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Enerfax Daily
NORTH AMERICA'S FREE POWER AND GAS INFORMATION SOURCE 
              Tuesday, June 25 2002 No. 1016
http://www.enerfax.com/


PHYSICAL NATURAL GAS PRICES   
Gulf/Eastern Region        
| Agua Dulce                 | 3.26  |
| ANR SE                     | 3.27  |
| Carthage (E.Tex)           | 3.26  |
| Chicago Citygate           | 3.35  |
| Columbia Gulf Onshore      | 3.31  |
| Dominion South Point       | 3.61  |
| Henry Hub                  | 3.33  |
| Houston Ship Channel       | 3.32  |
| Katy /Exxon                | 3.28  |
| NGPL LA Pool               | 3.28  |
| NGPL - Midcontinent        | 3.07  |
| NGPL STX                   | 3.27  |
| NGPL TX/OK (E.)            | 3.24  |
| NNG Demarc.                | 3.05  |
| Niagara                    | 3.35  |
| PEPL                       | 3.07  |
| Sonat Tier 1               | 3.28  |
| TCO IPP Pool               | 3.58  |
| Tetco ELa                  | 3.29  |
| Tetco M-3                  | 3.71  |
| Tetco STX                  | 3.27  |
| TGP Zone 0                 | 3.26  |
| TGP Zone 1 (500 Leg)       | 3.29  |
| TGT Zone SL                | 3.30  |
| New York Citygate          | 3.81  |
| Transco Station 65         | 3.40  |
| Transco Zone 6 (NY)        | 3.81  |
| Trunk E.La                 | 3.20  |
| Western Region             
| California Border          | 3.26  |
| El Paso Keystone (Permian) | 3.10  |
| El Paso Blanco (San Juan)  | 2.83  |
| Waha Hub                   | 3.15  |
| Canadian/Rockies Region    
| Nova/Aeco (C$/gig)         | 3.23  |
| Dawn Hub/Union             | 3.32  |
| Northwest Stanfield        | 2.26  |
| Wyoming Pool               | 1.80  |
| Opal                       | 1.81  |
| PGT-Malin                  | 2.72  |
| Sumas                      | 1.99  |
            Flow Date 6/25 

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NATURAL GAS FUTURES
12 Month Strip 3.8313  +0.1583
18 Month Strip 3.9287  +0.1483
| Month | High  |  Low  | Close | Change |
| JUL   | 3.470 | 3.330 | 3.430 | +0.193 |
| AUG   | 3.520 | 3.220 | 3.480 | +0.186 |
| SEP   | 3.530 | 3.250 | 3.501 | +0.177 |
| OCT   | 3.550 | 3.300 | 3.532 | +0.171 |
| NOV   | 3.850 | 3.595 | 3.827 | +0.166 |
| DEC   | 4.120 | 3.850 | 4.087 | +0.161 |
| JAN   | 4.195 | 3.955 | 4.180 | +0.154 |
| FEB   | 4.150 | 4.070 | 4.120 | +0.147 |
| MAR   | 4.070 | 3.820 | 4.037 | +0.141 |
| APR   | 3.955 | 3.930 | 3.927 | +0.136 |
| MAY   | 3.930 | 3.740 | 3.912 | +0.136 |
| JUN   | 3.960 | 3.770 | 3.942 | +0.131 |
-------------------------------------------------------------
Natural Gas Futures Rally on Short Covering 

