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Late in the week, Gov. Gray Davis met with the state legislative leaders who on both sides of the aisle were churning out new proposals for salvaging the state energy operations and keeping Southern California Edison Co. out of bankruptcy court. Consumer advocates and the state’s largest businesses are keeping a wary eye. Speculation is high that generators and the governor are going to have to give something, too.

Despite flurries of trading activity near the open and thenagain near the close, natural gas futures trading was extremelyquiet yesterday as most traders elected to morph their three-dayweekend into a four-day holiday.

The California Independent System Operator (Cal-ISO) Wednesdaybegan some joint inspections of off-line power plants as it facedthe possibility of declaring a Stage Three alert. Officials had notdeclared the alert as of press time.

In the first of its kind for the hotel industry, PG&E EnergyServices has signed a five-year, $165 million deal with theprocurement arm of Marriott International to provide natural gas,electricity and various energy services to 130 properties inCalifornia. As other states open their energy markets, PG&Ehopes to do other deals with the huge Bethesda, MD-based hoteloperator, which has 1,800 properties worldwide.

Due to an expected rise in Alberta’s prices, eastern Canadiangas buyers will save up to 25% off their delivery costs byswitching suppliers, once the major ongoing pipeline expansionsfinish, a study jointly prepared by Energy ERA (Calgary) and A.E.Sharp & Associates (Toronto) said. The multi-client study,which involved a comprehensive evaluation of the entire NorthAmerican natural gas marketplace and focused on the continentalNortheast, said the savings are expected to begin in the 2000contract year and last until at least 2005. The largest savingsyear will be when the Alliance opens in 2001.

A deal to joint venture the Permian Basin oil and gas producingassets of ARCO Permian, an ARCO subsidiary, and Chevron USAProduction will save the companies money and serve as a platformfor the addition of other Permian interests.

California energy regulators, all appointees of outgoing Gov.Pete Wilson, last week requested a meeting after Labor Day with thegovernor in an attempt to head off new state legislation that couldfurther hinder ongoing attempts to streamline regulation and injectmore competition into the natural gas industry. The president ofthe California Public Utilities Commission calls one of the bills”truly anti-competitive.”

FERC yesterday ordered a settlement judge to convene aconference on Texas Eastern Transmission’s settlement proposal thatprofesses to save the pipeline’s customers more than $260 millionby the end of 2003.