Warnings

Echoing the warnings of many other utilities across the country, Alabama Gas Corp. (Alagasco) told its gas customers Wednesday that higher bills are on the way this coming heating season. Following Piedmont Natural Gas’ lead earlier in the week, the utility also called for the implementation of a comprehensive national energy strategy, which it believes is necessary to address high natural gas prices (see Daily GPI, July 8).

Although some analysts are posting dire warnings for falling natural gas production in Canada, first quarter reports from some of the leading producers are proving a conundrum. Talisman Energy Inc. drilled six successful wells in the first three months of the year, and its production is up 6% from a year ago. Oil-heavy Husky Energy also came through production wise in its upstream operations, up 4%. Meanwhile, Shell Canada Ltd. and Imperial Oil Ltd. both saw production declines.

Although some analysts are posting dire warnings for falling natural gas production in Canada, first quarter reports from some of the leading producers are proving a conundrum. Talisman Energy Inc. drilled six successful wells in the first three months of the year, and its production is up 6% from a year ago. Oil-heavy Husky Energy also came through production wise in its upstream operations, up 4%. Meanwhile, Shell Canada Ltd. and Imperial Oil Ltd. both saw production declines.

Following through on earnings-related warnings it issued this spring, PNM Resources last Tuesday said continued weakness in the wholesale power market has caused the utility to drastically drop its 2002 earnings estimate from $3.00 per share to between $1.90 to $2.10 per share. In order to rein in expenses, the Albuquerque, NM-based company is taking the hatchet to its construction expenditure plans for this year by slashing its planned budget in this area by $111 million.

As blackouts finally swept through California yesterday afterweeks of warnings, the initial reaction was negative to theCalifornia legislature’s proposals to cure the state’s powerproblems. Most observers concluded there was little indication thatthe proposals would either provide the power needed to keep thelights on in the state or solve the utilities’ financial woes.

Despite warnings to companies that it was slowing the process togrant water discharge permits for coalbed methane projects, theWyoming Department of Environmental Quality has issued four waterdischarge permits for Pennaco Energy Co.’s House Creek Project. Allwere approved following a 30-day public notice period.

Northwest finally issued an OFO on Friday after posting warningsmost of the week. Primary nominations flowing north through theKemmerer Compressor Station on Friday exceeded available capacityat that point because of a shortfall in displacement volumes. Thedeclared Stage II (8%) entitlement for delivery points north of theKemmerer Compressor is in effect until further notice. Grants PassLateral requests are exceeding the design capacity at Oregon City,McMinnville, Albany and Eugene. Nominations were cut to designcapacity for the timely process, Northwest said. Kemmerer primarynorthbound volumes remain high with heavy reliance on displacement.NWP cut all alternate capacity at Green River for the timelyprocess.

Responding to regulatory and industry warnings of potentialpower outages this summer, Pacific Gas and Electric Co., SanFrancisco, has begun offering its largest customers payments forvoluntarily curtailing at least 20% of their loads during peaksummer days. The large combination utility covering the northernhalf of California is targeting its 450 largest customers and arelatively few small businesses to obtain up to 500 MW of savingsin a given peak hour.

The power market looks tight again for generation andtransmission this summer with some warnings of price spikes —particularly in the Midwest and California — and the situationisn’t likely to get much better over the next few years, accordingto power market executives.