From http://www.enerfax.com <http://www.enerfax.com/> :
 
California Wants to Renegotiate Power Contracts 
 
California's governor says he is working on proposals that could result
in negotiations with power suppliers to reduce the cost of power being
purchased by the state through long-term power purchase contracts signed
earlier this year. However, none of the generators reportedly have heard
anything concerning renegotiations of the deals. While the state would
gain lower rates for power from any renegotiations, the advantage to the
power providers is not certain, other than the avoidance of future legal
or regulatory challenges to the contracts. The governor has come under
intense criticism from critics charging that the contracts lock the
state into prices that are way too high. The California PUC wants the
FERC to force the generators to lower their prices. How FERC will act on
the deals remains to be seen. Sempra signed a 10-year, 1,900-MW deal
with the state in May that could be worth $7 billion. Sempra began 250
MW deliveries this summer and expects increase output under the deal
over the next several years as it brings new power online. The contract
includes variable prices based on the cost of natural gas. With gas
prices at about $2 per MMBtu, Sempra is able to sell the state baseload
capacity at $0.041 per kWh and peaking capacity at $0.051 per kWh. 
 
New Path 15 Power Line to Be Built 
 
PG&E and other power companies will build a new $300 million
transmission line along Path 15, an 84-mile stretch of power lines in
the central part of California. The outdated transmission lines in the
area do not have enough capacity to carry electricity between the
northern and southern parts of the state during peak demand periods.
Expanding Path 15 to include a 3rd power line would boost transmission
by about 1,500 MW. The project could be completed by summer 2004. Kinder
Morgan, Williams, Trans-Elect, and the Western Area Power Administration
are also involved in the project.
 
For more information, see the LA Times article at
http://www.latimes.com/news/local/la-000083333oct19.story .
 
El Paso and Iberdrola to Buy LNG from Snoehvit Project
 
The Snoehvit consortium, led by Norways Statoil has signed deals with El
Paso and Spanish Iberdrola to supply LNG from the Arctic for 17-20
years. El Paso will buy 2.4 Billion cubic meters of gas per year, while
Iberdrola will purchase 1.6 Bcm for a total of $453.8 million per year.
Snoehvit will also sell volumes totaling 1.7 Bcm to partners Gaz de
France and TotalFinaElf. Snoehvit, estimated to hold 320 Bcm of gas will
be developed as a subsea tie-back to a LNG plant near the world's
northernmost city Hammerfest. The LNG will be transported by specialized
carriers to the US and Europe. In the US, the LNG will be sold at spot
prices. Environmentalists oppose Snoehvit, the first development in the
Arctic Barents Sea, because of potential ecological damage. The deals
were signed under a condition that the Norwegian parliament approves the
project. A new political party is set to take over Norways government
today and may postpone Snoehvit in order to make further environmental
impact studies. Otherwise, construction is scheduled to begin by spring
2002 and be operational by autumn of 2006.
 
NOAA Winter Weather Forecast
 
Colder than average temperatures will prevail this winter in the
Northeast, Upper Midwest, Great Lakes and Great Plains states, according
to the National Oceanic and Atmospheric Administration. NOAA says that
the absence of El Nino and La Nina could lead to heavy snow in the
Midwest and along the East Coast. The forecast does not expect a repeat
of the record-breaking cold temperatures of November and December of
last year, but winter should still be colder than normal. The Pacific
Northwest had near-record dry conditions last winter that depleted
hydropower severely, but will have more normal weather this year. Texas,
Oklahoma, and the western parts of Arkansas and Louisiana will receive
above average rain while Florida, Georgia, South Carolina and the
eastern part of North Carolina will be dryer than usual. 
 
Deep Gas Conference in Houston
 
The Strategic Research Institute is holding a conference on deep gas
technology on November 27-28 in Houston.  For more information, see the
following website http://www.srinstitute.com/cr214 .
 
Bob Brooks
GPCM Natural Gas Market Forecasting System
 <http://gpcm.rbac.com/> http://gpcm.rbac.com