Uncertainty

Gas well completions are up throughout the Lower 48, but there is still “considerable uncertainty” regarding how much supply will come from the increased drilling, according to the Energy Information Administration. Noting recent price trends and increased drilling activity, EIA found there should be an excess gas supply by the end of 2001, but caveats remain.

Reliant Energy urged FERC on Friday not to force the financialuncertainty of the near-bankrupt California electric utilities onsuppliers across the entire western region by relaxing the creditprovisions of the Cal-ISO tariff. Reliant made an emergency filingwith the FERC, seeking a stay of such efforts.

Energy stocks took a pounding yesterday mainly in reaction tocontinuing uncertainty over the financial health of California’stwo largest utilities, Southern California Edison and Pacific Gasand Electric, which got a weak short-term prescription by stateregulators (see related story this issue).

Buoyed by falling temperatures and spiking cash prices, theprompt natural gas futures contract did what has become almostsecond nature for the commodity this year as it rumbled to a newall-time high Tuesday. In fact, after a strong opening, the onlyquestion to be answered was which month (December or January) wouldset a new high watermark.

Reflecting the uncertainty of the regulatory process andextremely tight time frames, San Jose, CA-based Calpine Corp.Monday dropped plans for three of five temporary natural gas-firedpeaking power generation plants it had proposed as a stopgapmeasure to meet expected power shortages next summer.

In the midst of the continuing uncertainty over regulatorytreatment of growing wholesale electricity cost under-collections,Fitch Tuesday assigned a “rating watch negative” designation to thesecurities of California’s two largest investor-owned utilities,Pacific Gas and Electric and Southern California Edison (and itsparent company, Edison International). In addition, it loweredEdison’s commercial paper rating one notch to “F1” from “F1+”.

In the midst of much uncertainty surrounding California’s powersituation, Duke Energy North America Monday reiterated itscommitment to the state’s struggling wholesale electricity market,announcing new bilateral power deals with Pacific Gas and ElectricCo. and progress with redevelopment plans at three coastal powerplant sites it is operating.

Continued uncertainty surrounding the recovery of record highwholesale prices for electricity prompted the Fitch rating serviceTuesday to lower its rating outlook from “stable to negative” forCalifornia’s three major investor-owned electric utilities. Themove came in the midst of another week of late summer heatthroughout the state that is pushing up power prices and squeezingsupplies.

Amid the “uncertainty” over its interconnection policy, FERClast week clarified its procedures to give all types of electricgenerators, especially new market entrants, a “fair shake” athooking up to the interstate transmission grid.