    Natural gas for July delivery on the NYMEX jumped almost 6% higher
yesterday, $0.193 to $3.43 per MMBtu, boosted by short covering from
locals and funds on a surprise of warmer summer forecasts. The August
contract gained $0.186 to $3.48 per MMBtu. A short squeeze set in and some
traders think the market is heading for $3.60. Options expire for July
today, and futures tomorrow. Look for the market to test $3.47 this
morning, and perhaps push into the $3.50s. Key options puts are seen at
$3.00, now well below the market, and calls at $3.50. Monday, fund buying
and locals pushing buy-stops shot the market into key technical resistance
levels around $3.47. Paper selling came out of the woodwork. Despite high
storage levels, anticipation of increased cooling demand helped fuel the
run. With the July contract's range lows at $3.08, there is still room for
the market to be sold. Spreads will also dominate the market the closer
the contract gets to expiration. Traders have seen a steady decline of
open interest over the last week. Open interest has fallen nearly 8% over
the last few weeks. Funds held net short positions in the last Commitments
of Traders Report from the Commodity Futures Trading Commission. Crude oil
prices for the new front August contract rose $0.65 to $26.45 per barrel
on high Mideast tensions. Estimated natural gas volume was 125,000
contracts, with about 51,000 spreads. Natural gas for next day delivery
across the US and Canada was generally $0.15 - $0.25 higher yesterday.
Natural gas for next day delivery at the Henry hub gained $0.16 to 3.33
per MMBtu.
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Today's Power Bulletins
 * Mirant Raises 2nd Quarter Earnings Forecast to at Least $0.35 per Share
 * Dominion Virginia Power Says 3,700 Workers Represented by International
Brotherhood of Electrical Workers Local 50 Rejected Proposed Labor
Agreement
 * NRG Energy Completes $325 Million Financing
 * Southern Company Energy Solutions and Atlantic Station Partner to
Develop Southeast's Largest Central Cooling System
 * Puget Sound Energy to Relocate Corporate Headquarters to The Summit,
Currently Under Construction in Downtown Bellevue, Washington
 * Vermont Energy Summit to Highlight Demand Response Efforts
 * Western Governors Meet to Promote Cross-Border Energy Trade 
 * Report from National Academy of Sciences Says US Needs to Protect
Nuclear Power Plants and Power Grid Against Future Attacks; May Need to
Reorganize Way Government Agencies Work Together
 * Judge Approves Tripled Severance for Enron Workers
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Insurers Say JP Morgan Misrepresented Enron Loans as Trades 

    JP Morgan Chase engaged in fake energy trades with Enron to boost its
income and trading volumes in order to attract more investors to ensure
that it could repay loans to the bank, according to court papers. JP
Morgan has filed suit against 11 insurers to collect $965 million in
surety bonds guaranteeing natural gas and crude oil contracts between
Enron and Mahonia Ltd, a subsidiary of JP Morgan. Enron filed for
bankruptcy in December and defaulted on the contracts. The insurers claim
the trades were actually disguised loans to Enron by JP Morgan and that
they would not have guaranteed the transactions if their real intent had
been revealed. JP Morgan used Mahonia to buy natural gas from Enron, which
it then resold back to the company at a somewhat higher price, the
difference essentially being interest on a secret loan by the bank,
according to the insurers. JP Morgan strongly refutes the allegations,
saying they are an attempt to get out of paying a straightforward claim.
The bank pointed out that the contracts contain language stating, 'The
obligations of each Surety hereunder are absolute and unconditional
irrespective of any circumstance whatsoever.' Apart from the energy
contracts in question, Enron owes JP Morgan $1.2 billion in secured and
unsecured loans, letters of credit and other financial obligations. It is
one of 9 banks being sued by Enron shareholders, who claim the banks
intentionally inflated Enron's stock prices to reap billions in profits
for themselves.
-------------------------------------------------------------
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Xcel Shares Fall to 11-Year Low 

