FW: Energy Market Report

Subject: Energy Market Report - 01/29/02

Energy Market Report
Tuesday, January 29, 2002

*See attached pdf file.
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Note: See correction in California paragraph for the issue dated Monday,
January 28, 2002.
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Western Pre-Scheduled Firm Electricity Prices($/MWh)
January 29, 2002 for January 30, 2002

Peak(Heavy)
Low Change High Change
NW/N. Rockies 18.90 0.10 19.50 -2.50
Mid-Columbia 18.90 0.10 19.50 -2.50
COB 21.00 0.00 22.00 -0.25
N. California 23.50 0.00 24.25 -0.75
Midway/Sylmar NA NA NA NA
S. California 23.00 0.00 25.00 0.00
Mead 24.50 1.75 26.50 0.75
Palo Verde 23.50 0.75 25.50 -0.25
Inland SW 23.50 4.00 26.50 0.75
4-Corners 23.00 0.00 25.25 0.75
Central Rockies 20.50 -1.50 23.00 -3.00
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Off-Peak(Light)
Low Change High Change
NW/N. Rockies 17.00 -0.25 19.00 0.50
Mid-Columbia 17.00 -0.25 19.00 0.50
COB 17.75 0.75 18.75 0.75
N. California 18.25 1.50 19.75 0.25
Midway/Sylmar NA NA NA NA
S. California 17.75 0.75 20.50 1.50
Mead 17.00 -0.50 19.00 -0.50
Palo Verde 14.75 0.75 16.50 0.00
Inland SW 14.75 1.25 19.00 2.50
4-Corners 15.00 0.50 16.00 -0.50
Central Rockies 12.00 0.50 13.75 0.25
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New CEO to Resurrect Enron

Heavy load energy costs for Wednesday delivery turned in mixed results in
the Western U.S. on Tuesday, reflecting varying weather forecasts in
different regions. "The average price in the Northwest was slightly lower
today because temperatures were forecast to rise tomorrow, while the average
price in the Southwest rose slightly on expected cooler temperatures," said
one weather watcher. Off-peak prices, however, were immune to geographical
boundaries, rising at just about all of the Western hubs on the cold
weather. "There were a lot of people looking to secure off-peak power today
in order to meet demand," said one trader of the stronger light load prices.
Nonetheless, some players were surprised by Tuesday's strength, noting that
the worst of the cold was likely over. Accordingly, Weather Derivatives was
forecasting a general decline in heating demand throughout the West over the
course of the week, and the latest six-to-ten from the NWS was predicting
mostly normal temperatures for the WSCC from February 4 through 8. In
Enron-related news, "Turnaround Expert" Stephen Cooper was named interim CEO
of bankrupt Enron Corp. on Tuesday. Cooper told Enron employees that their
company was in much better shape than some of the hundreds of other
companies he and his partners have represented in bankruptcies and
reorganizations. "They didn't start with nearly as strong a position as
this company. They were able to emerge successfully from bankruptcy and I'm
confident that Enron will also," Cooper said in a company-wide voice mail on
Tuesday. On Monday, about 400 former and current Enron employees filed suit
against several company officials and auditor Arthur Andersen in a federal
court in Houston, alleging that the defendants encouraged employees to buy
Enron stock without being notified about the company's precarious financial
condition.

Peak power prices in the Northwest fell by an average of nearly a buck on
Tuesday, likely due to forecasts indicating the worst of the region's most
recent cold snap had passed. In addition, strong river flows made for
abundant hydroelectric generation. Nonetheless, light load prices for
Wednesday delivery traded slightly higher than a day ago, on average. "It's
still cold at night, and a lot of the hydro is being pushed through during
the peak hours to meet demand, so we're just not seeing as many offers for
the light load hours," said one Northwest utility trader. Flow forecasts
for Chief Joseph were ratcheted slightly upward on Tuesday, coming in at 110
kcfs through Thursday, 105 kcfs Friday, 80 kcfs Saturday, 65 kcfs Sunday,
110 kcfs Monday, and 105 kcfs next Tuesday. According to Weather
Derivatives, heating demand in the region was forecast to be 124 percent of
normal on Wednesday, steadily falling to 99 percent of normal by February 3.
Meanwhile, the latest six-to-ten was calling for temperatures to be normal
in Oregon and Washington, and above normal in Idaho and Montana, from
February 4 through 8.

