Negotiations

With lack of progress in the FERC settlement talks, state legislative negotiations and among state regulators, all holding the hope for some financial relief, Southern California Edison Co. officials indicated Tuesday that they will continue to resist bankruptcy if state and federally-generated relief falls short, but they will be in a “very difficult” predicament unless some solution comes out of the state legislature by mid-August.

While California state officials continue to promise a workoutfor the state’s energy crisis, the California Power Exchange(Cal-PX), a mainstay of the state’s 1996 electric restructuring,announced it had shut down trading in its day-ahead market andwould close out day-of wholesale electricity markets by noon today.

After about half a year of negotiations, a first step has beentaken towards filling in the last missing link in the Canadianeast-west pipeline grid for natural gas. The Quebec and NewBrunswick governments set a date of Feb. 28 for a formal signingceremony for an agreement-in-principle on promoting construction ofa gas link between their provinces.

After negotiations with a special committee of Aquila Gas Pipeline (AQP) directors on an acquisition offer failed last week, UtiliCorp United Inc. launched an $8.00 per share cash tender offer directly to shareholders on Friday for all outstanding shares of the midstream operation. Kansas City, MO-based UtiliCorp already owns about 82% of AQP; the public owns about 18%, or 5.4 million shares.

The formal, bi-weekly negotiations on major gas restructuringinitiatives, which have been under way for two months, were”suspended” last week when various industry segments agreed that a”unified proposal” was not likely, sources said. This action wasnot totally unexpected.

In an unusual step last week, FERC Chairman James Hoeckeroffered some advice to the industry negotiators who have beenmeeting in closed-door sessions to craft an agreement on the majornatural gas initiatives contained in the notice of proposedrulemaking (NOPR) and notice of inquiry (NOI).

After months of negotiations and two years of wrangling inCanadian courts, Pan-Alberta Gas Ltd. has been taken over by theproducers in its supply pool.

Negotiations reportedly are going on to bring together onceagain the Washington lobbying activities of large oil and naturalgas producers in the form of the American Petroleum Institute (API)and the Natural Gas Supply Assoc. (NGSA).