Merchant

El Paso Merchant Energy said a final FERC order issued this week paves the way for it to receive a final $70 million payment from a Goldman Sachs subsidiary for East Coast Power LLC, which owns the gas-fired 940 MW Linden cogeneration facility adjacent to Staten Island in Linden, NJ. The total purchase price paid for the plant was $450 million. At closing in October, GS Linden Power Holdings LLC, paid $380 million with the remainder to follow FERC’s approval. El Paso also announced that it agreed to sell its interest in Mohawk River Funding IV to a subsidiary of Bear Stearns for $4.5 million in cash and the assumption of $75 million in debt. El Paso said MRF IV was formed to securitize a long-term power contract with Connecticut Light and Power Co. While the MRF IV debt is non-recourse to El Paso, the company has, nevertheless, included it and other similar debt when calculating its total obligations senior to common stock. The transaction is subject to FERC approval and is expected to close in February 2004.

Williams CEO Steve Malcolm remains concerned about the “noise” from the ongoing energy merchant industry investigations by FERC, the Department of Justice and the Securities and Exchange Commission, and the “uncertainty as to where those might lead.” Malcolm made the comments during a conference call last week to discuss the company’s third quarter earnings.

A Houston jury on Monday began hearing the first case that rocked the merchant sector in the past two years, but it didn’t involve Enron Corp. The jury seated Monday will determine whether a former Dynegy Inc. executive, who pleaded innocent, committed fraud with two fellow executives, who already have pleaded guilty.

Guarding against a repeat of the financial troubles that have devastated the merchant energy sector, the Committee of Chief Risk Officers (CCRO) Wednesday published proposed guidelines for assessing capital adequacy in a stressed environment, both for a company’s long-term viability and its short term liquidity.

Guarding against a repeat of the financial troubles that have devastated the merchant energy sector, the Committee of Chief Risk Officers (CCRO) Wednesday published proposed guidelines for assessing capital adequacy in a stressed environment, both for a company’s long-term viability and its short term liquidity.

Citing more discussion on the Mexican side of the border including its partner, San Diego-based Sempra Energy, PG&E Corp.’s National Energy Group (NEG) for the second time last week extended an open season on capacity on the 500 MMcf/d, 220-mile North Baja natural gas transmission pipeline. The open season previously had been extended until the end of last month, and they NEG indicated last week it now will run to the end of July.

To remedy the financial turmoil that exists for U.S. energy merchants still operating, an analyst with Standard & Poor’s Ratings Services (S&P) suggested Thursday that they should consider relying more on “trading around their assets” by hedging and other risk-management activities.

To remedy the financial turmoil that exists for U.S. energy merchants still operating, an analyst with Standard & Poor’s Ratings Services (S&P) suggested Thursday that they should consider relying more on “trading around their assets” by hedging and other risk-management activities.

Several favorable actions and events led Fitch Ratings to give Dynegy Inc. and its affiliates a “stable” outlook on Thursday, removing the energy merchant from Rating Watch Negative for the first time in nearly 20 months.