Rolling

Having been singled out by California’s governor for “price-gouging” during recent rolling blackouts for charging $1,900/MWh for some emergency spot market supplies, Houston-based Reliant Energy’s wholesale businesses President/COO Joe Bob Perkins fought back Friday, crying foul, but drawing short of saying his company would seek any legal action against the confidentiality of its bulk power transactions being apparently violated by state officials.

Having been singled out by California’s governor for “price-gouging” during recent rolling blackouts for charging $1,900/MWh for some emergency spot market supplies, Houston-based Reliant Energy’s wholesale businesses President/COO Joe Bob Perkins fought back Friday, crying foul, but drawing short of saying his company would seek any legal action against the confidentiality of its bulk power transactions being apparently violated by state officials.

Amid concerns over another day of rolling blackouts inCalifornia and buoyed by speculative short covering, natural gasfutures erupted higher Tuesday as traders factored in the chancethat the market has found at least a temporary bottom. The Aprilcontract finished 22.4 cents stronger at $5.287, but even moreimpressive was the buying interest in the out-months, which enabledthe 12-month strip to advance 23.6 cents to close at $5.421.

Along with the specter of rolling blackouts caused by powersupply shortages in California during peak-demand periods thissummer, the state’s increasingly constrained natural gas pipelineinfrastructure may be bogged down by peak load demands running asmuch as 2 Bcf/d over system capacity, an energy teleconference wastold Wednesday. At stake are billions of dollars of extra coststhat could be caused as much by natural gas constraints as byshortages of megawatts.

After several years being hard up for cash because gas and oilwere dirt cheap, producers are now rolling in the dough. Severalmore reported record financial results for the fourth quarter andfull year last week because of extremely high natural gas and crudeoil prices and rising production. EOG Resources, Louis DreyfusNatural Gas and Equitable Resources all hit the jackpot withmassive earnings increases from the year prior.

After several years being hard up for cash because gas and oilwere dirt cheap, producers are now rolling in the dough. Severalmore reported record financial results for the fourth quarter andfull year yesterday because of extremely high natural gas and crudeoil prices and rising production. EOG Resources, Louis DreyfusNatural Gas and Equitable Resources all hit the jackpot withmassive earnings increases from the year prior.

At 2 p.m. (PST) Monday, the Cal-ISO anticipated California wouldavoid rolling blackouts and have only some business interruptionsin northern California to get around the transmission bottleneckfor moving supplies south to north. The prognosis for Tuesday ispretty much as it was yesterday, said Cal-ISO’s COO KellanFluckiger, noting that they do not anticipate any unplannedoutages, which is always the wildcard in transmission gridmanagement in the midst of shortages of the magnitude thatCalifornia has faced for the past two months.

Responding to a California power market gone haywire andteetering on the brink of operational and financial disaster, FERCFriday issued a series of remedial measures, virtually strippingthe Cal-PX and Cal-ISO of their control of the market and callingmarket stakeholders together to negotiate bilateral forwardcontracts.

Spot gas prices into California broke Daily GPI’s nationwideall-time record high of $39 at the Chicago citygate, set in Feb.2, 1996 trading. A western trader for one marketing firm reported adeal for $41 at the Southern California border Wednesday, saying,”And I’ve got my confirmation from EOL [EnronOnline] to prove it.”California was just part of a hyperpowerful cash market that hadmost points exploring price territory they had never seen before.