Heated

Those who had expected cash bullishness to continue Wednesday,based on the July futures contract’s move to previously unknownheights on the previous day, were in for a big disappointment.Wednesday’s screen achieved most of its drastic downturn while cashwas still trading. And while hot weather remained fairly severe onthe West Coast, it cooled off considerably in the Northeast.

Adding to the lengthy and often heated controversy surrounding its contractual relationship with El Paso Natural Gas, Dynegy has signed a fourth contract with El Paso covering 196 MMcf/d of alternate firm backhaul capacity on the southwestern pipeline.

Adding to the lengthy and often heated controversy surroundingits contractual relationship with El Paso Natural Gas, Dynegy hassigned up for another 196 MMcf/d of El Paso pipeline capacity,bringing under its control a total of 1.5 Bcf/d of space on thesouthwestern pipeline.

Caught in the midst of heated criticism of FERC’s proposedauction mechanism, Mississippi River Transmission (MRT) isdefending its proposed new auction procedures from attack bymarketers and producers.

A delay on upstream unbundling continued this week in Oklahomawhere regulators and Oklahoma Natural Gas are in a heated battleover some of the changes ordered by the commission in July. Theutility refuses to begin a competitive bidding process ontransmission and supply service to the state’s major cities. Itfiled an appeal of the unbundling order with the Oklahoma SupremeCourt last week, saying it raised a number of constitutionalissues. The two sides may reach a settlement, but a dispute overabout $11 million stands in the way.

Cash prices emerged from the weekend with widespread gainsMonday. Most were of the small-to-medium variety at 2-6 cents, buta scorching West tended to see a lot of double-digit increases. SanJuan Basin and the Southern California moved in near-lockstep,rising about a quarter each. However, a basis relationship gap ofnearly 50 cents between the two points remaineduncharacteristically wide compared to traditional levels,reflecting the inroads made by Canadian and Rockies supplies intothe California market in recent years.

The White House nomination of Bill Richardson, U.S. ambassadorto the United Nations, to head up the Department of Energy (DOE) islikely to come under heavy fire once it gets to Capitol Hill.