Massive

Locational marginal pricing (LMP), a key component of FERC’s massive standard market design (SMD) proposal for U.S. wholesale power markets, will fail in the absence of so-called participant funding for new transmission construction and upgrades, a top official with Southern Co. said last Wednesday.

The current commissioners on the Federal Energy Regulatory Commission “may be planting the seeds for a massive failure of the energy infrastructure,” a veteran market analyst said on Wednesday, citing “the most unprecedented and blatantly political decision” made by FERC’s chief law judge against El Paso Corp.

The current commissioners on the Federal Energy Regulatory Commission “may be planting the seeds for a massive failure of the energy infrastructure,” a veteran market analyst said on Wednesday, citing “the most unprecedented and blatantly political decision” made by FERC’s chief law judge against El Paso Corp.

Few tropical storms have packed the punch of Isidore. Despite not reaching hurricane strength, the storm, with its wide girth, heavy rain and high seas and winds, wiped out as much as 4.5 million bbl of oil and 25 Bcf of natural gas production in the Gulf of Mexico last week as hordes of producers fled Gulf platforms and rigs, according to the Minerals Management Service (MMS). October futures prices soared to new 15-month highs at $3.99 last Monday before retreating to $3.686 at expiration on Thursday, and Henry Hub cash prices jumped to highs of more than $4 before slipping to $3.59 on Thursday.

The common stock price of El Paso Corp. took a massive hit last week, as the ratings agencies focused on Monday’s adverse FERC administrative law judge decision (see related story). Standard & Poor’s placed El Paso and its affiliates on CreditWatch with negative implications, and Moody’s also initiated a review for possible downgrade.

The common stock price of El Paso Corp. took a massive hit again Tuesday, as the ratings agencies focused on the adverse FERC administrative law judge decision of Monday (see Daily GPI, Sept. 24). Standard & Poor’s placed El Paso and its affiliates on CreditWatch with negative implications, and Moody’s also initiated a review for possible downgrade.

It was hard to tell from mostly moderately lower cash prices Monday that a huge amount of gas had been taken off the Gulf Coast market, especially since Gulf and Northeast points tended to see the lion’s share of declines. The storm-induced offshore shut-in volume was expected to grow as the week wears on, so in consideration of great strength in the energy futures complex Monday, sources felt confident in predicting soaring prices Tuesday in most markets.

As part of a massive overhaul of El Paso Corp., conceived by the management team after the stock fell amid rumors of dubious debt transactions (a la Enron Corp.), the company made two major announcements last week: it simplified its balance sheet to remove any off-balance sheet debt, and it announced it will divest itself of $2.25 billion in assets by the second quarter in the Gulf of Mexico, Midcontinent and the Rocky Mountains to enhance its liquidity.

Despite taking its massive utility into Chapter 11 bankruptcy proceedings last year, PG&E Corp. reported Wednesday it handed out $4.68 million in bonuses to 11 top corporate and utility senior executives, along with $13.5 million in restricted stock, as rewards for performances resulting in $1.1 billion in profits last year. The disclosure was part of a filing to the Securities and Exchange Commission, prompting strong criticism from consumer groups.