Increases

Bending another tool in its arsenal to shaping up the electricpower market, the Federal Energy Regulatory Commission (FERC) hasapproved an 11.6% rate of return for Southern California Edison,replacing the 9.68% rate set earlier by an administrative law judge(ER97-2335, et al).

TransCanada PipeLines Ltd., through its wholly-owned subsidiary,TransCanada OSP Holdings Ltd., reported last week it purchased anadditional 29.9% interest in an Ocean State Power (OSP) plant fromNational Grid USA for an estimated $61 million, making it the soleowner of the OSP facility. The transaction is expected to close bySeptember, pending regulatory approvals.

The weekend market was divided along geographical lines Friday.Price increases tended to range from about a nickel to a littlemore than a dime at eastern points, but high-linepack OFOs by themajor California distributors (see Tranportation Notes) served tokeep western numbers flat to down more than 30 cents at thePG&E citygate.

The dazzling increases in cash prices Thursday certainly failedto surprise anybody who was paying attention Wednesday afternoon tothe storage report and the screen’s subsequent skyrocketingperformance.

Except for smaller price increases, cash trading Tuesday wasalmost a repeat of Monday’s. Small upticks of about a nickel orless dominated in the East and were mostly associated with thescreen’s late run-up Monday, sources said. Slightly larger gains atmost western points got extra support from cooling load that wasconcentrated in the hot east-of-California markets of the desertSouthwest.

The week opened with swing price increases Monday that werealmost uniformly in the vicinity of a nickel but were more like adime or so for the Northeast, Appalachia, PG&E citygate andintra-Alberta, but only a couple of pennies for Kern River andNorthwest in the Rockies.

Due to nomination increases exceeding available capacity reducedby a lost engine at Station 315, Tennessee bumped flowingInterruptible services (IT-X, IT, AOT, PAT, Payback, EDS/ERS) andrestricted nominated services through Secondary (IT-X, IT, AOT,PAT, Payback, EDS/ERS, Secondary) for meters downstream of MLV 314on the 300 line effective 1700 for yesterday’s gas day.

Increases of more than a nickel dominated the cash marketyesterday as strong demand and chilly weather in core populationareas mixed with a surging futures screen to produce bullishresults. While many traders were surprised to see prices at theircurrent levels, they also agreed that this bull run does not appearlikely to go away any time soon.

The cash market kept rising in most cases Tuesday, but exceptfor some Northeast citygates with gains of about a nickel or more,quotes generally ranged from flat to only 2-3 cents higher.