    Xcel Energy shares fell for a 5th consecutive day yesterday after it
said last week it expects earnings to be reduced by $40 million the rest
of this year because regulators denied a rate increase. Xcel shares
dropped as low as $13.91, an 11-year low. The shares had fallen 43% in the
past year. Xcel says it expected net income would be reduced by $5 million
per month for the rest of 2002 after Connecticut regulators denied a rate
increase at the company's NRG Energy unit. Xcel had expected a rate
increase to take effect May 1st when it issued a forecast for 2002
earnings. The Connecticut Department of Public Utility Control denied the
request from NRG to increase customer bills by $0.01 per kWh.
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PHYSICAL POWER PRICES
|            |  High  |  Low   | Average  |
|            | $/MWh  | $/MWh  |  $/MWh   |
| Cinergy    | 44.00  | 38.75  |  41.35   |
| ECAR       | 49.00  | 30.00  |  44.30   |
| ERCOT(SC)  | 28.25  | 28.00  |  28.20   |
| Entergy    | 42.00  | 33.00  |  39.25   |
| TVA        | 54.90  | 36.40  |  47.05   |
| ComEd      | 44.00  | 42.25  |  42.95   |
| Nepool     | 46.00  | 44.50  |  45.40   |
| PJM West   | 59.00  | 49.55  |  57.25   |
| Main       | 50.00  | 42.00  |  45.00   |
| MAPP       | 48.00  | 42.00  |  45.00   |
| Palo Verde | 46.50  | 39.00  |  42.00   |
| Mid C      | 13.75  |  9.80  |  12.35   |
| COB        | 24.25  | 23.50  |  23.90   |
| 4 Corners  | 46.75  | 43.00  |  44.45   |
| Mead       | 48.50  | 43.75  |  46.15   |
| NP 15      | 35.00  | 31.50  |  32.60   |
| SP 15      | 42.50  | 36.00  |  39.20   |
                  Power Delivered 6/25
-------------------------------------------------------------
Todays Gas Bulletins
 * S&P Says Canada's NEB Declination of TransCanada PipeLines' Application
to Have Cost of Capital Based on 7.5% After-Tax Weighted Average Will Not
Affect Ratings or Outlook
 * Spain's Enagas IPO Priced at 6.50 Euros per Share; Demand for 10 Times
Shares on Offer
 * Northern Border Partners Maintains 2002 Guidance
 * National Fuel Gas Writes Off $15 Million Investment in Independence
Pipeline Company
 * Two Dominion Employees Elected to Standards Board
 * Kern River Gas Transmission Company Secures $875 Million in Expansion
Financing
 * Tengasco to Hold Annual Shareholders Meeting June 27th
 * Southern Natural Gas Announces Completion of 1st Phase of South System
Expansion I Project
 * Magnum Hunter Announces New Gulf of Mexico Discoveries; Significant
Increase in Total Company Production
 * Sponsors Abandon Independence and SupplyLink Natural Gas Pipelines
Project
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-------------------------------------------------------------
PHYSICAL POWER PRICES (Cont)
|            | High  |  Low  | Average |
|            | $/MWh | $/MWh |  $/MWh  |
| NY Zone A  | 49.50 | 49.00 |  49.25  |
| NY Zone G  | 59.50 | 59.00 |  59.25  |
| NY Zone J  | 77.50 | 77.00 |  77.25  |
| Fla-Ga Bdr | 44.95 | 28.00 |  35.75  |
| FRCC       | 44.95 | 28.00 |  37.35  |
| Va Power   | 57.00 | 42.00 |  49.50  |
| VACAR      | 43.00 | 42.00 |  42.50  |
| SERC       | 57.00 | 25.00 |  41.40  |
| SPP        | 45.00 | 33.00 |  42.15  |
| Houston    | 35.50 | 34.50 |  35.00  |
               Power Delivered 6/25
-------------------------------------------------------------
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Canadian Bank Sued by Dutch Bank Over Enron Related Debt

    Royal Bank of Canada is considering its options for fighting a lawsuit
by Dutch bank Rabobank over a disputed Enron related transaction. Royal
Bank lent $517 million to an Enron affiliated trust in late 2000. The bank
then hedged against a default on the loan by negotiating a total-return
swap with Rabobank. A total-return swap is a derivative frequently used by
big multinational banks to hedge credit risks. Rabobank contends that 3
investment bankers for Royal Bank knew about Enron's possible
susceptibility to default. The investment bankers were forced to resign
from Royal in November for not divulging  the extent of their connection
to Enron when they were hired. While working at UK investment bank,
Greenwich Natwest, the 3 bankers had structured one of Enron's limited
partnerships, which was part of Enron's complicated off-balance sheet
partnerships that eventually led to its collapse. Until the lawsuit was
filed, Royal Bank said that Rabobank had fulfilled its contractual
obligations related to the deal. Royal Bank also said it expects to
receive full and final payment from Rabobank on June 28th. If payment is
not forthcoming, Royal Bank said it may file a countersuit against
Rabobank.
-------------------------------------------------------------
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Williams to Cut Trading Staff

