Fortnightly Magazine - March 15 1996

Canceled last August, Enron Corp.'s $2-billion, 2,250-megawatt power plant in Maharashtra has been resurrected. Enron's new agreement with the Indian Government specifies a lower price for electricity (5.28 instead of 6.81 cents per kilowatt-hour) and a $365-million cut in capital costs. A separate venture will cover a portion of the costs in the project's second phase, reducing the overall capital budget from $2.8 to $2 billion. Although the government has not yet rendered a formal decision, Enron expects to begin construction within three months.

A joint study by Arthur Andersen & Co. and Cambridge Energy Research Associates (CERA) cites this winter's dramatic spike in natural gas prices as evidence of a growing need for selective new investment in gas transmission and storage infrastructure. Natural Gas Trends, 1996 identifies three underlying trends:

s Surging demand is creating new bottlenecks.

s Technology is improving the competitive position of gas.

s Natural gas and electric power markets are becoming increasingly integrated.

Quicktrade, an electronic natural gas trading system created by Enerchange L.L.C. and Energy Exchange Inc., went on line January 8, serving multiple points in the Chicago area and Ventura, IA, as well as pooling points along Natural Gas Pipeline Co.'s interstate system. The computerized, real-time system allows buyers and sellers to trade gas 24 hours a day both in the United States and in Canada (through the Energy Exchange). Quicktrade enables users to instantly measure levels of supply and demand, determine price trends, and execute transactions.

Southern California Gas Co. (SoCalGas) has unveiled a "transaction-based" storage program that allows customers to arrange one storage transaction at a time and to negotiate storage fees.The program was approved by the California Public Utilities Commission in November. Previously, most storage customers had to choose between basic, long-term, or auction services, which required differing storage commitments that ranged from a few months to 15 years.