Water

Someone pulled the plug on gas futures yesterday, but there’sstill plenty of water left in the tub. The July contract plunged42.5 cents but remained above $4 at $4.063.

The acquisition and management of natural gas supplies is a keypart of San Jose, CA-based Calpine Corp.’s five-year strategy tohave generating plants totaling 25,000 MW by the end of 2004, theaggressive merchant power plant developer/operator’s seniorexecutives told the company’s annual shareholders’ meeting lastweek.

The nation’s biggest municipal utility, the City of Los AngelesDepartment of Water and Power, has signed 27 of its largestcustomers to discount contracts valued collectively at $1.2 billionover their seven- and 10-year lives. The deals represent about 8%of the departments electricity sales which are projected to be 25GWh this year, according to Randy Howard, LADWP’s manager of thelong-term contracts.

Tennessee delayed pigging operations on the Blue Water System,originally scheduled for Monday and today (see Daily GPI, March 6), tentatively until Thursday andFriday of this week. No service restrictions are expected, butproducers may experience higher than normal pressures.

LG&E Energy has reached a settlement with the Springfield,IL, City Water, Light, and Power Co. (CWLP) over a dispute stemmingfrom the city’s default on a 1998 electricity options contract. TheSpringfield City Council approved the $16.6 million settlementduring a special meeting Saturday following an agreement lastTuesday with representatives from Springfield, just days before thecase was scheduled to go to trial before U.S. District Judge JohnG. Heyburn in Louisville, KY. “We are pleased to settle this matterin a very favorable manner for our company. It clearly sends amessage that we will aggressively pursue parties who do not honortheir contractual obligations to us,” said Paul W. Thompson,LG&E Energy’s senior vice president of energy services. Pricesfor power spiked in the summer of 1998 as demand for powerincreased in the Midwest due to intense heat. CWLP did not honorits commitments with LG&E Energy Marketing (LEM) and laterattempted to argue that the contracts were void because the utilitydid not have the proper authority under Illinois law to enter intothem. Those defenses were argued before Judge Heyburn last Novemberand he ruled in LG&E Energy’s favor in certain summaryjudgement proceedings.

In an effort to increase their access to deep-water gas, TheCoastal Corp. announced last week that subsidiaries of ANR Pipelineentered in a series of agreements under which they collectivelyhave become joint owners in a new holding company, DeepwaterHoldings L.L.C. The financial terms were not disclosed.

While the American Gas Association (AGA) report loomed at theend of Wednesday’s trading, moderate temperature forecasts and theeasing of New England and New York electricity jams were enough tocause drops of more than a nickel in the Northeast. The New Yorkcitygate ended the day in the mid $2.50s after ascending to the mid$2.70s on Monday.

Kansas, a significant natural gas producing state, is stickingits toes in the water of retail gas competition with a notice ofinquiry (NOI) from the Kansas Corporation Commission (KCC), “thegoal of which is to explore whether extending restructuring to allretail consumers is in the public interest. We also wish to exploreother regulatory alternatives which may bring benefits to smallerretail gas consumers.”

Producing state Kansas is sticking its toes in the water ofretail gas competition with a notice of inquiry (NOI) from theKansas Corporation Commission (KCC), “the goal of which is toexplore whether extending restructuring to all retail consumers isin the public interest. We also wish to explore other regulatoryalternatives which may bring benefits to smaller retail gasconsumers.”