NGI The Weekly Gas Market Report

Under a five-year tolling agreement announced last week withHouston-based Engage Energy, Southern Company Energy Marketing hasagreed to convert natural gas supplied by Engage into 300 MW ofelectricity. The agreement allows Engage to sell the electricityfollowing its conversion, which will be done at a power plantcurrently under construction in Zeeland, MI. The plant, beingconstructed by Southern Company Energy Marketing’s parent, SouthernEnergy, is expected to begin operations by mid-2001.

FERC Commissioner Linda Breathitt last week called on theCommission to initiate a generic review of whether the ratestructures of most interstate gas pipelines, especially TennesseePipeline, are inhibiting the development of market centers.

The northern frontier on the eastern side of the continent isstepping up work on adding new supplies to the North Americannatural-gas market, along with promoters of a development andpipeline revival in Alaska and the Northwest Territories.

FERC Chairman James Hoecker extended an olive branch to theboard of trustees of the North American Electric ReliabilityCouncil (NERC) during a recent visit to Canada, urging the counciland the Commission to work more cooperatively toward a common goal— ensuring the reliability of the bulk electric market.

The full Senate passed by unanimous consent a stand-aloneelectric reliability bill late last week, while House CommerceCommittee Chairman Thomas Bliley (R-VA) moved ahead full throttlewith plans to mark up a comprehensive power bill and bring it tothe House floor before the end of July.

FERC last week conditionally approved a significant re-design ofthe New England bulk power market in an attempt to reduce the pricevolatility stemming from congestion of the region’s transmissionsystem. But it could be as long as two years before the regionalmarket feels the benefits of the changes.

The finger-pointing and calls for market intervention — mostnotably centered on electricity price caps —heated up fasterthan the temperatures on both coasts this week, with merchantgenerators and incumbent regulated utilities drawing the ire ofstate and federal policymakers.

A House subcommittee last week passed a resolution citing threemembers of a public watchdog group for refusing to respond toquestions about payments they made to two federal officialsinvolved in oil royalty policy.

Reliant Energy Gas Transmission (REGT) completed installation ofan 18-mile extension of its mainline in East Texas to increase gasdeliveries to Southwestern Electric Power’s (SWEPCO) 882 MW Wilkesgenerating plant, located near Marshall.