Pressures

The drought that has suppressed hydro generation levels in the western United States may put more financial pressure on utilities that serve the region, according to a report published Thursday by Standard & Poor’s Ratings Service (S&P).

Economics, politics and public policy pressures seem to be converging against the creation of regional transmission organizations (RTOs) and more cohesive, coherent power markets in the West, according to a consultant and a generators’ representative who spoke at GasMart/Power 2002 last Tuesday in Reno. Although on opposite sides in California’s ongoing electricity restructuring debate, they agreed that regulators and public policymakers need to change their approaches substantially in the future.

President Bush has called on the U.S. Senate to take “quick action” on a comprehensive energy bill when lawmakers begin debate on the measure this week.

For the fourth morning in a row, gas futures spiked higher onlyto come crashing down as long traders liquidated their positions inan effort to avoid margin calls on their positions. Includingyesterday’s margin hike, the exchange has raised margins on fivedifferent occasions in the past three weeks, resulting in anincrease for its customers from $5,670 (on Nov. 17) to $13,500.

In an indication that Mexico may be headed toward privatizing its monopoly-run energy industry, Mexican President-elect Vicente Fox, who takes office Dec. 1 under a vow to make the government more professional and less political, is hearing calls from friends and foes alike to restructure the energy industry and allow more private investment.

Buoyed by storm concerns and another overnight session dominatedby buyers, natural gas futures jumped higher yesterday to post yetanother all-time record high. After opening right on top ofprevious resistance at $5.10, the October contract raced to its$5.223 high during the first 90 minutes of trading, triggering buystops on the way up. October finished just off its high at $5.195,up 14 cents for the session.

Texas Eastern (Tetco) said Friday its delivery pressures haddropped below contractual levels due to cold weather and highmarket-area takes. Thus it issued an OFO, effective at 1 p.m. CTthat afternoon, requiring that all deliveries in its M-3 zone underall rate schedules be made at a uniform hourly rate. All M-3Operational Balancing Agreements were suspended for purposes ofhourly allocations only during the OFO period, the pipeline said.Penalties for non-compliance with the OFO were $25/dth. However,late Friday afternoon Tetco said the OFO was being suspended at 9a.m. Saturday because of forecasts of a “slight” warming trend.

Citing high storage inventories and declining injectioncapabilities related to high field pressures, CIG will implement anOFO taking effect today until further notice for all firmtransportation and storage customers. To relieve a “criticaloperational situation,” CIG is limiting No-Notice Transportation(NNT-1 and NNT-2) customers to an injection maximum of 1/250th oftheir contractual Maximum Available Capacity. Shippers with storageinventory exceeding MAC should initiate withdrawals to get withintheir allowable limits, the pipeline said. Although interruptiblestorage customers (IS-1) were not specifically part of the OFO,they were notified that injections are not available. In additionto the storage situation, CIG said, excessive positive imbalanceson FT contracts are threatening system integrity.

Construction of a new 710 MW gas-fired cogeneration plant toreplace a 75-year old coal-fired powerhouse supplying Ford MotorCompany’s massive Rouge complex and Rouge Steel Co. in Dearborn,MI, is going into overdrive following a boiler explosion lastTuesday that killed one person, critically injured a dozen othersand destroyed the power plant.