Wholesale

Looking back on the winter that wasn’t in his Monthly Energy Outlook issued March 23, Stephen Smith of Stephen Smith Associates is projecting wholesale natural gas prices near $6-$7 for the second quarter, “and depending on summer heat and hurricanes, possibly longer.”

Warmer-than-normal weather since the early December freeze across much of the nation has caused wholesale natural gas prices for February to drop 31% from last month’s levels for Pacific Gas and Electric Co. The San Francisco-based utility said there has been a “significant drop” in heating demand nationwide, and in California the utility’s more than four million natural gas customers “appear to be conserving above and beyond the dictates of weather.”

Five years after a wholesale energy market crisis with lasting economic and political ramifications, one of which was his election to California’s highest office two years ago, Gov. Arnold Schwarzenegger late Thursday in his state-of-the-state address only once referred to energy during a 20-minute, 2,500-word speech in Sacramento. When talking about environmental and state infrastructure programs the “e-word” never crossed the former movie actor’s lips.

El Paso Marketing LP (EPM) said Monday it will sell most of its remaining wholesale power trading portfolio to emerging domestic energy player Morgan Stanley Capital Group Inc. for $442 million. The assets, which have been a huge financial drain on parent company El Paso Corp., include all power positions other than the Cordova tolling arrangement and some positions in the PJM power pool.

The only viable mitigation for the nation’s continuing high wholesale natural gas prices over the next two or three years is stepped up conservation, and FERC is now urging industry and regulatory leaders to push for more demand-side management, according to a Federal Energy Regulatory Commission staff director speaking Tuesday at the two-day “LDC Forum — Rockies & West” conference in Los Angeles.

Skyrocketing wholesale natural gas prices have had a mixed impact on New Mexico, said PNM Resources CEO Jeff Sterba. The positive side has been substantially higher revenues to the state for the higher-priced oil and gas production. The negative has been the cost impact on consumers.

With wholesale natural gas prices trending only one way in the wake of the two Gulf of Mexico hurricanes, Pacific Gas and Electric Co. in San Francisco has established a monthly “Natural Gas Watch” bulletin, and its latest issue Friday cited average retail gas utility bills for its customers in October being up by $17.45/month, compared with October last year. That represents an increase of 70.8%, according to the combination utility.

While most have been disposed of or are lingering in court appeals, the blizzard of litigation after California’s wholesale energy market meltdown four years ago has spawned 236 separate lawsuits and a 42-page listing compiled by an attorney who has been involved in much of the litigation.

Responding to growing concerns about retail natural gas utility bills this winter in the face of ever-increasing wholesale natural gas prices, the Arizona Corporation Commission (ACC) Thursday announced it will hold a forum Sept. 8 to hear from utilities and consumer groups on preparations to help mitigate high winter gas utility bills. At the same time the ACC is reminding customers that the utilities it regulates don’t make a profit on the cost of gas.