Energy Market Report
Tuesday, December 18, 2001

*See attached pdf file.
__________________________________________________________
Western Pre-Scheduled Firm Electricity Prices($/MWh)
December 18, 2001 for December 19, 2001

Peak(Heavy)
                   Low     Change     High     Change
NW/N. Rockies     27.00    -0.25     28.25     -1.25
Mid-Columbia      27.00    -0.25     28.25     -1.25
COB               29.50    -0.50     30.20     -1.80
N. California     30.50    -1.50     33.00     -2.25
Midway/Sylmar       NA       NA        NA        NA
S. California     30.00    -2.00     31.75     -3.50
Mead              30.00    -1.75     32.00     -1.50
Palo Verde        29.00     0.00     30.75     -3.00
Inland SW         29.00     0.00     32.00     -1.75
4-Corners         28.00    -2.00     30.00     -2.00
Central Rockies   27.00    -0.75     29.25     -1.75
__________________________________________________________
Off-Peak(Light)
                   Low     Change     High     Change
NW/N. Rockies     22.00     5.00     23.00     -1.25
Mid-Columbia      22.00     5.00     23.00     -1.25
COB               23.50     0.50     24.00      0.00
N. California     25.00    -0.75     26.50     -1.90
Midway/Sylmar       NA       NA        NA        NA
S. California     20.00    -4.50     24.00     -4.40
Mead              22.00    -0.50     24.00     -2.50
Palo Verde        21.25    -1.50     23.50     -3.50
Inland SW         21.25    -1.25     24.00     -3.00
4-Corners         21.00    -2.75     22.50     -4.00
Central Rockies   19.00    -1.00     20.75     -2.25
_________________________________________________________
The Boxer Rebellion

On Tuesday, Western peak power prices dipped slightly amid abundant
Northwest hydro flows, sluggish holiday demand and slightly lower spot gas
prices.  "A lot of schools and businesses are beginning to close for the
holidays, and loads should remain at lackluster levels until after the start
of the new year," said one marketer.  Spot gas prices fell about 10 cents on
all of the Western pipelines.  At the Southern California border, spot gas
reportedly traded between 2.63 to 2.68$/mmBtu, down from Monday's range of
2.74 to 2.79$/mmBtu.  NYMEX Henry Hub futures contracts also slid Tuesday on
ample storage, but the decline was likely limited by colder weather
forecasts for much of the eastern half of the United States.  January Hub
gas slipped 2.9 cents to close at 2.657$/mmBtu, while February lost 4.9
cents to end at 2.712$/mmBtu.  After Wednesday's inventory report is
released, with most players expecting a 20 to 70-bcf draw, the AGA will
delay its next two reports due to the Christmas and New Year's holidays.
The next report will be released at 14:00 EST on Thursday, December 27, and
then again on Thursday, January 3, 2002.  In the political arena, Democratic
Senators Barbara Boxer and Jon Corzine proposed legislation on Tuesday
requiring more diversification in pension plans to protect other U.S.
workers from the retirement savings fiasco that crippled many Enron Corp.
employees.  The two senators also called for a thorough investigation of the
events leading up to Enron's collapse.  According to Reuters, Boxer and
Corzine said about 67% of the assets in Enron 401(k) retirement plans were
invested in Enron stock, and they proposed limiting the investment an
employee can have in any one stock in their 401(k) to 20 percent.  "No one
who gives investment advice would ever recommend someone being invested at
67%," said Corzine at a news conference.  Their proposal also called for
limiting the time an employer can force an employee to hold a matching
employer stock contribution in the employee's individual account plan to 90
days.  That proposal would increase the tax liability of the employer when
matching contributions to an employees 401(k) are made in company stock.
With Congress preparing to recess soon for the year, Boxer and Corzine's
bill will likely have to wait until next year to progress, and the bill does
not at this point have Republican support.

Heavy load energy costs in the Northwest fell by an average of 75 cents on
Wednesday, as abundant hydro flows and lower demand placed downward pressure
on the market.  Light load goods gained as much as 5$/MWh on the low end
from a day ago, which was misleading since most Monday transactions took
place on the upper end of the spectrum.  "There was not much of a range out
there today, and consequently not as much activity," said one
Washington-based trader.  Recent rains have continued to spawn hearty river
flows in the hydro-heavy region, but water watchers warned that if the
soaking continues, rising flows could begin cutting into maximum generation.
Flow forecasts for Chief Joseph were little changed from a day ago, coming
in at 95 kcfs Wednesday, 90 kcfs Thursday and Friday, 65 kcfs Saturday, 55
kcfs Sunday, 75 kcfs Christmas Eve, and 65 kcfs on Christmas Day.  Weather
forecasts for the region's major load centers called for near-normal
temperatures into the weekend, while the latest six-to-ten from the NWS was
predicting above-normal conditions for most of the Northwest from December
24 to 28.

