Levels

In his latest review of the California market, FERC Chairman Curt Hebert said that while the levels of interstate natural gas pipeline capacity and intrastate capacity serving the state have risen since the start of the year, the gap between the two has grown even wider and could serve to further constrain delivery points there.

Maintaining transmission adequacy at year 2000 levels would require a quadrupling of transmission investments during this decade, but the price tag for building these new facilities — including the cost of replacing retired capacity — is about $56 billion, according to a recent study done for the Edison Electric Institute (EEI). This transmission investment cost is roughly half of the investment likely to be made in new generating units during the same time.

Maintaining transmission adequacy at year 2000 levels would require a quadrupling of transmission investments during this decade, but the price tag for building these new facilities — including the cost of replacing retired capacity — is about $56 billion, according to a recent study commissioned by the Edison Electric Institute (EEI). This transmission investment cost is roughly half of the investment likely to be made in new generating units during the same time.

In light of natural gas storage levels far outpacing last year’s injection schedule, a sluggish economy and lost demand only trickling back to market, energy analysts from UBS Warburg, Salomon Smith Barney (SSB), Lehman Brothers and ABN-AMRO have taken another look at their respective companies’ 2001 gas price forecasts.

In most cases swing prices for today’s flow were up moderately from end-of-May levels but both above and below June indexes depending on the market. A majority of points appeared to be starting out below index.

Pacific Gas & Electric, projecting that its linepack would rise well above maximum target levels from Saturday through today, had a customer-specific OFO in place Saturday.

The May aftermarket began at price levels considerably below first-of-month indexes in nearly all cases, and several traders advised against anyone holding their breath while awaiting an upturn of any significance. They cited a screen plunge Monday that was about twice as large as any of last week’s single-day drops, a general near-term weather outlook that remains on the benign side, and expectations of another big storage injection report (Lehman Brothers is projecting 70 Bcf).

Despite sharply higher gas prices and an apparent struggle to maintain adequate supply levels, gas producers have more than enough reservoir targets and they are continuing to expand the nation’s gas resource base, according to a biennial report released yesterday by the Potential Gas Committee (PGC). However, committee officials warned that some energy policy changes are needed for the industry to continue expanding the resource and to meet burgeoning demand.

With linepack threatening to soar well above its maximum targetlevels later this week, Pacific Gas & Electric widenedTuesday’s customer-specific OFO into a systemwide Stage 3high-inventory OFO today. The OFO has penalties of $5/Dth forpositive daily imbalances exceeding a stringent 1% tolerance.