Optimistic

Although it remains optimistic about being able to delay having to post billions of dollars worth of collateral triggered by a series of recent ratings downgrades, NRG Energy last week wasn’t able to rule out the possibility of having to file for bankruptcy if it falls short in its ongoing efforts to obtain waivers or modifications of the massive collateral requirements facing the Xcel Energy subsidiary.

While current Canadian natural gas prices have dropped, officials who take a longer view described the nation’s natural gas sector as poised for lasting growth, after weathering a spell of turbulence this summer. Natural Resources Canada, in an annual review of the continental gas market, projected further growth of 25% in exports to the United States to 4.4 Tcf per year by 2010.

Officials from FirstEnergy’s nuclear operations division told the Nuclear Regulatory Commission (NRC) Wednesday they would submit a detailed plan in two weeks for repair of the corroded Davis-Besse reactor head in Ohio, with a goal of having the 883 MW unit back on line in July.

With more “normalized” natural gas prices that will push first quarter earnings lower than they were in 2001, Duke Energy Corp. CFO Robert Brace said Wednesday earnings growth for 2002 still should reach the “high end” of the 10-15% range, fueled by its Westcoast Energy acquisition and plant completions that will add 6,700 MW to the portfolio by this summer. Duke’s earnings in the first quarter will fall between 35 and 45 cents per share, with the company’s strongest earnings expected in the third quarter.

All signals late Friday indicated that former Enron Chairman and CEO Kenneth L. Lay will testify when he comes before a subcommittee of the Senate Commerce Committee this week, said a spokesman for the full committee.

While Capitol Hill’s legislative schedule has been turned upside down in the wake of last week’s terrorist attacks, the Senate Energy and Natural Resources Committee still expects to mark up and vote out a comprehensive energy bill this fall, an aide to the committee said.

A spokesperson for the Electric Reliability Council of Texas Inc. (ERCOT) yesterday expressed optimism that ERCOT will be able to meet a Friday deadline to complete additional interactive testing with utilities and new market competitors before it begins operating as a single control area, which will in turn clear the way for a full ramp-up of the state’s deregulation pilot. But ERCOT’s Heather Tindall also refused to rule out further delays if the council determines that its systems are not up to snuff by the time the latest deadline rolls around July 20.

A proposed new law to implement sections of the governor’s agreement (MOU) with Southern California Edison Co. will be offered later this week in the ongoing special session of the state legislature, Edison senior vice president Bob Foster said Tuesday in a regular conference call with utility bondholders. Foster characterized the state lawmakers’ attitude as “cautious,” but noted there is “no outright rejection” of the Edison MOU, which requires a state law to authorize California to buy the utility’s transmission assets and assign a portion of its rates to pay for state-backed bonds.

California ended last week without a definitive deal with theinvestor-owned utilities, but with the governor predicting a dealwould be in place by the end of the month. Gov. Gray Davis’optimism didn’t stop there, however. He also believes under-paidsuppliers will accept partial payments for the their mountingbills, and federal regulators somehow will bless the state’stakeover of the utilities’ transmission assets on a lease-backarrangement.