Republished

CalEnergy Co. Inc. and MidAmerican Energy Holdings Co. formallyclosed their merger Friday, marking the first time that anindependent power producer has acquired a traditional gas andelectric utility. The Iowa Utilities Board’s (IUB) recent approvalof the deal cleared the way for it to be completed.

After losing a court battle that would have nullified theacquisition, FPL Energy Inc. announced last week it closed thedeal to obtain Central Maine Power Co.’s (CMP) non-nucleargenerating assets. The transaction is expected to be completed inApril.

Chevron announced late Friday it adjusted its 1998 earnings toaccommodate $637 million in “potential losses” due to an OklahomaSupreme Court decision last week affirming a lower court’s rulingagainst the integrated oil and gas company. Chevron said it stillplans to seek aggressive review of the case.

The Oklahoma Corporation Commission (OCC) is deciding whether toorder interim rates, which could lead to a reduction for customersof Oklahoma Natural Gas (ONG), which would create what the LDCcalls “a rate case within a rate case.”

Small gas producers might not see much if any benefit from aseverance tax relief bill passed by the Texas legislature lastweek. Oil producers, however, will get a break. Relief specified inthe bill is triggered by low commodity prices, and the trigger foroil producers already has been pulled. However, the statecomptroller’s office does not expect gas prices to dive low enough,long enough to enact relief.

The formal, bi-weekly negotiations on major gas restructuringinitiatives, which had been under way for more than two months,were “suspended” when various industry segments decided that a”unified proposal” wasn’t likely, sources said. This action was nottotally unexpected (See NGI, March 1 issue).

A group of Wisconsin distributors say FERC should resort to amandatory auction of short-term capacity only as a last measure -after it has implemented and weighed the effects of its otherproposed initiatives, such as increased pipeline reportingrequirements, and finds they failed to achieve a similarcompetitive end.

As construction begins on Alliance Pipeline, Canadiannatural-gas producers are mounting aggressive northern drillingcampaigns to fill up the added export capacity when it goes intoservice in October of 2000. Northeastern British Columbia, thestarting point for Alliance’s 2,320-mile route to Chicago, hasemerged as an E&ampP hot spot.

A very divided FERC last week broke with a decade-old procedureby leapfrogging the preliminary determination (PD) step in fourcontroversial pipeline projects intended to carry Canadian gas fromthe U.S. Midwest to the Northeast gas market. Instead, it deferredaction on the fate of the projects until all of the environmentalreviews are completed – “hopefully” by early next fall. Projectsponsors had mixed reactions: they were disappointed by the breakwith PD procedure, but they also were encouraged by FERC’sassurance of a final vote by fall. And all said – at least publicly- they still planned to move forward with their separate projects,but sources said privately sponsors were re-evaluating whether itwas “worthwhile to go ahead.”