Finally

With natural gas price spikes finally seeming to ease after asix-month-long roller coaster ride, U.S. electricity generatorshave taken the experience as a warning, but vow to stick withnatural gas as their go-to plant-firing source.

While California state lawmakers finally rushed to deal with theshort-term power supply crisis on Friday, the financial conditionof Southern California Edison (SCE) and Pacific Gas & Electricmoved closer to the terminal stage. So far the measures passedappear inadequate to cure the utilities’ financial woes, accordingto many observers. Unless creditors see some ray of hope incontinuing legislative action they soon could force the utilitiesinto bankruptcy.

As blackouts finally swept through California yesterday afterweeks of warnings, the initial reaction was negative to theCalifornia legislature’s proposals to cure the state’s powerproblems. Most observers concluded there was little indication thatthe proposals would either provide the power needed to keep thelights on in the state or solve the utilities’ financial woes.

The volatility in the California energy market finally spilledover into the stock market last week. The uncertainty over thefinancial health of California’s two largest utilities, SouthernCalifornia Edison and Pacific Gas and Electric, triggered panic onWall Street over the potential impact on many other energycompanies and even some utility lenders.

Although El Paso shippers are pleased that the Federal EnergyRegulatory Commission (FERC) finally has recognized that El PasoNatural Gas has been unjustly overselling firm capacity, they areexasperated over the Commission’s proposed solution.

Northwest finally issued an OFO on Friday after posting warningsmost of the week. Primary nominations flowing north through theKemmerer Compressor Station on Friday exceeded available capacityat that point because of a shortfall in displacement volumes. Thedeclared Stage II (8%) entitlement for delivery points north of theKemmerer Compressor is in effect until further notice. Grants PassLateral requests are exceeding the design capacity at Oregon City,McMinnville, Albany and Eugene. Nominations were cut to designcapacity for the timely process, Northwest said. Kemmerer primarynorthbound volumes remain high with heavy reliance on displacement.NWP cut all alternate capacity at Green River for the timelyprocess.

It’s been a long wait, but traders are finally seeing what theysaid was needed to spark a turnaround in a sagging gas market:genuinely substantial cold weather approaching a major market area.That and continued, albeit moderate, support from the Decemberfutures contract generated cash price increases Thursday rangingfrom a nickel or less in the Rockies and California to between anickel and about 15 cents in the Southwest, Gulf Coast,Midcontinent, Midwest and Appalachia.

The cash market finally shook off the price weakness that haddominated it since late last week as most points ranged from flatto up about a nickel Tuesday, with some in the Rockies/San JuanBasin achieving dime-plus gains. However, with traders still unableto perceive see any significant weather load on the horizon and thescreen falling more than a quarter, the cash firmness was expectedto be short-lived.

Buccaneer Pipeline, one of two long lines proposed to cross theGulf of Mexico and deliver gas to the west coast of the FloridaPeninsula, has finally received permission to go ashore in PascoCounty, north of Tampa-St. Petersburg, after facing substantiallandowner opposition.