Threat

In a move to stave off a possible involuntary bankruptcy attempt, Southern California Edison announced it has agreed to pay the City of Long Beach, the largest municipality in its service territory, $14 million for past-due bills related to power that the city sells to the utility from a municipal waste-fired generation plant.

Despite higher cash market prices, natural gas futures checked lower Monday as traders learned that neither of the tropical systems being monitored Friday had been able to strengthen over the weekend. The October contract suffered the largest setback, tumbling 10.8 cents to finish at $2.392.

Full requirements (FR) service for East of California customers, which gives them unlimited access to firm capacity at no additional demand charges, is a “significant contributing factor” to the shortfall of transportation capacity on El Paso Natural Gas, and the practice should be ended, said producers, marketers, utilities and other pipeline shippers last week. Even El Paso agreed that the time has come for FERC to address its FR contracts.

The tropical storm threat was fading, but hotter weather was returning in many areas, prompting mild firmness in the cash market Monday. Most points ranged from flat to as much as about 30 cents higher in the case of Transco Zone 6-NYC, but there were a few small downturns thrown into the mix.

Pennsylvania faces the very real threat of being dethroned as the nation’s leading model for electricity choice because skyrocketing wholesale power prices are pushing state customers to abandon electric choice in favor of default providers, according to the Center for the Advancement of Energy Markets. As Pennsylvania stumbles on the road to electric deregulation, Texas, Maine and New York are all making impressive strides in promoting sustainable competition among electricity providers, the center said.

As Gov. Gray Davis made the rounds in Washington and New Yorkseeking support for California’s plan to buy and run powertransmission lines, Moody’s sounded a warning that the plan couldfalter if consumers balk at the price tag at the same time powershortages hit this summer. “Absence of progress on the state’sproposed solutions to the California power crisis could worsen thepower crisis and begin to seriously threaten the health of theeconomy,” Moody’s said in a report issued after the market closedTuesday.

The threat of rolling blackouts hovering over California formore than a month became a reality Wednesday when the state gridoperator (Cal-ISO) ordered them, first, for northern California,and later in the day spreading them to the southern half of thestate.

Southern California Edison made good on its threat to go tocourt if FERC failed to respond immediately to its request tore-impose price controls on bulk power sales in the in theout-of-control California market.

The closest thing to a production threat that the Gulf of Mexicohas had so far this year failed to cause any ripples in cash pricesMonday. Eastern quotes ranged from barely higher to about a nickeldown, while western numbers reacted mostly to renewed heat waves inCalifornia and the desert Southwest, in ranging from flat to abouta dime higher.