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Growing demand and limited gas transportation capacity in theTidewater area of southeastern Virginia, northeastern NorthCarolina and southeastern Maryland prompted Columbia GasTransmission to test the market for a pipeline expansion in thatarea.

Kern River Gas Transmission, a subsidiary of Williams, filed anapplication last week with FERC to add 124,500 Dth/d of additionalfirm transportation capacity to its 922-mile pipeline system. Thecompany said the California Expansion Project will not only provideadditional transportation capacity from Wyoming to markets inCalifornia, but also will provide an opportunity for Williams tooffer significantly reduced rates for firm transportation based onthe recent approval by FERC of Kern River’s Extended Term RateProgram.

Aquila Energy has won a five-year weather hedge contract toserve the Sacramento Municipal Utility District, a move designed toprotect the California utility from the combined effects of lowprecipitation and the wide swings in electricity prices now facedby other communities in the state.

Oklahoma Natural Gas Co. has been cleared by the OklahomaCorporation Commission of any wrongdoing regarding how it evaluatestransmission service bids for ONG customers, but the company thatfiled the original complaint — Enogex — is appealing thebidding process to the Oklahoma Supreme Court.

Merrill Lynch has been hired to serve as Avista Labs’ investmentbank and strategic adviser to evaluate the best ways to maximizethe shareholder value of its fuel cell technology. Avista Corp. ofSpokane, WA made the announcement yesterday, and said that MerrillLynch will “consider all possible options, including financialrestructuring and an initial public offering.” Avista Labs recentlyreceived a comprehensive patent securing the exclusive modulardesign of its PEM fuel cell system, a “plug and play” feature thatallows fuel cell cartridges to be easily removed and replacedwithout interrupting power. The Labs arm of Avista Corp. is a jointdevelopment agreement with UOP to integrate its fuel cell with thenatural gas and propane fuel processor systems of UOP. Later thisyear, field testing will begin for the integrated units of UOP.Currently, Avista Labs is testing its fuel cell subracks in severallocations across the country, including Arizona Public Service inPhoenix, the Fuel Cell Test and Evaluation Center in Johnstown,PA., Tyndall Air Force Base in Panama City, FL, and as back-uppower within the Avista Utilities service territory in the PacificNorthwest.

Wisconsin Gas fired back at the latest ANR challenge to theGuardian Pipeline project to serve the Wisconsin market. The companytook issue with an ANR press release of last week (see Daily GPI, Feb. 15). The release challenged Guardianto release detailed information about its costs and rates and said theproject was not competitive with alternatives following a presentationto a state business group.

In the race to serve the lucrative Florida generation trafficthinned last week, as Duke Energy announced it has shelved itsproposed Sawgrass pipeline project and allied with formercompetitor Williams’ Buccaneer Pipeline.

The race to serve the lucrative Florida generation market becamemore clear yesterday, as Duke Energy announced it has shelved itsproposed Sawgrass pipeline project and allied with a formercompetitor, Williams’ Buccaneer Pipeline.

Calpine Corp. of San Jose, CA, plans to invest $750 million ingeneration to serve Florida’s wholesale power market. The companywill manage its southeastern activities from a new office to beopened in Tampa. Calpine will develop two gas-fired energy centers,including the 1,080 MW Blue Heron Energy Center, to be located inIndian River County outside Vero Beach, and the 540 MW OspreyEnergy Center, to be located in the Auburndale adjacent toCalpine’s existing power facility. Together, the proposed energycenters will produce enough electricity to power nearly two millionFlorida households. The Blue Heron Energy Center will produce up to1,080 MW of electricity and represents an investment ofapproximately $500 million. The $250 million Osprey Energy Centeris designed to generate 540 MW . Construction is planned for 2001,with the Osprey project slated for operation in early 2003, andBlue Heron in mid-2003.