    Williams plans to lay off about 130 trading floor staffers, or 16% of
the total. The news sent Williams shares down 8.4% to $6.53, a 9-year.
Williams  joins Dynegy, El Paso and others in cutting its sales following
the collapse of Enron. Williams also fired 11 employees at its European
trading operation, based in London. The company had about 800 people in
its trading group, including 100 traders. Williams is still determining
how many traders it will let go as part of this move. It said last week it
would sell off assets in Memphis, Tennessee, and Alaska to shore up its
balance sheet. On June 10th, Williams lowered its earnings outlook and
said it would cut jobs as part of a wide-ranging restructuring of its
trading business. It also said it would cut risk management spending by  a
third, to $1 billion, to improve its balance sheet in the face of
increased scrutiny by investors and credit agencies. Moody's cut its
credit rating to just one notch above junk status a couple weeks ago.
-------------------------------------------------------------
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-------------------------------------------------------------
Senate Environment Committee Demand White House Documents

    The Senate Environment Committee will vote on Thursday whether to
subpoena the White House for documents about its decision to reduce air
pollution rules for older coal-fired power plants. Democrats and
Environmental groups have criticized the Bush administration's decision
utilities and refineries more leeway in repairing and expanding the 
plants without costly upgrading. The Senate Environment Committee is
seeking EPA records on interagency discussions and meetings with outside
interest groups on development of the new air pollution regulations. If
subpoenas are issued, it would be the 2nd time this year that a Senate
Committee has ordered the Administration to turn over energy related
documents. Last month, the Senate Governmental Affairs committee
subpoenaed White House records of its links with Enron and Kenneth Lay.
The EPA gave the committee  700 pages of documents last month, but
committee staff members said most of the pages were blank and that the
rest were unusable. Also on Thursday, the Senate Environment Committee
will vote on a proposal to place limits on power plant emissions far
beyond those recommended by the Administration earlier this year. The
draft bill would sharply limit emissions of nitrogen oxides, sulfur
dioxide and mercury by 2008. It also includes mandatory limits on
emissions of carbon dioxide, a heat-trapping gas linked to global warming.
The White House opposes mandatory carbon dioxide limits.
------------------------------------------------------------
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-------------------------------------------------------------
Dynegy Plans to Raise $2 Billion to Preserve Credit Rating

    Dynegy plans to raise about $2 billion to maintain its investment
grade credit rating and restore investor confidence. The restructuring
measures include a 50% dividend cut, the spin-off of its UK natural gas
storage business and the partial sale of its stake in Northern Natural Gas
pipeline, which it acquired from Enron as part of their ill-fated deal.
Dynegy also expects 2nd quarter earnings per share to be about the
breakeven point. The company said that its 2002 profit forecast no longer
applies, and it will issue a new earnings forecast in late July. Dynegy
was expected to earn $0.21 per share in the 2nd quarter and $1.35 in 2002,
according to the average estimates of analysts. The company said it
expects to take a $450 million pretax charge in the 2nd quarter, $300
million in expenses from its communications unit and $150 million in
severance related costs and other expenses. Fitch cut Dynegy''s debt to a
'BB+', the highest level of junk, yesterday. Moody's and S&P, both of
which currently give the company an investment grade rating, are also
considering downgrades. Dynegy says it would be able to meet its
obligations, even if its credit were downgraded by one or more services.
Dynegy said the dividend cut would provide $56 million in savings. Over
the last 2 years, Dynegy has paid a quarterly dividend of $0.075 per
share. Dynegy's partners in the Catlin venture have agreed to remove a
$270 million trigger, and it will repay or refinance bank credit in a
joint venture with NRG Energy, which will eliminate a $31 million trigger,
the company said. Dynegy plans include the sale of up to $400 million in
mortgage bonds in its Illinois Power utility and the sale of various other
assets to raise another $200 million. The company plans to sell shares in
Dynegy Energy Partners, a new company that will own and operate a portion
of its natural gas liquids business. It also plans to sell 50% of the
16,600-mile Northern Natural Gas pipeline and expects to save $50 million
per year from workforce reductions and spending cuts. In addition, the
company will attempt to make its financial results more transparent by
including more details about its earnings from regulated businesses and
from energy trading.
-------------------------------------------------------------
Nymex Natural Gas Option Volatility  
Supplied by "The Daily Hedger"
http://www.linkcounter.com/go.php?linkid=217700