Amid softer spot natural gas prices at the SoCal border and weaker demand,
spot electricity prices softened in the Golden State on Tuesday.  Heavy load
goods at NP15 traded between 30.5 and 33$/MWh, with the bulk of deals done
above 32$/MWh.  Light load pieces saw action from 25 to 26.5$/MWh, with
odd-lot deals heard as high as 27.25$/MWh.  Light load goods at SP15 earned
the dubious honor of the steepest price declines in the West on Tuesday,
falling more than 4$/MWh at both ends.  Traders said lighter loads were the
likely culprits, but were generally perplexed by the extent of the
softening.  In other news, SCE reported it would request permission from the
CPUC to increase the rates its customers pay by 18% in 2003.  The utility
emphasized that the rate hike was based solely on operating costs, and not
related to debt repayment negotiations.  SCE said upgrades on its
electricity system are necessary in the near future and employee health care
costs have also dramatically increased.  On the unit front, San Onofre #3
(1,080 MW) was derated by 100 MW on Tuesday, though no cause could be
determined.  Gas-fired Etiwanda #4 (320 MW) returned to service, and El
Segundo #4 (335 MW) was operating at 170 MW.  Calpine's Sutter Plants (546
MW) was completely off-line, down from 235 MW a day ago.  Los Angeles was
expecting high temperatures in the mid-60s through Saturday, while most
other major load centers were expecting highs in the low-to-mid-50s.  The
most current six-to-ten called for above-normal temperatures across
California from December 24 to 28.

Lower spot gas prices and weaker demand led to a general softening in the
day-ahead electricity market in the Southwest on Tuesday.  Heavy load energy
at Palo Verde ranged between 29 and 30.75$/MWh, with unconfirmed trades as
low as 27.25$/MWh and as high as 33$/MWh.  In unit news, Mohave #1 (790 MW)
was expected to return on Wednesday or Thursday following tube leak repairs
that began on Saturday, though most thought Wednesday to be a wee bit
optimistic.  Further to the north, Colorado-based Craig #1 (428 MW) was
given an ETR of "sometime on Wednesday," but most participants were
reportedly not scheduling it in until Thursday.  The latest six-to-ten from
the NWS called for normal temperatures in Arizona and below-normal
temperatures throughout much of New Mexico from December 24 through 28.



Patrick O'Neill and Beth Goodwin
_________________________________________________________

Western Generating Unit Outages

Current                            Begins          Ends          Reason
CAISO units <250/5480 total          NA             NA
planned/unplanned*
Alamitos #3/320/gas               04-Dec-01         ?            planned
Big Creek Project/1020/hydro      09-Dec-01         ?         @752MW,
planned
Craig#1/428/coal                  15-Dec-01     19-Dec-01        unplanned*
El Segundo #3/337/gas             02-Oct-01         ?            unplanned
Encina #5/332/gas                 27-Oct-01         ?            planned
Grand Coulee #19/600/hydro        10-Dec-01       March          repairs
Helms PGP #2/407/hydro            01-Oct-01         ?            planned
Hunter #2/472/coal                11-Dec-01     21-Dec-01        unknown
Hyatt/Thermalito/933/hydro        02-Oct-01         ?      @607 MW,
unplanned
Mohave #1/790/coal                15-Dec-01     20-Dec-01        tube leak
Ormond Beach #2/750/gas           05-Oct-01         ?      @350 MW,
unplanned
Pittsburg #6/317/gas              22-Nov-01         ?            planned
Sutter Plants/546/gas             04-Dec-01         ?            planned*

For unit owners refer to pdf version.
*Indicates a change from previous EMR.
______________________________________________________________________

Eastern Markets Pre-Scheduled Firm Power Prices ($/MWh)

December 18, 2001 for December 19, 2001

Peak (Heavy) in $/MWh
                 Low     Change   High      Change
Into Cinergy    18.50     0.60    21.00      2.35
Western PJM     23.90     0.15    24.05     -0.45
Into Entergy    20.50     2.50    21.75      1.25
Into TVA        18.50     0.25    19.50      0.75
___________________________________________________________
Amid light trading and continued warm weather, peak power prices mostly
strengthened across the Eastern Interconnect on Tuesday.  "People are
closing their positions for the year, which gave the dailies a little boost,
but I expect it to get even quieter this week as people start leaving ahead
of the holiday," said one seasoned dealer.  Forecasts for Wednesday called
for temperatures to be about five degrees cooler across the East.  The rest
of the week was expected to linger one to five degrees above seasonal
levels.  The AGA announced the Christmas and New Year holidays would delay
the weekly report by one day, pushing its release back to Thursday, December
27 and January 3 at 14:00 EST.  NYMEX Henry Hub natural gas futures settled
lower on Tuesday.  The front-month contract lost 2.9 cents to end the day at
2.657$/mmBtu, while February slipped 4.9 cents to close at 2.712$/mmBtu.

