Ongoing

In an ongoing effort to reduce power costs from existing PublicUtilities Regulatory Policy Act (PURPA) contracts, Puget SoundEnergy announced yesterday an agreement to buy a 160 MW gas-firedcogeneration plant in Bellingham, WA, from Encogen for $164million. Puget Sound said buying the facility eliminated its secondlargest PURPA contract, a deal which required it to pay Encogenfixed and escalating fees through mid-2008 for the plant’s output.

FERC’s attempt at a “Solomonic solution” to the ongoing debateover the function of Sea Robin Pipeline – dividing the offshoresystem in two, with the smaller part being declared transportationand the larger section found to be gathering – apparently hasfailed miserably, with both pipelines and their customers citingshortcomings with the remand decision and seeking rehearing. If theSea Robin ruling is upheld by FERC, the case – which has beenpending since 1995 – would be headed back to the courts for asecond time.

TransCanada promised $70 million in savings to its pipelinecustomers last week as part of an ongoing effort to work outsynergies and structural issues caused by last year’s merger withNova Corp. But while the company is working on its internaloperations, other companies are sizing up TransCanada as apotential acquisition, according to Jim Oosterbaan, vice presidentfor the Alberta-based consulting firm Ziff Energy Group.

Tossing aside an ongoing state regulatory investigation of someof its billing practices, California’s most aggressive independentenergy service provider (ESP), Commonwealth Energy, plans to moveinto Pennsylvania and New Jersey next month where it expects a morestraightforward and receptive marketplace for its residential andsmall business electricity products. While signing up more than60,000 customers in California’s daunting retail mass power marketsso far, Commonwealth has been able to pass on savings of up to fivepercent, emphasizing green power from environmentally benignsources, developing prospects for new green products and shoppingfor power generation operations of its own, in addition to eyeingother states as the next stage of its two-year-old development.

Midcoast Energy of Houston continued an ongoing buying spree last week. This time, however, the company has set its sights to the North. Subsidiary Midcoast Canada Operating Corp. bought the Calmar gas treating plant and gathering system in Alberta from Probe Exploration Inc. for C$20 million (US$13.2 million). The company said it has its sights on similar acquisitions in the future.

Political forces are prevailing over economics in California’songoing efforts to finish the job of unbundling its natural gas andelectricity industries, and no one in the newly elected Gov. GrayDavis’s administration so far is getting involved, according toenergy industry observers in the state capital in Sacramento. As aresult, three months into 1999, the five-member California PublicUtilities Commission is operating with two vacant seats, stillawaiting gubernatorial appointments.

As part of its ongoing quest to comprehensively reform thenatural gas industry, FERC last week announced that it is planninga series of conferences to tackle issues ranging from its proposedcapacity auction to state unbundling to a pre-filing collaborativeprocess for gas pipeline projects.