Warns

Unless independent system operators in the Northeast are able to correct design flaws and lower market barriers, there is a very large risk that high and volatile wholesale electric prices will occur in that part of the country over the next two summers, especially if this summer turns out to be unusually hot, according to a recent report issued by Xenergy Inc.

Friction is likely to increase between state and federal regulators on the issue of deregulation if states begin to block retail competition because of the crisis in California, according a new report issued last week by Andersen Consulting. The report, “Energy Crisis in the Western United States: Lessons for Navigating Regulatory and Market Minefields,” was unveiled by Andersen’s North American Energy Consulting Practice at a Washington, D.C. briefing.

The likelihood of friction between state and federal regulators increasing over deregulation plans if states slow or walk away from retail competition is just one of several important implications resulting from the ongoing shockwave that has rolled through the Western energy markets, according to a new report issued Tuesday by Andersen.

Faced with severe drought conditions and skyrocketing wholesale electricity market prices, the Bonneville Power Administration (BPA) last week warned that it may be forced to increase wholesale rates by 250% or more after Oct. 1, unless the region’s retail utilities and large industrial customers step up to the plate and agree to slash energy use within the next 60 days.

The future is bright for investors in the power market, butrather dim for the nation’s power users, Salomon Smith Barney (SSB)warned in a new report titled “The U.S. Electric Shock.”

Gas supplies probably will remain tight, NGSA President SkipHorvath told the Consumer Federation of America’s Consumer Assembly2001 in Washington, D.C. yesterday. “Although producers aredrilling all out and production numbers are beginning to reflectour work, forecasters are predicting continued higher prices.”Horvath spoke on a panel titled “Rising Energy Prices Clobber thePoor: What Should be Done?”

The future is bright for investors in the power market, butrather dim for the nation’s power users, Salomon Smith Barney (SSB)warned in a new report titled “The U.S. Electric Shock.” The powercrisis won’t be confined to California and the West for very long.Power shortages are going to spread to eastern states over the nextfew years not only because of delays in power plant constructionbut also because of delays in gas supply development andconstraints on the gas pipeline grid, the firm predicted.

After halting its fourth quarter dividend and requestingemergency help from the state for gas purchases last week, PacificGas & Electric Co. revealed that it also will lay off 325employees immediately and another 675 over the next several monthsto save $180 million.

After suspending payment of its fourth quarter dividend of 30cents/share and requesting emergency assistance from the state forbuying natural gas on Wednesday, Pacific Gas & Electric Co.said Thursday it will immediately lay off 325 employees and cutcustomer services to save $180 million. The utility unit ofPG&E Corp. plans to cut another 675 jobs if its cash situationdoes not improve over the next few months, Pacific Gas and ElectricPresident Gordon Smith said in a memo sent to employees onThursday.