Merchant

Having exited the global trading space and facing merchant power markets that are problematic, San Diego-based Sempra Energy will be placing renewed emphasis on its varied natural gas investments along with its California and foreign utilities. That was the essence of presentations at the energy holding company’s financial analysts’ meeting last Wednesday in New York City.

Having exited the global trading space and facing merchant power markets that are problematic, San Diego-based Sempra Energy will be placing renewed emphasis on its varied natural gas investments along with its California and foreign utilities. That was the essence of presentations at the energy holding company’s financial analysts’ meeting Wednesday in New York City.

The plain vanilla merchant power plant developer/operators of the past need to transform themselves into broader renewable, transportation and natural gas fields in the post-carbon world, according to NRG Energy Inc. CEO David Crane, who spoke to financial analysts in Houston Thursday.

With the economic viability of added underground natural gas storage in California already verified by utility and merchant developers currently pursuing proposals, state regulators later in October will hold a one-day hearing on a unique, urban-based storage project in the heart of the state capital, Sacramento. The California Public Utilities Commission (CPUC) will use the public input as part of its ongoing review and environmental assessment.

While not shying away from active trading, independent generation and merchant natural gas pipeline/storage plays, it’s a sign of the economic downturn that Sempra Energy is charting a course led by its two sizable California utilities, CEO Don Felsinger told financial analysts.

While not shying away from active trading, independent generation and merchant natural gas pipeline/storage plays, Sempra Energy is charting a course led by its two sizable California utilities, CEO Don Felsinger told financial analysts last week at a company meeting in New York City.

It was trick and treat for Westport, CT-based NGS Energy LP on Halloween when it added to its portfolio of merchant natural gas storage facilities on the Gulf Coast and announced that it obtained FERC approval for its Leaf River Energy Center LLC in Mississippi.

Westport, CT-based NGS Energy LP added to its portfolio of merchant natural gas storage facilities in the Gulf Coast, announcing last Friday that it obtained FERC approval for its Leaf River Energy Center LLC in Mississippi.

Fortis Merchant Banking led a $280 million senior secured financing and signed a 29 Bcf, 10-year financial fixed-price gas agreement with Sherbino I Wind Farm LLC, a joint venture in Pecos County, TX, owned by subsidiaries of BP Alternative Energy North America Inc. and NRG Energy Inc. The hedge was designed to accommodate wind intermittency risk and will provide Sherbino with greater revenue stability. Fortis has structured, underwritten and will begin to syndicate the credit facility, which will be converted into a 15-year senior secured term loan at the onset of commercial operations scheduled to begin during the second half of 2008. Fortis Energy Marketing and Trading (FEMT) provided a fixed gas hedge based on forward notional heat rates. The hedge agreement begins Jan. 1, 2009 and runs through 2018. FEMT structured the transaction; terms of the hedge were not disclosed. “The Sherbino I Wind Farm transaction complements the portfolio of hedge transactions Fortis has executed for wind project developers while meeting the requirement of both sponsors and creditors with the backing of Fortis’ ‘AA-‘ credit,” said David Duran, managing director of origination and marketing at Fortis. Currently under construction, the Sherbino I Wind Farm is a 150 MW project that consists of 50 Vestas V90s turbines. FEMT was created when Fortis acquired Cinergy Marketing & Trading from Duke Energy in late 2006 (see Daily GPI, June 28, 2006).