Exercise

Arizona’s regulatory commission last week pre-approved Arizona Public Service (APS) request to get close to half of its future natural gas supplies from the proposed Kinder Morgan Silver Canyon interstate transmission pipeline, which will bring gas from New Mexico’s San Juan Basin and from the northern Rockies via a connection with TransColorado Gas Transmission.

Williams disclosed that its former telecommunications business, Williams Communications Group, intends to exercise a purchase right for certain assets for which Williams is guarantor. WCG expects Williams to pay for the fiber-optic network and associated facilities, pursuant to the guarantee, which was negotiated in September 1999, in return for unsecured debt or equity. Williams CEO Steve Malcolm said the action already was factored into earnings, balance sheet and liquidity numbers reported in filings and presented to investors during the past week. “In the event we need to perform on this obligation, we have developed more than sufficient financial capacity to do so,” he said. The issue involves credit support of $750 million for a lease agreement related to the communications assets. The expected closing date for the transaction is April 1. Williams Communications said the move will help preserve its flexibility to achieve a previously-announced comprehensive balance sheet restructuring. The proposed restructuring is intended to support uninterrupted business service and, at the same time, minimize any impact to customer and vendor relationships. Discussions with the company’s banks and others have been expanded to include multiple restructuring options, including the use of a negotiated Chapter 11 reorganization as a restructuring mechanism. The company may decide to pursue that alternative to allow for a more orderly process that maximizes enterprise value.

On the advice of counsel, former Enron Corp. Chairman Kenneth Lay will exercise his Fifth Amendment right not to testify before a Senate hearing today, his spokeswoman said Sunday. The Senate Commerce, Science and Transportation Committee subpoenaed Lay last week after he decided not to voluntarily testify before a subcommittee hearing investigating Enron’s bankruptcy.

Dynegy Inc. said Thursday that its major shareholder, ChevronTexaco, plans to exercise its pre-emptive right to retain a proportionate 26.5% common stock ownership interest in the Houston-based company. ChevronTexaco said it will purchase 10.4 million shares of Class B common stock, with net proceeds from the sale totaling $205 million to be used for general corporate purposes, including debt reduction.

Financial analyst Curt Launer of Credit Suisse First Boston has called on FERC to exercise “extreme caution over the next few months” in its regulatory rulings to avoid sending the already-embattled energy market into a further tailspin and compounding the uncertainty on Wall Street.

Financial analyst Curt Launer of Credit Suisse First Boston has called on FERC to exercise “extreme caution over the next few months” in its regulatory rulings to avoid sending the already-embattled energy market into a further tailspin and compounding the uncertainty on Wall Street.

The benefits of deregulating the electric power industry may be”deferred” — or may not be realized at all — if monopolyutilities are left unchecked to exercise market power in arestructured marketplace, according to an FTC staff report.