Nears

After suffering through a long period of low prices and thinmargins, exploration and production (E&P) companies appear tobe headed toward a period of success, a report published recentlyby Deutsche Banc Alex. Brown (Deutsche Banc) said. Strong gasprices, industry consolidation and probable low storage levels arethe main factors contributing the report’s bullish conclusions.

After nearly three years and some substantial changes in itsnatural gas supply flexibility, the backers of the proposed HighDesert Power Plant about 100 miles northeast of Los Angeles pulledtogether final air emission mitigation and water deals this week(Feb. 7-11) they think will get them final state approval for theirplant by spring. The final steps were taken as the project won alast-minute reprieve from a preliminary recommendation that theCalifornia Energy Commission (CEC) reject the proposal, which wasthe first of what are now more than two dozen merchant power plantproposals pending.

Last week was busy for MidAmerican Energy Holdings, as it movedcloser to completing its sale to Berkshire Hathaway Inc. while alsoannouncing intentions to step up efforts in Illinois’ retail energymarket. Once the merger is finalized, the parent of a utilityserving 653,000 electric customers and 622,000 gas customers inIowa and Illinois will become a privately-held company.

ScottishPower PLC and PacifiCorp announced they have brokered asettlement in principle with the staff of the Oregon Public UtilityCommission (OPUC) that essentially clears the way for the firstacquisition by a foreign company of a U.S. power utility.

ScottishPower PLC and PacifiCorp announced they have brokered asettlement in principle with the staff of the Oregon Public UtilityCommission (OPUC) that essentially clears the way for the firstacquisition by a foreign company of a U.S. power utility.

Despite the study by the Mid-America Interconnected Network(MAIN) last month indicating that power supplies in the Midwesthave greatly improved over last year, there are some who aren’tquite ready to write off the possibility of a recurrence of pricespikes for the region this summer.

Although gas supply and power contracts probably won’t be signeduntil next year, California’s first major merchant generation plantis expected to get its final state regulatory approval next weekand break ground this summer north of Sacramento in Sutter Countynear the agricultural town of Yuba City. A set of environmentalconcessions by the project sponsor, San Jose, CA-based CalpineCorp., pushed it into the lead spot among seven other projectsundergoing the state regulatory approval process. Projectfinancing, gas supply contracts and power supply deals will all bewrapped up in the second and third quarters of 2000, according toCalpine’s Sutter project manager, Curt Hildebrand.

Texas moved a step closer to a restructured electricitymarketplace last week when the state Senate approved a bill toderegulate electric utilities. The bill is now bound for the StateAffairs Committee of the House of Representatives. Hearings couldbe held as early as March 29. Gov. George W. Bush has voiced hissupport for electric deregulation.

Other than the screen-related drop in prices Wednesday, it’sbeen a pretty slow and uneventful bidweek, a number of GPI sourcesagreed. Things had settled down Thursday and June gas was tradingin about the same area as it had following the futures expiryWednesday, a Midwest-based marketer noted. However, another sourcesaid Southwest and Southern California border prices continued tosoften a bit further Thursday.