Yesterday

Oneok’s proposed merger with Southwest Gas received a big shotin the arm yesterday, as the Nevada Public Utilities Commission(PUCN) unanimously approved the deal two months ahead of schedule.Although approval is still needed from Arizona and Californiaregulators as well as Southwest Gas shareholders, both companiesare confident the merger will be completed in the previouslyannounced fourth quarter 1999 timeframe.

A survey released yesterday by the American Gas Association of69 gas local distribution companies shows LDCs last winter made ashift to more short-term gas supply contracts. The percentage ofpeak-day gas purchases made under long-term supply agreementsdeclined to 35% in winter 1998-99 from 38% in winter 1997-98, andthe percentage of LDCs with more than half of their peak-daypurchases under long-term arrangements dropped to 38% from 47%during the previous winter. Spot market purchases accounted for 10%of peak-day supplies on average compared to only 5% during theprior winter, AGA said. Storage deliveries comprised 41% ofpeak-day gas supplies.

FERC yesterday gave its endorsement to a transmission rateschedule proposed by Reliant Energy Gas Transmission that willenable the company to meet the hourly peaking needs of powergenerators. With this action, Reliant becomes the first gaspipeline capable of providing such service.

MCN Energy said yesterday it has had to chop millions from its 1997and 1998 earnings reports and raise slightly its 1Q99 results becauseof deliberate financial miscalculations by several former employees atCoEnergy trading, its unregulated gas marketing subsidiary. MCNdiscovered the problem last month and fired three employees, includingtwo subsidiary officers (see Daily GPI, May18), for falsely showing good financial results from marketing.

Light profit-taking that began in Monday’s Access tradingsession, continued yesterday at the New York Mercantile Exchange.Locals were seen as aggressive sellers, unloading positions aheadof today’s storage report. The July contract finished at $2.393,down 4.9 cents for the day.

Industrial gas customers yesterday endeared themselves topipelines that are trying to build new capacity into the Northeastmarket, calling on FERC to give the go-ahead to any and allprojects that meet “some basic standards.” Major gas and powerproducers, however, urged the Commission to first encourage pipesto use existing capacity more efficiently before doling outcertificates for new lines. They also proposed that pipelines berequired to assume more risk for their projects to protect shippersagainst “unnecessary” construction.

“Close, but no cigar,” was one trader’s apt description of theprice action yesterday in the natural gas pit at the New YorkMercantile Exchange. A session that saw the prompt month unable tobreak stubborn resistance near $2.40. After an early dip, the Julycontract spent much of the session near its $2.39 high beforeplummeting lower at the close. July finished at $2.343, down 1.5cents.

MichCon officials announced a successful beginning to its pilotprogram yesterday, with 70,000 of their 75,000 eligible customerschoosing a newly introduced competing supplier in the first year ofa three-year program. Stephen E. Ewing, the president of theMichigan gas utility, said the results prove customer choiceprograms can work for the entire state.

Exxon and Mobil took an eagerly anticipated step towardcompleting their merger yesterday as shareholders for bothcompanies approved the combination. Mobil received 98% shareholderapproval for the deal and Exxon received 99%. The votes were heldat separate hotels in Dallas, TX.