NGI The Weekly Gas Market Report

New Century Energies Inc. (NCE) of Denver and Minneapolis-basedNorthern States Power (NSP), two mid-sized combination utilities,got the go-ahead from FERC last week for their marriage that willcover a wide swath of the natural gas and electricity markets inthe Midwest and Southwest. The $4.8 billion merger will create the8th largest utility in the nation, serving more than 4.5 millionnatural gas and power customers in 12 states from Canada to Mexico.

A CMS Trunkline spokesman said executives had not had time to studythe 110-page order, but based on a quick reading expected it would resultin some reduction of rates. The new formulas included in the order wouldhave to be applied to the underlying data to calculate a specific number.

In a new study forecasting gas supply and demand over the next15 years, GRI said demand will reach 32.7 Tcf by 2015, but theindustry will have to adapt to changing consumption patterns inorder to take advantage. The results of the report, titled “GRIBaseline Projection of U.S. Energy Supply and Demand to 2015, 2000Edition,” were released last week at the National Press Club.

Reliant Energy Gas Transmission, whose proposal to supplytransportation services to a mega gas-fired generation project wasspurned, is now rapping that very same power project, insistingthat there’s not enough demand to justify the project or thepipeline option that was selected to supply it with natural gas.

Joining a short list of other states, New Jersey opened upentirely to gas supplier choice earlier last week. At a specialmeeting on Jan. 10, the Board of Public Utilities (BPU) approved ofeach of the state’s four main gas utilities’ unbundling plans. Thelegislation calling for this deregulation was enacted lastFebruary.

Bowing to the concerns of shippers, FERC last week suspended forthe maximum five-month term Texas Gas Transmission’s tariffproposal to provide new hourly service for the summer electricpower generation market. During the suspension period, theCommission directed staff to convene a technical conference toaddress shippers’ issues and report back to it within 120 days.

Growing weary of waiting, BP Amoco and Atlantic Richfield Co. hope to step up the pace of their ongoing merger procedures by restarting the required 20-day notice period, suspended Nov. 2, at the US Federal Trade Commission (FTC). The companies concede the FTC has concerns about their pairing, but the merger partners said they don’t agree with the issues raised by the commission.

Tenaska Alabama Partners LP said last week it executed a fuelconversion services agreement with Williams’ energy marketing andtrading unit for the entire electrical production of the plannedTenaska Lindsay Hill generating station. Under the long-termservice agreement, the Tenaska facility will convert fuel owned andsupplied by Williams into electricity, which will be marketed byWilliams throughout the Southeast region’s wholesale power market.Terms of the agreement were not disclosed.

Although 1998 saw a 25-year low in world oil prices, capitalexpenditures by major U.S. producers totaled $75.1 billion, thesecond highest level since 1974. Expenditures were up 21% from1997, according to data released by the Energy InformationAdministration (EIA) in “Performance Profiles of Major EnergyProducers 1998.”