         Futures                        Implied
Month   Settlement     Days Left       Volatility
Jul	$3.430          Exp Tues	 66.7%
Aug	$3.480		   31            52.6%
Sep	$3.501	 	   63	 	 51.8%
Oct	$3.532	 	   92		 51,5%
Nov	$3.827		  122	 	 52.1%
Dec	$4.087		  153	         51.2%
Jan	$4.180		  184	         52.2%
Feb	$4.120		  217            52.0%
Mar	$4.037		  245	         47.9%
Apr	$3.927		  274	 	 40.9%                      
-------------------------------------------------------------
Enron's Trading Partners Denied Separate Creditors Committee

    The bankruptcy judge handling Enron's case has denied a petition by
some of the company's former trading partners for their own committee.
Enron owes its former trading partners about $1 billion. But the judge
says that the current creditors committee adequately represents the
interests of the trading partners, saying their proposed committee would
create further discord, litigation and delay. The judge said that the
13-member creditors committee, which includes Duke and Williams, fairly
represents the major groups that are owed money by Enron. According to the
judge, the former trading partners have not cited a single instance where
the ability of the creditors' committee to function has been impaired. The
former trading partners are creditors of Enron North America, which
generated 90% of the revenue before it collapsed. Court papers indicate
that Enron North America has adequate funds to repay its creditors. It
lists assets of $13.7 billion and debts of $8.8 billion. Creditors of
Enron NA are attempting to separate themselves from the creditors of Enron
Corp, which are owed $100 billion, to prevent consolidation of all Enron
unit bankruptcies into one large case. If the cases are consolidated, the
trading partners and other creditors of Enron North America would see
their monetary compensation diluted.
-------------------------------------------------------------
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-------------------------------------------------------------
ANALYST SEES MAJOR LOW EARLY 2003

 For market technicians who combine the study of the seasonality of
natural gas prices with cycle analysis, the early part of 2003 may be a
major turning point in the direction of prices.  "Our data shows the time
cycles pointing lower into the first quarter of 2003," says Walter
Zimmerman, Vice President with United Energy, New York.  Zimmerman is an
advocate of combining the intricacies of Elliott Wave analysis with the
seasonal and cyclic characteristics of natural gas prices to make both
short and long term forecasts. One of the most intense and often difficult
to understand analytical approaches is the us of matching preconceived
price patterns to that of current price behavior to see when trends in
prices may begin or end. Elliott Wave analysis is just such a technique.
The general rule is that an Elliott pattern requires five waves to be
completed, three in the primary direction and two counter to the main
trend. Thus if natural gas prices have completed a five wave pattern, then
the current trend, either up or down, should be over. Typically prices are
never exactly at the precise beginning or end of a five wave pattern and
analysts often refer to price moves as being one of the five waves. "We
think there has been an initial leg down from $3.875 to $3.05 and now the
market is correcting that move (higher)," says Zimmerman. Seasonality is
also important and is often more easily understood that the vagaries of
Elliott Wave analysis. "The seasonality of this market is that prices
typically peak in May and bottom in January. There tends to be a
correction in between those two points where there is a bottom in
September and a rally into November. "Longer term we are very, very,
bullish. We think that the $1.76 is a major multi year low (September
2001), and all my longer term time cycle analyses point up to 2005 to
2006. A hedger would want to hedge out to the end of the year, but that's
about it. In January 2003 all the cycles turn up at the same time."
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-------------------------------------------------------------
FINANCIAL SUMMARY
The TSE 300 dropped 9.50 points to 7129.93
The CRB Index added 3.42 points to 207.01
The US Dollar increased  0.12 points to 108.31
The Dow advanced 28.03 points to 9281.82
The S&P 500 gained 3.58 points to 992.72
The Nasdaq was up 19.38 points to 1460.34
August NYMEX Crude Oil rose 0.65 to 26.47
Canadian-US Exchange fell 0.0062 to 1.5168
-------------------------------------------------------------
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