Structure

EnCana Corp. said Thursday that it intends to consolidate its corporate structure through a vertical short-form amalgamation with its subsidiary Alberta Energy Company Ltd. (AEC). EnCana said the amalgamation will not require any public securityholder vote. The company said the consolidation is expected to be effective on Jan. 1, at which time, EnCana will be the successor issuer in respect of AEC’s previously issued debt securities and will be responsible for all of AEC’s contractual obligations. The amalgamation is subject to the receipt of all necessary consents and regulatory approvals. EnCana said it would comment more after the first of the year.

If the assessment of a top industry analyst is correct, the structure of natural gas demand is undergoing a significant change which is likely to lead to increased weather-derived price volatility. Current price levels beg the question of how such elevated prices can be sustained given full storage supplies.

Anxious Houston-based employees Friday were waiting for formal news that their employer, Enron Corp., had filed for bankruptcy, expected to be the largest in U.S. history, and waited to learn whether layoffs will begin in the United States as they have in Europe. Across the country, others kept an eye on whether Enron would file a lawsuit against its short-term merger partner Dynegy Corp. for backing out of the transaction last week. Meanwhile, companies that had once dealt with the former trend-setting energy trader began tallying their own expected losses should Enron go under, and in Washington, DC, legislators announced they would begin investigating exactly who knew what when.

In a merger that would create the second largest refiner of petroleum products in the United States behind ExxonMobil Corp., San Antonio-based Valero Energy Corp. and Ultramar Diamond Shamrock Corp. (UDS) announced last week that they have entered into an agreement in which Valero will acquire UDS in a transaction valued at $6 billion.

While one part of California’s regulatory structure was giving an expedited okay to 95 more megawatts of power to come on line in late summer, California Public Utilities Commission President Loretta Lynch Thursday was taking a slower, more detailed approach to determine how to spread the 3-cent/kW rate increase that was approved last month for the state’s two largest investor-owned utilities. In separate action, Moody’s Investor Service removed Southern California Edison Co. from further possible downgrades because the deal it struck with the governor last Monday.

To strengthen its capital structure before an anticipated spinoff this year, Tulsa-based Williams Communications exchanged assetsfor shares of stock with its parent company Williams yesterday. Inthe agreement, Williams received 24.3 million common shares ofWilliams Communications, bringing its total ownership to 420million shares, or 86% of the outstanding stock. In return forequity, Williams Communications will purchase its outstandingpromissory note from Williams and acquire the 15-story,750,000-square-foot Williams Technology Center, scheduled forcompletion this summer adjacent to Williams’ headquarters in Tulsa.

“The new market structure is broken and must be discarded,” saidEdison International Chairman John E. Bryson yesterday, in astatement warning that his company soon will be “compelled to takedrastic measures,” including “rationing” electricity. He called fora return to regulation, where needed.

FERC yesterday ordered a formal investigation of the electricrates and the structure of the California’s Independent SystemOperator (Cal-ISO) and Power Exchange (Cal-PX), as well asmarket-based sellers in the state.

NiSource Inc. last week unveiled the new organizationalstructure that will be in place when its $6 billion merger withColumbia Energy Group is completed, and noticeably absent from theroster was Columbia Chairman, CEO and President Oliver “Rick”Richard III who had fought tooth and nail to fend off NiSource’soverture.