Merchant

Mirant’s diversified global portfolio and growing gas merchant business in North America sent third quarter earnings soaring, with earnings from operations totaling $234 million or 67 cents per diluted share, compared to $119 million or 35 cents per diluted share for the third quarter, 2000. CEO Marce Fuller said the earnings have given the Atlanta-based company “increasing confidence in our ability to achieve earnings per share of $2.55 to $2.65 next year, and to grow off that base by at least 20% on average in subsequent years.”

Among the sea of red ink flooding the U.S. economy’s third-quarter earnings reports, San Jose, CA-based Calpine Corp., the merchant power plant developer/operator, Thursday stood out as a glaring exception, reporting a 102% increase in net income for the quarter ($320.8 million versus $158.5 million for the same quarter in 2000) and a 292% increase in quarterly revenues ($2.9 billion versus $744.8 million for year-earlier period). Diluted earnings/share were up 80% to 88 cents for the quarter.

El Paso Natural Gas Co. and El Paso Merchant Energy (EPME) Friday filed a petition with FERC, seeking the appointment of an administrative law judge to facilitate settlement negotiations with California regulators over charges that El Paso abused market power and affiliate regulations in the transportation of gas along its Southwest pipeline system. The El Paso companies emphasized that the motion does not represent a retreat “in any way from their position” that they did not engage in market power in the California gas market, artificially raise gas or electricity prices, or engage in affiliate abuse.

FERC Chief Administrative Law Judge Curtis Wagner has ordered El Paso Merchant Energy Co. (EPME) to produce a copy of a highly sensitive internal memorandum, which allegedly reveals the intimate working relationship between parent El Paso Corp. and affiliates El Paso Natural Gas and EPME, into the record of a high-profile case exploring charges of affiliate and market-power abuse.

FERC Chief Administrative Law Judge Curtis Wagner has ordered El Paso Merchant Energy Co. (EPME) to produce a copy of a highly sensitive internal memorandum, which allegedly reveals the intimate working relationship between parent El Paso Corp. and affiliates El Paso Natural Gas and EPME, into the record of a high-profile case exploring charges of affiliate and market-power abuse.

Ever-expanding San Jose, CA-based Calpine Corp., one of the nation’s fastest growing merchant power plant developers, Tuesday bought another 236 Bcf of natural gas reserves through two purchases–one in the San Juan Basin in New Mexico and the other in South Texas. This brings Calpine’s gas reserves to about 1.5 Tcf, with a goal of having 6.7 Tcf in the company’s portfolio by the end of 2005 to support an almost exclusively gas-fired fleet of plants totaling 70,000 MW of output.

Duke Energy has entered into an agreement to acquire a 400 MW merchant generation facility from Enron North America. Acquisition of the Union County, MS, gas-fired facility expands Duke Energy’s Southeast generation portfolio. It also provides additional trading and structured origination opportunities throughout the eastern interconnect. Terms of the transaction were not disclosed. Closing is anticipated to take place in early October. The North American Electric Reliability Council estimates the Southeastern Electric Reliability Council needs an additional 40,000 MW of generation capacity over the next decade to meet peaking demand. Given access to major transmission lines, the Duke Energy facility will be able to serve demand throughout the southeastern and midwestern United States.

In the midst of an ever-widening series of battles facing merchant electricity generators during California’s energy crisis, the state’s small generator trade association Wednesday lauded the newly inked deal with Southern California Edison Co. and many of the state’s small qualifying facility (QF) generators as good for consumers and a means of “stabilizing” state wholesale power prices. A string of legal suits by both the utility and QFs has been suspended as a result.

Representatives from a dozen merchant generators met with California Gov. Gray Davis for four hours late Wednesday in discusssions that one participant characterized as “cordial and candid,” but the result only reinforced differences between the state and electricity suppliers, whom the governor has characterized as “gougers.” The only clear agreement among the participants was to maintain daily contact with the governor and his staff to keep a dialogue going.