Political

On a straight partisan political vote, California regulatorsyesterday approved rate relief for beleaguered Southwest GasCorp.’s cost-overrun plagued development of a new natural gasdistribution system for the Sierra Nevada foothill town of Truckee,CA, about 50 miles east of Sacramento in the northern third of thestate.

In a surprising bit of candor, the chief political architect ofCalifornia’s 1996 electric industry restructuring law last weekrevealed that out-of-state energy companies paying high prices forgeneration assets, exceeded state lawmakers goals of gettingconsumers out from under the enormous stranded costs of the state’sthree major investor-owned utilities.

In a surprising bit of candor, the chief political architect ofCalifornia’s 1996 electric industry restructuring law told a groupof industry participants at a statewide energy roundtablediscussion in San Diego that the state’s lawmakers intentionallyderegulated generation to draw out-of-state capital to pay off theenormous stranded costs of the state’s three major investor-ownedutilities.

The Maritimes & Northeast Pipeline overcame a significantpolitical hurdle last week, signing an agreement with protestingNova Scotia Indians that smoothes the way for deliveries of 450MMcf/d of Sable Island gas to begin by the end of the year. Theagreement with the Assembly of the Nova Scotia Mi’kmaq Chiefscovers a wide variety of environmental and socio-economic programsgiving native Indians a head start on industry-related jobs andtraining and ensures that Indians on a Mi’kmaq reserve will be thefirst Atlantic Canadians to receive gas. The National Energy Boardadded its final stamp of approval.

Improving crude oil market conditions usually are accompanied byincreasing political scrutiny into rising prices. A good example ofthat is occurring in California where Attorney General Bill Lockyerhas vowed to probe deeply into the mergers of major oil and gasproducers following a report that shows consolidation is one of thereasons California has experienced some of the highest gasolineprice spikes in the nation.

While Congress played political football with draft electricrestructuring legislation, natural gas pipelines urged legislatorsto take a page from the history of natural gas deregulation andgive FERC enough authority to effectively oversee the nationalelectric grid.

While Congress played political football with draft electricrestructuring legislation, natural gas pipelines urged legislatorsto take a page from the history of natural gas deregulation andgive FERC enough authority to effectively oversee the nationalelectric grid.

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.

International gas producers are sailing into a political stormas they pursue their next drilling target off the East Coast, theCanadian half of Georges Bank between Nova Scotia and New England.Three wholly-owned arms of senior U.S. gas suppliers — TexacoCanada, Chevron Canada and Amoco Canada — are out to persuadeCanadian federal and provincial authorities to let a moratorium onresource exploration on Georges expire.