Amid below-normal temperature forecasts, flat spot gas values at the Socal
border, and firmer overnight heating demand, peak power prices were mostly
steady and off-peak prices strengthened in the Golden State on Tuesday.
Heavy load goods at NP15 changed hands predominantly between 23.5 and
24.25$/MWh, but one confirmed trade was heard at 26.5$/MWh. Light load
pieces saw action from 18.25 to 19.75$/MWh. Correction: in the Energy
Market Report for January 28 we incorrectly reported that CPUC
administrative law judge Robert Barnett advised the commission to restore
the direct access provision, which was revoked September 20, 2001, allowing
industrial and household consumers to again chose their ESP through July 1,
2002. In fact, Barnett's ruling would retroactively cancel direct access
from July 1, 2001 onward, nullifying contracts signed between July 1, 2001
and September 20, 2001. "This is not a restoration of choice. This is a
post-birth abortion," emailed one reader. Additionally, contracts penned
before July 1 but which didn't deliver power until after July 1 are also
cancelled under the new ruling. "To boil all this down to the simplest
terms, the DWR and the utilities are afraid that too much load switched to
alternate suppliers during that time frame (July through September). Since
they bought too much power through high-priced contracts they have fewer
kilowatt hours to spread their costs against," summed up one market analyst
on the reason behind the new ruling. The ruling is on the agenda for the
CPUC's February 7 meeting, at which point it could be enacted. In unit
news, Calpine's Sutter Plants (546 MW) was almost back to full capacity on
Tuesday, generating at 525 MW. Helms PGP #1 (407 MW) also returned to the
grid. Wednesday forecasts called for temperatures to climb slightly, with
highs expected in the upper-40s to low-50s at mid-state load centers and
overnight lows anticipated near freezing. The latest six-to-ten predicted
normal temperatures from February 4 to 8.

The average price for a 25-megawatt block of spot electricity rose
marginally in the Southwest Tuesday amid continued cold weather. Heating
demand in the region was expected to remain well above normal through
Friday, but then drop to below-normal levels over the coming weekend. "It's
cold down here, especially at night, so we're having to buy to cover our
load," said one Phoenix-based trader shivering at the thought of overnight
lows in the 30s. Peak power at Palo Verde saw action from 23.5 to
25.5$/MWh, with unconfirmed late-day trades heard as high as 26$/MWh. There
was little in the way of unit news on Tuesday, except for word that
Arizona-based Coronado #1 (395 MW) was still having trouble making it back
online. Weather forecasts called for gradual warming through the coming
weekend, while the latest six-to-ten was predicting a near-blanketing of
normal temperatures from February 4 through 8.

Patrick O'Neill and Jessie Norris
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Western Generating Unit Outages

Current Begins Ends Reason

CAISO units <250/6699 total NA NA
planned/unplanned*
Alamitos #3/320/gas 26-Jan-02 ? planned
Alamitos #6/480/gas 20-Jan-02 ? planned
Big Creek Project/1020/hydro 28-Jan-02 ? @710MW, planned
Colstrip #3/700/coal 11-Jan-02 ? repairs
Corondado #1/395/coal 25-Jan-02 29-Jan-02 tube leak
Encina #4/303/gas 12-Jan-02 ? unplanned
Etiwanda #4/320/gas 21-Jan-02 ? planned
Four Corners #5 09-Jan-02 14-Mar-02 maintenance
Grand Coulee #19/600/hydro 10-Dec-01 March repairs
Haynes #6/341/gas 07-Jan-02 ? planned
Helms PGP #2/407/hydro 01-Oct-01 ? planned
Hyatt/Thermalito/933/hydro 02-Oct-01 ? @665 MW,
unplanned
Moss Landing #7/739/gas 29-Dec-01 ? planned
Ormond Beach #1/725/gas 28-Dec-01 ? planned
Ormond Beach #2/750/gas 05-Oct-01 ? @350 MW,
unplanned
Pittsburg #6/317/gas 22-Nov-01 ? planned
Scattergood #3/445/gas 22-Jan-02 ? maintenance

Future
Navajo #2/750/coal 02-Feb-02 25-Feb-02 maintenance

For unit owners refer to pdf version.
*Indicates a change from previous EMR.
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Eastern Markets Pre-Scheduled Firm Power Prices ($/MWh)

