Proposed

The proposed merger of Dominion Resources Inc. (DRI) withConsolidated Natural Gas Co. (CNG) is making a lot of energy peoplein and around Virginia very nervous. So much so they have askedFERC to either reject the combination of the two companies outrightor place “stringent” conditions on the marriage.

Coral Energy affiliates have signed a deal to supply gas to andpurchase the power from the proposed 830 MW Tenaska GatewayGenerating Station in Rusk County, TX. Construction of the plant isscheduled to begin this summer and be completed in spring 2001. Aspart of the deal, Coral also has gained an equity position inTenaska Gateway Partners, which will build, own and operate thefacility. It is Omaha-based Tenasaka’s second power project in thelast two years. “Joining with Tenaska in the Gateway GeneratingStation supports Coral’s strategy to build a power generationplatform that complements our marketing and trading activities,”said Coral CEO Charlie Crisp. Terms of the deal were not disclosed.

Western Resources last week threatened to cancel its proposedmerger with Kansas City Power & Light and sell off the companyto a national energy conglomerate following a decision by theKansas Corporation Commission (KCC) to reopen the docket on its $2billion merger.

Duke Energy’s Algonquin Gas Transmission announced an openseason for its proposed HubLine Pipeline The open season to acceptcapacity requests began July 20 and concludes on Aug. 12. Servicefor HubLine, which is designed for 600,000 Dth/d, is expected tocommence in 2002 and nominations for services starting at differentperiods will be accepted and evaluated.

Consolidated Natural Gas paid a hefty price during the secondquarter for its proposed merger with Dominion Resources. Thecompany took a one-time $165.3 million, $1.12/share, charge relatedprimarily to cash-out of stock options and awards to about 700employees and took another $6.3 million charge, $0.04/share, for aworkforce reduction related to the merger. CNG reported a secondquarter loss from continuing operations of $80 million, or 83 centsa diluted share, compared with income of $46.8 million, or 49 centsa diluted share, a year earlier. The comparison was made worse by a$13.9 million, or $0.15/share, gain in 2Q98 related to a favorableregulatory decision. Excluding special items for both periods,income from continuing operations was 33 cents a diluted share in2Q99, compared to 34 cents in 2Q98. Wall Street consensus had CNGpegged quite a bit higher at $0.39/share.

CMP Natural Gas (CMPNG) said it has signed a long-term contract to deliver gas on a proposed pipeline lateral to a 540 MW gas-fired power plant being built in Westbrook, ME, by Calpine Corp. Construction of the $200 million electric generating facility is under way and Calpine said it will require gas service by June 1, 2000.

CMP Natural Gas (CMPNG) said it has signed a long-term contractto deliver gas on a proposed pipeline lateral to a 540 MW gas-firedpower plant being built in Westbrook, ME, by Calpine Corp.Construction of the $200 million electric generating facility isunder way and Calpine said it will require gas service by June 1,2000.

Continuing a flurry of activity since its proposed merger withSempra Energy fell through (See related story), KN Energy was at itagain Friday as its marketing affiliate, KN Marketing, announced itwas selected to provide gas and fuel management services to a 600MW power plant in Elwood, IL. KN will supply 10 Bcf/year to thisplant at an undisclosed price. The Colorado-based company will alsomanage the plant’s fuel service, including supplying, balancing andmanaging storage and transportation.

Oneok’s proposed merger with Southwest Gas received a big shot in the arm last week, as the Nevada Public Utilities Commission (PUCN) unanimously approved the deal two months ahead of schedule. Although approval is still needed from Arizona and California regulators as well as Southwest Gas shareholders, both companies are confident the merger will be completed in the previously announced fourth quarter 1999 timeframe.