NGI The Weekly Gas Market Report

The British Columbia government last Monday unveiled an ambitious energy plan under which BC Hydro will be restructured into two separate Crown corporations, one for generation and distribution, and the other for transmission.

Newfield Exploration Co. completed its $640 million merger transaction with EEX Corp. last week. EEX will become a subsidiary of Newfield and will be named Newfield Exploration Gulf Coast Inc. (see NGI, June 3). More than 98% of the common shares voted were in favor of the transaction.

A combination of above-market priced, long-term contracts and demand-side programs is the best formula for avoiding a return of high prices and power blackouts, the California Consumer Power and Conservation Financing Authority concluded at a recent board meeting in Sacramento. It is pointing the state toward achieving reserve levels of more than 20%, with ideally half coming from the demandside.

Citing the uncertainty looming over the high-profile complaint case against El Paso Corp. at FERC, Moody’s Investors Service cut the senior unsecured debt ratings of the Houston-based energy corporation and its subsidiaries to junk status, or Ba2 from Baa3 last Tuesday, and also assigned a senior implied rating to El Paso of Ba1. It put the ratings outlook for embattled El Paso at negative.

Williams took another big step in its asset sales program Tuesday with the sale of its Memphis, TN, refinery and other related operations to Premcor Inc. for $465 million cash. Premcor will pay $315 million cash for the refinery and related fixed assets at closing and will purchase petroleum inventories estimated at about $150 million.

Joining the growing pile of abandoned plans for new power plants in California, the City of Roseville, about 30 miles east of Sacramento, last week terminated its agreement with part of Enron Corp. to develop a 750-900 MW power plant in Placer County. The action has officials in the counties in and around the state capital worried about new sources of power for the future.

NRG Energy Inc. said that it intends to continue to conduct business as usual despite the recent filing of an involuntary Chapter 11 petition against the company by five former NRG executives. The Xcel Energy unit also said the filing of the involuntary petition does not put the company into bankruptcy, nor is the company subject to restrictions imposed on debtors under the U.S. Bankruptcy Code.

Tengasco Inc. shares were down 11% last Tuesday but rebounded 9% on Wednesday by noon to $1.31 after the company discounted a class action lawsuit brought against it on Monday. Tengasco said the lawsuit was initiated by common stock short-sellers, who profit when share prices decline.

Ontario Premier Ernie Eves’ controversial plan to cap electricity prices paid by residential and small business consumers at C4.3 cents through 2006 moved one step closer to becoming a reality last week after the province’s energy minister introduced a bill implementing the proposal.