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News Digest

Fortnightly Magazine - February 1 1999

Avista + Vitol. Avista Energy, the energy trading and marketing affiliate of Washington Water Power, on Dec. 17 announced that it would purchase Vitol Gas & Electric LLC, one of the top 20 energy marketing companies in the United States. Terms of the deal were not disclosed. "By combining the resources of Avista Energy and Vitol Gas & Electric, we have placed ourselves squarely among the top 10 energy marketing and trading companies in the nation," said T.M. Mathews, WWP chairman, president and CEO.

Business Wire

Two rural electric cooperatives are joining forces to build a $200 million power plant near Chouteau, Okla. KAMO Power and Associated Electric Cooperative plan to build a 530-megawatt (mw), gas-fired combustion turbine power plant to meet the growing electric demands of their customers. Construction of the plant will start in the first quarter of 1999, with commercial operations expected to begin in July 2000. The location has not been finalized, but the "preferred site" is Mayes County.

Stockholders of Sierra Pacific Resources approved the merger of the company and Nevada Power Co. The merger, conditioned upon approvals from the various regulatory commissions, is expected to close in the second quarter of 1999.

South Jersey Industries Inc. and Conectiv announced plans for a joint customer account services venture to provide meter reading services. Millennium Account Services, which will be established as an entity separate from the two companies, eventually could provide a variety of customer account services - including metering, billing and customer service - upon passage of the pending restructuring legislation.

GE Harris Energy Control Systems Canada Inc. signed a $3 million contract with China Light & Power Co. Ltd. to provide substation automation equipment to the Hong Kong company. GE Harris will supply equipment to control, monitor and automate substations in CLP Power's 400-kilovolt and 132-kilovolt transmission system. It will provide 120 Wesdac D200 Remote Terminal Units, an upgrade that will replace equipment originally supplied by GE Harris more than 10 years ago.

Electric Reliability

Mandatory Compliance. The Western Systems Coordinating Council (WSCC), at its December annual meeting in Phoenix, voted to move forward with implementation of Phase 1 of its reliability management system, which requires mandatory compliance, according to chairman Jan B. Packwood. WSCC claims to be the first of the 10 regional reliability councils to proceed with such a system prior to enactment of federal legislation.

Studies and Reports

Gas Capacity Release. The average value of capacity release transactions runs substantially below the regulated maximum rate, while published rates are generally consistent, according to a new report, "Analysis of Short-Term Natural Gas Markets." The report was conducted by Energy and Analysis Inc. on behalf of the American Gas Association and the Interstate Natural Gas Association of America. It marks the first full-scale look at released natural gas capacity prices.

According to Karen Hill, A.G.A.'s vice president for regulatory affairs, the report confirms that the price ceiling in the secondary market (at the long-term tariff rate) can distort the value of released capacity, producing a price differential between capacity release and bundled ("gas market")