Needed

The draining of capital from the U.S. power industry needed to build new power plants and a lack of incentives from utility regulators to make better use of generation could lead to power shortages in certain parts of the country in the back half of this decade, an official with the Electric Power Supply Association (EPSA) warned on Friday.

The gas and power industries are going to have to develop products on the retail level to shield consumers from the volatility of the wholesale market, FERC Commissioner Nora Meade Brownell told an Energy Bar Association audience last week.

On the heels of a three-day, 77-cent price rally, natural gas futures took a much-needed breather Tuesday as light profit taking by day traders and commercial hedgers demoted the prompt contract off its recent high. The April contract closed at $3.256, down 4.9 cents for the session, but more than a dollar above its Jan. 28 low. Estimated volume of 121,262 was heavy considering the modest price retreat.

With FERC-ordered mitigation measures on wholesale power prices in the western part of the country set to expire later this year, Commission Chairman Pat Wood on Thursday disclosed that he’s traveling to California this week to, among other things, receive assurances that the region’s market rules and infrastructure are on enough of a solid footing that those caps can be lifted when they expire at the end of September.

Although the nation needs to await the completion of a “full autopsy” on Enron Corp., an initial analysis using public financial documents shows that the Houston energy trading giant was marked by “income that seldom matched its cash flows,” according to Portland, OR-based energy economist Robert McCullough, speaking Friday to an industry conference in Seattle, WA.

Although many might want Enron Corp.’s once remarkable trading platform to resume as soon as possible, several factors may delay a quick start-up of the proposed UBS AG-Enron wholesale trading arm. The two companies may have come to terms in a 10-year deal, but the transaction faces the scrutiny and ultimate decision of the bankruptcy court handling Enron’s case and several federal authorities. It also faces the blessing of creditors, who would have 10 days following a court’s decision to appeal.

Although many might want Enron Corp.’s once remarkable trading platform to resume as soon as possible, several factors may delay a quick start-up of the proposed UBS AG-Enron wholesale trading arm. The two companies may have come to terms in a 10-year deal, but the transaction faces the scrutiny and ultimate approval of the bankruptcy court handling Enron’s case and several federal authorities. It also faces the blessing of creditors, who could appeal any decision, and because of the legalities involved and the witch hunt going on in Washington, many analysts remain tight-lipped about the deal.

In a report issued just one day after the U.S. terrorist attacks, the General Accounting Office (GAO) offered testimony before the Senate’s Committee on Governmental Affairs that poor information security on interconnected computer systems to support federal and private operations and infrastructures — including the energy industry — “could have potentially devastating implications for our country.” GAO found that federal computer systems are “riddled with weaknesses that continue to put critical operations and assets at risk.”

While voicing continuing support for the state’s electricity recovery plan and the specific deal to sell San Diego’s utility transmission assets, Sempra Energy’s CEO last Thursday advocated more political reality and attention to expanding U.S. natural gas infrastructure in outlining his current views on California’s electricity crisis to business leaders attending a joint forecast of the economic impact from the power woes by UCLA’s Anderson School of Business and Cambridge Energy Research Associates (CERA).