Mired

A pioneering firm in California’s ill-fated competitive retail electricity market, Costa Mesa, CA-based Commerce Energy Group Inc., is mired in a sea of red ink as it compiles its fiscal 2008 results, selling off a Houston-based energy consulting firm it acquired four years ago and announcing earlier this year that it was cutting about one-third of its work force.

Chapter 11-mired Mirant and Pepco Holdings Inc. (PHI) last week said that they have reached a settlement agreement to restructure two power purchase agreements under review for potential rejection as part of Mirant’s bankruptcy case. Mirant’s challenge of another agreement under which the bankrupt generator buys power from Pepco remains in play.

Mired in a sea of bearish news, natural gas futures traders glommed on to the only available bullish factor Wednesday and rode a buying wave created by an early spike in the nearby crude oil market. The October natural gas contract notched a new $4.66 high for the week by 11 a.m. EDT. Modest position squaring was seen in the afternoon, which allowed prices to ease back to finish the session at $4.588, a 7.7-cent advance on the day.

Chapter 11-mired Mirant Corp. last Thursday said that it filed a motion with the U.S. Bankruptcy Court to reject an out-of-market agreement to purchase power from Pepco. Mirant forecasts it would cost the company and its stakeholders “hundreds of millions of dollars” over the duration if this agreement if it were to remain in effect. The obligations under this agreement will run out over time and end in 2021.

Mired in a bog of bearish influences, cash prices continued to drift downward Wednesday at nearly all non-California points. Much like the day before, most of the downturn ranged between about a nickel and a dime, but with larger drops in the teens recorded at several Northeast citygates.

Chapter 11-mired Pacific Gas and Electric Co. last week accused the California Department of Water Resources (DWR), the state’s wholesale bulk electricity buyer, of overestimating its forecast of spot power purchase costs through next year by $3.1 billion, including overestimating the price of natural gas used to generate the power supplies.

The woes of Philadelphia’s main gas utility, Philadelphia GasWorks (PGW), have grown to embarrassing levels as computer systemproblems, debt, and customer unhappiness continue to dominate thescene. The situation came to a head last week, as the hierarchy ofPGW testified before the Philadelphia Gas Commission during publichearings of the utility’s budget process.

$2.43 continued to be a stubborn resistance level for the AugustNymex contract on Thursday, as yesterday marked the fourthconsecutive day the spot month failed to move above this key shortterm price objective. On the other hand, Thursday was also thefourth day in a row that August failed to move below key technicalsupport at $2.32. The inability for August to move significantly ineither direction helped lead the contract down 1.7 cents to settlethe day at $2.349.