As additional megawatts continued to come back on-line in the Mid-Atlantic
on Tuesday, heavy load energy costs were heard in a very tight range and
about 50 cents lower than a day ago.  Western PJM goods changed hands
between 23.9 and 24.05$/MWh.  After the usual early morning spike, LMPs
spent most of the day between 15 and 20$/MWh, and averaged 16.47$/MWh
through 15:00 EST.  "Balance-of-the-month remains pretty soft, along with
everything else, but I bought a piece at 25.25$/MWh today," commented one
rueful PJM trader.  Deals for the Jan/Feb contract were heard around
31.5$/MWh on Tuesday.  High temperatures for Wednesday were expected in the
crisp 47 to 52 degree range at the major Mid-Atlantic load centers.  Little
change was seen in the forecasts through Saturday.  The latest six-to-ten
called for below-normal temperatures from December 24 to 28.

Forecasts for slightly cooler weather on Wednesday sent the corresponding
load projections a little higher, boosting day-ahead electricity prices in
the Midwest on Tuesday.  Into Cinergy deals were done from 18.5 to 21$/MWh,
gaining a 2.35$/MWh on the high end and a less robust 60 cents on the low.
In generation news, traders reported on Monday that nuclear unit Fermi #2
(1,085 MW) was exiting a fall refueling outage and ramping up to full power.
Temperatures were only expected to reach a high of 43 degrees on Wednesday,
with forecasts for the rest of the week calling for little change. Overnight
lows were projected to be at or just below freezing.  The most current
six-to-ten predicted below-normal temperatures from December 24 to 28.

Amid stronger spot natural gas prices, peak power prices in the Southeast on
Tuesday strengthened, despite mild weather and holiday-related loads.  Into
Entergy pieces were bought and sold from 20.5 to 21.75$/MWh, firming up
1.25$/MWh on the high end and 2.5$/MWh on the low.  Into TVA transactions
were heard between 18.5 and 19.5$/MWh.  "Weather is the ringleader of the
SERC circus right now," joked one Southern trader.  Nonetheless, the mercury
was forecast to dip on Wednesday, with highs only expected in the 54 to 59
degree range.  Little change was predicted through Saturday.  The latest
six-to-ten called for below-normal temperatures from December 24 to 28.
___________________________________________________________
California ISO Congestion Index in $/MWh

                         Path                 Peak   Off-peak
for 19-Dec-01         NW1 to NP15             0.00     0.00
                      NW3 to SP15             0.00     0.00
                      AZ3 to SP15             0.00     0.00
                      LC1 to SP15             0.00     0.00
                      SP15 to NP15            0.00     0.00



OTC Forward Peak Electricity Contracts in $/MWh

                    Mid-C              PV              SP-15
                Bid      Ask      Bid      Ask      Bid      Ask
BOM            27.50    28.50    29.00    30.00    30.50    31.50
January        25.50    27.00    27.25    28.25    28.00    29.00
February       22.50    24.00    26.50    27.50    26.50    27.50
March          19.50    21.00    26.00    27.00    27.00    28.00
Q1 '02         22.50    24.00    26.50    27.50    27.50    28.50
Q2 '02         18.00    19.50    28.75    29.75    28.00    29.00
Q3 '02         34.00    35.50    46.00    47.00    42.25    43.25
Q4 '02         27.50    29.00    29.00    30.00    31.00    32.00
Cal '03        29.50    31.00    33.50    34.50    35.50    36.50

Represents the most recent bid/ask spread obtainable
by the Energy Market Report.



Alberta Power Pool Index (C$/MWh)

                    Peak(14)   Peak(16)   Off-Peak    Flat     Change
for  17-Dec-01       46.75      45.05      15.55      36.27     4.73



BPA's Offer for 12/20/01 through 12/22/01.

Hours        Amount          NW delivered        COB/NOB delivered

7-22         100MW           Market Price*          Market Price*

*Market price will be determined at time of request.



NYMEX Henry Hub Gas Futures in $/mmBtu

                 Close        Change
        Jan      2.657        -0.029
        Feb      2.712        -0.049



Natural Gas Spot Prices in $/mmBtu

                  Low          High
Sumas             2.53         2.58
So. Cal Border    2.63         2.68
San Juan          2.37         2.42
__________________________________________________________

Economic Insight, Inc. - 3004 SW First, Portland, Oregon 97201,
Telephone (503) 222-2425, Internet e-mail emr@econ.com -
Copyright, Economic Insight, Inc. 2001.