Record Gas Demand Means Higher Prices

RDI'S NEW STUDY, THE CONVERGENCE OF GAS AND POWER: Causes and Consequences, projects gas consumption in the United States will grow 2.4 percent per year, or a 26.8-percent increase from 1998 to 2007.

Overall, demand is expected to grow from 20.5 trillion cubic feet in 1998 to 26 Tcf in 2007. More than half of this projected growth will come from electric industry demand for gas, which will increase from 4.1 Tcf in 1998 to 6.9 Tcf in 2007, or 5.3 percent per year.

The jump in gas consumption is linked to the electric industry's limited range of choices for new capacity.

Frontlines

AS YOU CHILL OUT IN YOUR TV CHAIR, WATCHING THE Winter Olympics from Nagano, Japan, think a moment about Kyoto, not far away, and what the climate change treaty might have in store.

On Jan. 8, federal climatologist Tom Karl announced that 1997 was the warmest year on record, with thermometer readings exceeding the mean (1961-90) by 0.42 degrees centigrade (0.75 degrees Fahrenheit). Writing in his World Climate Report, editor Patrick J. Michaels took Karl to task for reporting only half the story.

People

THE former chairman of the Missouri Public Service Commission, Karl Zobrist, is now a partner at Blackwell Sanders Matheny Weary & Lombardi LLP.

Zobrist resigned from the commission on Aug. 15, 1997.

Robert C. Kelly, former chairman and CEO of Enron Renewable Energy Corp., was named managing director of renewable energy for Enron International.

Steven J. Lewis joined AEP Energy Services Inc. as senior vice president of energy services. Previously, Lewis managed trading of natural gas and electricity for Duke/Louis Dreyfus LLC.

Michael P.

News Digest

POWER PLANT SALE. Central Maine Power Co. has agreed to

sell its hydroelectric, fossil and biomass power plants totaling 1,185-MW of generating capacity to FPL Group, the holding company of Florida Power and Light. The sale price of $846 million exceeds book value and could permit up to a 10-percent rate cut for customers by the end of the year.

OHIO/TEXAS DEAL. Ohio-based American Electric Power

Co. and Texas-based Central and South West Corp. on Dec.

Perspective

THE COALITION OF utilities calling to "Repeal PUHCA Now!" has pulled together a first-class team of lobbyists. They have been working intensely on Capitol Hill for more than two years. But they haven't won the easy victory they thought was within their grasp when the Republicans took over the Congress in 1994. The major flaw in the coalition's approach is classic: The pro-repeal lobbyists have been tireless talkers, but poor listeners.

Off Peak

AMID WORRIES THAT RESIDENTIAL CONSUMERS MAY NOT benefit from competition comes a study that shows at least one industry will: metering. This market is expected to grow an average of 5 percent per year through 2002.

By 2002, the metering industry is expected to be worth $3.1 billion, up from $2.4 billion last year, says Metering for Utilities: Riding the Wave of Deregulation, a new book from Business Communications Co.

Overall, meter reading systems are expected to log the highest average annual growth rate, about 16 percent each year over the next five years.

How Commodity Markets Drive Gas Pipeline Values

Has rate regulation become obsolete for natural gas pipelines?

On Jan. 30, FERC will hold a public conference to review the financial health of the pipeline industry. It will ask whether its regulatory framework still works; whether pipelines can still attract new capital for investment. Does rate policy threaten the financial integrity of the pipeline industry? That very question may come before the Commission. Nevertheless, FERC need not look far for an answer. If the pipeline industry should lie at risk, the cause may go no farther than the Commission itself. In fact, FERC ratemaking policy for gas transportation service now appears to jeopardize the ability of pipelines to recover costs.

A Second Opinion on Network Architecture Why a "closed" system is actually "open"

METERING issues can be confusing, especially as they relate to

new technologies and electric deregulation. However, only three guiding principles are needed to protect consumers and to ensure fair competition.

First, consumers need accuracy, safety and reliability. These are ensured through adherence to ANSI C12 standards.

Second, they need public, or "open," access to both meters and communications (with passwords to protect privacy).

Reliability or Profit? Why Entergy Quit the Southwest Power Pool

ON OCT. 31, 1997, ENTERGY CORP. AND 16 OTHER MEMBERS

announced their intention to withdraw from the Southwest Power Pool regional reliability council and join the neighboring Southeastern Electric Reliability Council. The announcement shocked the SPP and its members, plus other industry observers and stakeholders.

While significant in number, the withdrawals do not necessarily signal widespread displeasure with SPP's initiatives and performance.

Selling Energy to the Federal Government

THE FEDERAL GOVERNMENT IS THE NATION'S SINGLE largest energy consumer. It buys billions of dollars of electricity and natural gas from utilities each year. Deregulation, and the competition it brings, will change how the government buys these services.

For utilities that signed contracts with the government in the past few years, the future may be here. Utilities must read their contracts carefully; they must know which rules apply to them, and try to comply. Noncompliance can lead to criminal and civil penalties for the utility and its employees.