar. A large number of points inLouisiana and Texas averaged in the $0.90s, and in a few caseslow-end quotes slipped into the high $0.80s. Few markets fared muchabove a dollar other than California, Sumas, Stanfield andColumbia-Appalachia.

With a blatant clue like the screen’s Monday drop of just over15 cents, which no cash point came close to matching that day, nogas traders had to switch occupations to rocket scientist topredict swing prices would be softening further Tuesday. Except foressential flatness in the Rockies and at Canada’s intra-Alberta andSumas points, most of Tuesday’s declines were within the range of4-9 cents.

Mild softness dominated Monday’s cash trading in spite of a bigdrop on the futures screen. Drops of up to a nickel or so tended tocluster in eastern markets, where late-autumn weather is relativelymild. Meanwhile, flatness prevailed in much of the West as theNational Weather Service is predicting below-normal temperatureslater this week for the Rockies and interior parts of SouthernCalifornia.