England

Northeast citygates soared Monday, topping out at $9.00 in New England. That seemed natural, considering that the Northeast and Midwest were experiencing their worst siege of cold so far this winter, and chilly temperatures dominated most of the weather picture elsewhere.

The New England Gas Association (NEGA) and the New York Gas Group (NYGAS) merged last week to become the Northeast Gas Association (NGA), which will represent the local distribution companies, interstate pipeline companies, LNG importers, and associate companies involved in supporting the natural gas industry in the seven-state region of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

The New England Gas Association (NEGA) and the New York Gas Group (NYGAS) will merge to become the Northeast Gas Association (NGA), effective Jan. 1, 2003. The new organization will represent the local distribution companies, interstate pipeline companies, LNG importers, and associate companies involved in supporting the natural gas industry in the seven-state region of Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. Craig Frew, NEGA chairman, and Ralph Tedesco, chairman of the NYGAS Executive Committee announced the merger Tedesco, President and COO of New York State Electric and Gas (NYSEG), will be the first chairman of NGA. Dennis E. Welch, President and COO of Yankee Gas Services Company, will be the vice chairman. Thomas M. Kiley, who has served as President of NEGA and Acting Executive Director of NYGAS, will be President of NGA. NEGA and NYGAS first entered into an alliance in 2001, when they combined several administrative and management functions. The formation of the NGA is consistent with the increasing consolidation of the natural gas industry in the Northeast. The NGA will be administered at 75 Second Avenue, Suite 510, Needham, MA 02494, telephone: (781) 455-6800. A New York office will be located at 1515 Broadway, 43rd floor, New York, NY 10036, telephone: (212) 354-4790.

Like the snowfall piling up in New England, long positions filled the natural gas pit on Thursday as bulls received yet another double-dose of supportive news in the form of fresh weather and storage (162 Bcf withdrawal) reports. By 11 a.m EST the January contract had blasted through the $5.00 mark. With sellers backing away, the prompt contract was able to continue higher in the afternoon to top out at a new 19-month continuation chart high at $5.15. January finished at $5.089, up 38 cents for the session.

Despite forecasts calling for up to 8 inches of snow across southern New England, natural gas futures continued lower in expiration-related selling Tuesday, as traders continued to rotate out of their December contracts. With that the prompt month came to its final resting place at $4.14, down 12.1 cents for the day. Coincidentally, December also expired 12.1 cents lower than the level at which it began its month-long tenure as prompt contract, though it ended 1.4 cents above November’s settle.

Northeast Utilities (NU), New England’s largest utility system, expects to lose between $20 million and $30 million in the last six months of this year because of marketing losses. On Tuesday, the Berlin, CT-based utility company revised downward its 2002 earnings guidance. NU lost nearly $31 million in the first six months of the year and expects to earn between $1.10 and $1.30 per share for the entire year, well below guidance it issued in July of $1.40-$1.65, not including non-recurring items. Wall Street expected 2002 earnings to average $1.30 a share.

A relatively bullish storage report (65 Bcf), rising futures prices, continued moderate heating demand and the shutdown of another unit at the Palo Verde nuclear station in Arizona all contributed to solid price increases across the board yesterday.

This summer, warmer-than-normal temperatures along the East Coast “may re-test the power systems of New York and New England,” which last year had cooler-than-normal temperatures, said WSI Corp., which issued its end-of-May update on Monday. WSI’s forecast for a warm July and August, “especially in the major cities,” could “spell a strain for the already delicate capacity balances in critical areas like New York City.”

The substantial energy management outsourcing relationshipbetween New England gas distributor Yankee Gas and energy marketerTransCanada Gas Services continues to grow. After a competitivebidding process, Yankee signed a new one-year contract that allowsTransCanada to manage another large part of Yankee’s gas supply,storage and long-haul pipeline capacity.