From http://www.enerfax.com:

Northwest Spot Power Prices Rise

   Spot power prices in the Pacific Northwest continued higher
yesterday amid unit outages and strong natural gas prices. A
projected weekend outage at the 1,087 MW Diablo Canyon Unit 2 nuclear
power plant and a 10-day outage at the 820 MW IPP Unit 1 coal power
plant should keep supplies scarce heading into next week. At COB,
power for today rose over $15 to $270. Power sold at Mid-Columbia for
today was up $15 at $267. Concern is mounting about the possibility
of a dry year in the Pacific Northwest, which could keep prices high
into the spring. In the Southwest, power prices declined amid lower
day-ahead demand. According to the California PX, demand  will peak
at 32,435 MW today. Palo Verde slipped $36 to $137 per MWh, while
Mead traded down $32 at $146 per MWh.

Alliance Begins Commercial Operations

    Alliance pipeline is finally ready to begin commercial shipment
of Canadian natural gas to Chicago from northern British Columbia
today and operators are already talking about expanding the system.
Originally scheduled to begin flowing in October, the delayed opening
is set for the pipeline to begin transporting today. The addition of
the $3 billion Alliance pipeline's capacity curbed price increases at
Chicago yesterday relative to spikes in the Northeast. Cold weather
headed for the East Coast triggered a 9% price jump in the region's
prices yesterday.
Prices at the New York City gate surged $0.75 per MMBtu to a record
high of $7.20, while Chicago prices were only Up $0.35 at $6.41 per
MMBtu. Canada supplies about 16% of US natural gas. Alliance is one
of two new pipelines beginning operations this week. BC Gas C$375
million Southern Crossing Pipeline from eastern British Columbia to
the West Coast began pumping 250 MMcf per day on Thursday in
competition with Westcoast Energy. For its part, the Alliance system
is seen by some as a key link in the eventual transport of Arctic
natural gas to market. BP Amoco has assumed the transportation
responsibilities of eight shippers on the pipeline whose volumes
total more than 250 MMcf per day, and plans to increase that amount.
Alliance partners include Westcoast Energy, 23.6%; Enbridge, 21.4%;
Fort Chicago Energy Partners, 26%; Williams, 14.6%; and Coastal,
14.4%.

We will be adding Southern Crossing to the next base case.

Also, some corrections are needed in our Alliance model.  Further research
shows that the maximum receipt capacity from B.C. to be about 300 / day
(9,120 / month) and from A.B. to be 1,950 / day (59,280).  Alliance
receives no supplies in the Northwest Territories and has no plans for
doing so.  The only existing connection to NWT is into Westcoast.  I would
change its capacity to 400 / day (12,160 / month), increasing to 500 / day
(15,200) in 2002.  Nova (TCPL Alberta System) is considering an extension
into NWT in the future.  The current base case shows a need for more than
500 / day starting in 2006.  So, I've set up a supply link from NWT into
Nova at 300 / day starting in 2006.


Pollution Credits Shutting Down California Power Plants

    AES says output from three of its power plants in southern
California has been cut in half due to a shortage of pollution
credits. AES Pacific has curtailed 2,000 MW of a total capacity of
4,000 MW at its three natural-gas fired plants in the Los Angeles
area, Alamitos, Huntington Beach and Redondo Beach. The move followed
the filing of a petition by the South Coast Air Quality Management
District related to its Alamitos plant which had exceeded its NOX
emission allocation. Both Huntington Beach and Redondo Beach were
close to reaching their NOX allocations. The plants could operate if
the California ISO declared a power emergency.  An arbitration board
is due to rule in late December on the air quality district's
petition. California has been struggling to meet surging demand for
power this year. There have also been few power plants built during
the last decade and the California ISO has had to issue numerous
power alerts this year as operating reserves dropped to critical
levels. The California ISO says a number of other plants are also
running out of pollution credits.

Coastal to Buy Pipe for Gulfstream

     Coastal has agreed to buy steel pipe for the Gulfstream natural
gas pipeline from Berg Steel Pipe Corp for $310 million. Coastal's
774-mile pipeline will run from Mobile, AL across the Gulf of Mexico
to Tampa. Duke and Williams, which had been developing a competing
project, agreed earlier this month to buy Coastal's pipeline. Terms
were not disclosed. Coastal's purchase was for the 36-inch diameter
pipeline to run through the Gulf of Mexico and the 36-inch and 30-
inch pipe for Florida. Pipe production will start immediately with
delivery starting early next year in Port Manatee, Florida, and
Mobile. All of the pipe is scheduled for delivery by September, and
the pipeline is scheduled to start by June 2002. Coastal plans to
complete the sale of the Gulfstream system this quarter.

According to Williams' Buccaneer website, upon closure of the purchase of
Gulfstream by Williams - Duke, Gulfstream will be built in lieu of
Buccaneer.  Our next base case database will reflect this change.

Power Marketers Accused of Manipulating Prices

    Enron, PG&E Energy Trading, Duke Energy Trading and Marketing,
Sempra Energy Trading and Dynegy Power Marketing are among a dozen
energy companies accused in a lawsuit of conspiring to manipulate
California wholesale electricity prices.  The lawsuit claims
companies selling electricity in California intentionally limited
supply to drive up prices. The suit seeks certification as a class
action covering all electricity consumers in California, estimates
damages in excess of $1 billion. The allegations in the lawsuit are
based on a number of studies of the state's electricity market that
concluded it was not functioning normally. Southern California Edison
and PG&E's Pacific Gas & Electric filed suit against state officials
separately last month for permission to charge customers billions of
dollars for losses from open-market power purchases.

Bob Brooks
GPCM Natural Gas Market Forecasting System
http://gpcm.rbac.com