Week

PG&E Gas Transmission Texas (PG&E GT-T), a subsidiary ofPG&E Corp., said it will appeal a judgment handed down lastweek in the 92nd district court in Hildalgo County, TX, regardingfranchise fees, even though the judge reduced the August 1998 juryverdict.

A new battle in utility deregulation gained momentum last weekwhen the Electric Power Supply Association (EPSA) published aletter urging the Florida Public Service Commission (FPSC) toreject Florida Power Corp.’s petition to forgo competitive biddingfor construction of Hines 2, a second gas-fired generation plant atits Hines Energy Complex in Polk County, FL.

Vector Pipeline sponsors finally conceded last week their $471million project will not be prepared to ship a proposed 1 Bcf/d ofgas from Chicago to Dawn, ON, in November 1999 as planned. Theproject will be able to ship some gas along a short stretch of pipeat the downstream end between MichCon’s system and the Dawn hub,but about 340 miles of the system will remain out of service untilfall of 2000, sponsors told FERC.

Nova Scotia regulators kicked off competition for gasdistribution rights in the province last week, and so far fourplayers have come forward with plans to deliver the first SableIsland gas production to come ashore next fall. A Sempra Energysubsidiary; Scotia Advantage, a partnership of Consumers Gas andNova Scotia Power; Sask Energy; and Maritimes NRG all plan tosubmit proposals to distribute gas in the province.

The latest battle in utility deregulation was waged last weekwhen the Electric Power Supply Association (EPSA) published aletter urging Florida’s Public Service Commission (FPSC) to rejectFlorida Power Corp.’s petition to forgo competitive bidding forconstruction of Hines 2, a second gas-fired generation plant at itsHines Energy Complex in Polk County, FL.

BP shareholders gave their overwhelming support to the company’smerger with Amoco last week. About 700 shareholders voted toapprove the merger at a general meeting at the Royal Festival Hallin London. Shareholders representing another 3.2 billion sharesvoted by proxy with 92% approving the merger. Chairman PeterSutherland called the vote a “massive endorsement” of the deal. Theall-stock transaction will result in a 60-40 equity split with BPshareholders having the majority.

New York Public Service Commission issued a notice last weekseeking comments on how “strandable” gas capacity costs createdwhen existing sales customers migrate to transportation serviceshould be recovered from customers. Interested parties should filetheir comments by Dec. 14.

FERC Chairman James Hoecker issued an ultimatum to warringfactions in the gas industry last week, saying it is now or neverregarding major new initiatives aimed at a more competitive market,while two other commissioners in speeches in different citiesassured gas representatives they were open to debate andalternatives. But it was not clear that anyone was listening, asindustry leaders reportedly were attempting to forma coalition toask for a second delay – this time for six months – in the deadlineto respond to FERC’s proposals. (See Late Breaking News)

The International Petroleum Exchange (IPE), based in London,accepted an offer from NYMEX last week to look into a possiblemerger, which would create a “single global energy exchange.” Anagreement to join the exchanges would affect companies which sellcommodities internationally in both markets. The domestic gasmarkets in both countries, however, would see little impact.