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Pacific Gas and Electric applied to the California PublicUtilities Commission (CPUC) to reduce electric rates at the end ofthe electric rate freeze, but no later than March 31, 2002. Thestate law that governs the restructuring of California’selectricity market, AB 1890, gave residential and small businesscustomers a 10% rate reduction on Jan. 1, 1998 and froze rates atthat level. The state law also provided investor-owned utilities atransition period to recover stranded costs. That transition periodends March 31, 2002, or when the past investment costs have beenrecovered, whichever comes first. At that time, the rate reductionswill go into effect.

Moving one step closer to bringing 1.325 Bcf/d of gas fromWestern Canada to Chicago, Alliance Pipeline last week announcedthe start of construction with the clearing of 410 miles offorested rights-of-way for mainlines and laterals in northwesternAlberta and northeastern British Columbia. The entire system isexpected to be completed and in service by October, 2000. Alliancesaid it already has commitments from 37 shippers for 15-yearcontracts worth a total of $8.2 billion. Agreements have beenreached with 93% of landowners along its 2,320-mile route acrossCanada and the United States, while time to complete the NEBproceedings has been built into the construction schedule.

Maritimes &Northeast Pipeline sponsors defended their proposed pipeline certificate (Phase II) amendment last week against attack by some the project’s own shippers and others who say it is too large and too costly for the market it will serve. Project sponsors said the calls for a stay on the project and a hearing on its size are based on a misreading of its amendment filing and a misunderstanding of its agreements with its shippers (see NGI, Feb. 22 issue).

Destin Pipeline Co. has filed at FERC to have cost limitationson its “CNG Lateral” waived in light of delays that pushed theproject’s cost to $35.1 million, well above $19.6 million allowedfor in the Commission’s certification of the project last year(Docket No. CP98-238).

UtiliCorp joined the merger-mania Friday as it announced plans to acquire St. Joseph Light &Power in Missouri for $190.6 million. The agreement has been approved by the boards of directors for both companies but still needs approval from Light &Power shareholders and state and regulatory officials. Both companies expect the deal to close in 2000.

Cash prices hinted Thursday that they’re not ready to settleinto the same kind of stagnation period that characterized much ofFebruary’s activity. Riding the momentum of a rising Henry Hubfutures contract, stronger crude oil futures (back over $13/bbl)and snowy weather in various regions, nearly all points roseanywhere from 2 cents to a dime with most increases in the vicinityof a nickel.

Fresh after receiving a boost from a hefty storage withdrawalWednesday afternoon, natural gas futures continued higher yesterdayin yet another tumultuous trading session. And for the second dayin a row locals were seen as the catalyst, using buy stops toorchestrate a gap higher opening. But overhead resistance at $1.77held and the market was left to ebb and flow within the 4-centtrading range, which was set in the first hour of trading. TheApril contract finished up 3.9 cents to $1.762.

Burlington Resources (BR) announced that its plan for 80-acrein-fill drilling of the Mesaverde Formation in the San Juan Basinof New Mexico has been approved by the New Mexico Oil ConservationDivision. The 80-acre well spacing order could open up anadditional 7,000 drilling locations in the San Juan and be a majorfactor contributing to production growth in the basin over the nextfew years, according to basin analyst George Lippman, who hasstudied the San Juan for the last 30 years. To date, BR has drilled38 Mesaverde 80-acre in-fill wells and plans to drill 50 additionalwells in 1999.

Some traders were groaning with dismay Wednesday at the prospectof the March market being one of nearly all sideways pricemovement, much like the February one preceding it. All it takes isa look at the multitude of zeroes and ones in the change column ofDaily GPI’s price table today to understand where they might havegotten such an idea.