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Facing more power alerts, near-record demand and strongpolitical pressure, the California Independent System Operator(Cal-ISO) Board Monday voted, 15-6, to lower the price cap to$250/MW for ancillary services, and spent another day discussingwhat combination of fixed-price supply deals and infrastructureupgrades can help the state avoid blackouts and rolling brownoutsthe rest of this summer. The price cap lowering is effective Aug.7.

In a move that could have a near-term bearish impact on thenatural gas market, the American Gas Association has decided torelease a five-year average of gas storage levels in its weeklystorage report. With current storage levels significantly behindlevels last year, the decision to publish an average that is muchlower than levels last year will give the market a much differentview of industry fundamentals.

Williams’ Transco pipeline has received approval for its SouthCoastExpansion, a project to deliver up to 204 MMcf/d of additionalsupplies starting in November, primarily in Georgia and SouthCarolina. The Federal Energy Regulatory Commission issued acertificate for the project Monday, accepting Transco’s alternateincremental rate scheme, requiring signed 15-year contracts for 100%of capacity, and dismissing protests (see FERC Docket CP99-392)

Like a monster at the end of horror movie that refuses to die,natural gas futures sprung back to life Friday following Thursday’squiet trading session that led some to believe the bull-run wasover. It didn’t take the market to prove them wrong Friday, as theJune contract gapped higher at the open and then erupted 11.5 centsto close at $3.825.

Opening near its daily high and closing just off its low, themarket took on the trajectory of a safe pushed out a 10-storybuilding Friday, as traders pressured prices to their lowest levelsince April 12. The June contract was hardest hit late in thesession, when a wave of sell-stops exacerbated the price slide. Theprompt month closed down 8.2 cents at $3.025.

The cash market arrested the slide that had been developingTuesday by coming to a near-standstill in price movement Wednesday.Only a few points ranged any further than a penny or so to eitherside of flat.

BP Amoco said it is near an agreement with the FTC on its mergerwith Atlantic Richfield Co. (ARCO). The news comes with theannouncement the companies are selling ARCO’s Alaskan businesses toPhillips Petroleum Co. for $7 billion. BP Amoco also agreed to sellARCO’s interests in the Cushing storage terminal, together withvarious pipeline interests, to TEPPCO Partners of Houston for $355million.

The Midwest utility landscape should expect radical changessoon, as two major mergers have cleared all regulatory approvalsand are closing in on completion.

Tennessee anticipates completing repairs of a rupture nearHebron Center in northern Pennsylvania around 9 p.m. EST Wednesdayand will accept Cycle 2 nomination increases then if the repairsare finished. Sunday morning’s rupture on the 300 Line is causingrestrictions through Secondary services downstream of Main LineValve 314.