January 29, 2002 for January 30, 2002

Peak (Heavy) in $/MWh
Low Change High Change
Into Cinergy 17.00 0.00 19.30 0.80
Western PJM 21.00 0.05 21.50 -0.60
Into Entergy 15.00 -0.50 17.15 -0.85
Into TVA 15.75 -0.50 16.75 -0.75
ERCOT 17.50 0.50 19.40 1.90
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With little change in market fundamentals to a day ago, peak power prices
posted mixed results across the Eastern Interconnect on Tuesday. Very warm
temperatures continued to smother demand across most of the East, while
cooler conditions were expected in ECAR and Texas, lending some support to
those regions. According to traders, there were higher prices in the Summer
and Q4 term products on Tuesday. NYMEX Henry Hub natural gas futures rose
on some short covering ahead of February's expiration. The front month
crawled up 9.8 cents in its last gasp and closed at 2.006$/mmBtu, while
March gained 8.3 cents to end at 2.067$/mmBtu.

Weak demand pummeled the Mid-Atlantic again on Tuesday, sending day-ahead
electricity prices lower. Western PJM goods for Wednesday delivery changed
hands between 21 and 21.5$/MWh, with the bulk of deals heard around
21.25$/MWh. February settled about a dime lower to a day ago, at 23.4$/MWh.
LMPs softened on Tuesday, averaging 18.11$/MWh through 15:00 EST, after some
mid-morning, short-lived volatility. Rumors circulated of an outage at
Keystone #2 (850 MW) on Tuesday, but confirmation was not available, and
little effect was seen on the market regardless, sources said. Forecasts
for Wednesday called for about five degrees of cooling, with highs expected
in the 57 to 65-degree range and overnight lows in the upper-40s. The
mercury was expected to settle five degrees lower on Thursday. The most
current six-to-ten predicted above-normal temperatures from February 4 to 8.

Amid cooler forecasts for Wednesday, peak power prices strengthened in the
Midwest. Into Cinergy pieces were bought and sold from 17 to 19.3$/MWh,
climbing almost a buck on the high end. Temperatures were expected to drop
significantly on Wednesday, with highs forecast in the 39 to 49-degree range
across ECAR, with overnight lows about five degrees below there. The latest
six-to-ten called for above-normal temperatures from February 4 to 8.

Peak power prices slipped in the Southeast on Tuesday, as warm weather kept
demand very soft. "It's gas close-out day so everyone's keeping an eye
turned to NYMEX. A rally there could push spot gas higher tomorrow and thus
the dailies as well," said one SERC player. Into Entergy deals were done
between 15 and 17.15$/MWh, settling to the low end late. The February
contract weakened slightly on Tuesday, trading between 18 and 18.1$/MWh.
Texas power firmed up for Wednesday delivery, with much colder temperatures
expected across the Lone Star State. The most current six-to-ten called for
mostly normal temperatures, with above-normal conditions in the north, from
February 4 to 8.
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California ISO Congestion Index in $/MWh

Path Peak Off-peak
for 30-Jan-02 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 NA NA NA NA NA NA
February 16.75 18.25 21.00 22.00 22.50 23.50
March 15.00 16.50 20.50 21.50 21.50 22.50
April NA NA NA NA NA NA
Q2 '02 15.50 17.00 24.00 25.00 23.75 24.75
Q3 '02 29.00 30.50 37.00 38.00 NA NA
Q4 '02 27.00 28.50 26.50 27.50 28.50 29.50
Q1 '03 27.00 28.50 NA NA NA NA
Cal '03 28.75 30.25 32.00 33.00 34.00 35.00

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 28-Jan-02 38.71 36.69 14.13 29.80 9.55

BPA's Offer for 01/31/02.

Hours Amount NW delivered COB/NOB delivered
7-22 200MW Market Price* Market Price*

*Market price will be determined at time of request.

NYMEX Henry Hub Gas Futures in $/mmBtu

Close Change
Feb 2.006 0.098
Mar 2.067 0.083

Natural Gas Spot Prices in $/mmBtu

Low High
Sumas 1.96 2.01
So. Cal Border 2.04 2.09
San Juan 1.91 1.96
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Economic Insight, Inc. - 3004 SW First, Portland, Oregon 97201,
Telephone (503) 222-2425, Internet e-mail emr@econ.com -
Copyright, Economic Insight, Inc. 2002.