![](media/image1.jpeg){width="8.5in"
height="3.5027777777777778in"}**U.S. DEPARTMENT OF ENERGY**

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

**January 14, 2004**

**Highlights / Major Developments**

**New York Natgas Prices Hit Highest Levels Ever**

Bitter cold weather moving into the U.S. Northeast on Wednesday drove
wholesale natural gas prices in New York to their highest levels ever,
as businesses and homeowners cranked up their furnaces to fend off the
chill. The scramble for supplies caused prices in New York City to spike
almost 200 percent higher, with next-day deliveries fetching \$48 per
million British thermal units, up more than \$31 from Tuesday and the
highest ever for the area, according to one industry analyst. But trade
sources \-- noting prices in most other areas were slipping this week
despite the arctic cold \-- said the surge in New York was an isolated
case and should be short-lived. \"This is a transportation issue.
There\'s a bottleneck into the delivered market area (New York City).
There's tons of supply around but no way to get it to the people who
need to burn it,\" said one Texas-based trader. He said there was more
demand than pipeline capacity to New York this week. \"There\'s plenty
of gas around, but these (high New York) prices will last as long as the
cold does,\" a Midwest trader said. Pipeline limitations played a
critical role in California\'s 2000-2001 energy crisis as well.

Reuters, 1333 January 14, 2004

**Electricity**

**More Northeast US utilities See Record Gas Use in Cold**

South Jersey Gas said on Tuesday its customers burned record amounts of
natural gas on Jan. 10 \-- a record it said would likely fall later this
week as another severe cold snap hits the region. Several gas utilities
in the Northeast said Tuesday they were cutting gas deliveries to some
commercial and industrial customers with interruptible contracts in
order to ensure enough gas was available to meet home heating demand.
Also, New Jersey\'s largest electric and gas utility, Public Service
Electric and Gas Co., said it was responding to an exceptionally high
number of calls from customers without heat after the bitterly cold
weekend. Reuters 0731 January 13, 2004
<http://biz.yahoo.com/rc/040113/utilities_natgas_southjersey_1.html>

**U.S. Midwest Power Up at Hubs, Plains on Cold**

Traders said transmission loading relief on the MAPP grid was crimping
the flow of power on south-to-north paths, boosting prices in the
Dakotas to \$40/MWh. Reuters 1222 January 14, 2004

**Two Plants Supplying California Have Unplanned Outages**

The California Independent System Operator reported today that there
were two unplanned outages at the 807 MW High Desert gas-fired plant in
Southern California and at the 790 MW Unit 1 at the Mohave coal-fired
plant in Nevada. Dealers also noted there has been heavy congestion on
Path 26 (transmission line) in central California overnight, limiting
the ability of suppliers to move power south. The congestion helped to
boost off-peak prices in SP-15 and weaken values in NP-15. Reuters 1329
January 14, 2004

**U.S. Northeast Power Soars on Arctic Blast, Outages**

Northeast spot power prices for Thursday soared on forecasts calling for
the arctic weather to continue, boosting heating demand and spot natural
gas prices, market sources said Wednesday. Traders in the Northeast said
generators were not operating their natural gas plants because the spark
spreads were

negative, meaning they could make more money selling the gas than the
electricity. \"A lot of companies are withholding their generation so
they can sell the gas. This is totally weather related. We better get
used to this since the arctic weather will be with us until Friday
night,\" one New England trader said. Reuters 1103, January 14, 2004

**Poletti, NY Plant Expected Back in Service Today** Officials at NYPA
said its 825 MW Poletti oil/gas-fired plant in New York City was
expected to return to service by Wednesday after shutting for repairs
over the weekend. On-peak real-time and day-ahead power prices in New
York City have been over \$100 per megawatt hour since the weekend due
in part to the cold weather, which boosts heating demand, and the
Poletti outage. Poletti is one of the biggest and cheapest-running power
plants in the city, where all generators are paid the cost of the most
expensive megawatt needed to meet the demand in the city.

Reuters, 1103 January 14, 2004

**New Brunswick Canada Using Record Amount of Electricity**

Businesses and homes in New Brunswick used a record 3,145 MW of
electricity on Wednesday, according to a statement from NB Power, the
province-owned energy company, breaking the previous record of 3,129 MW
set just five days ago on Jan. 9. Reuters, 1103 January 14, 2004

**345 Kilovolt Transmission Line Out in Mid-Atlantic**

The Hmr Cty-Stll 345 kV transmission line serving Pennsylvania and New
York has been out since Monday and will probably be out until some time
on Thursday January 15^th^. Reuters, 0850 January 14, 2004

**Transformer Explodes at Exelon\'s Pa. Limerick Nuke**\
A transformer exploded late Tuesday at the Limerick nuclear station in
Pennsylvania due to an electrical malfunction in the plant\'s turbine
building, the company told the Nuclear Regulatory Commission in an event
report on Wednesday. Both 1,196 megawatt units 1 and 2 at the plant,
which can produce enough power to serve more than 2.2 million homes,
remained at full power during the incident. The affected transformer,
located in the non-nuclear portion of the plant, provides internal power
to plant equipment such as heating, ventilation and air conditioning
equipment and other components, the company said in a separate
statement. The malfunction was isolated to the individual transformer
and did not affect the safety of the plant, the company said. Following
the explosion, Exelon declared an unusual event, which is the lowest of
four levels of emergency classification used by the NRC. The company
exited the event within about two hours.
<http://biz.yahoo.com/rc/040114/utilities_exelon_limerick_1.html>

**Entergy\'s River Bend Nuke Returning to Full Service**\
Entergy Nuclear said its 936 megawatt River Bend nuclear unit in
Louisiana was boosting power Wednesday after being reduced to 60 percent
of capacity for repairs. \"We reduced power for a planned rod sequence
exchange,\" Entergy spokeswoman Amy Wells said, adding \"it is
increasing power, and is at about 63 percent right now.\" River Bend had
been operating at full power as of early Tuesday.
<http://biz.yahoo.com/rm/040114/utilities_entergy_riverbend_1.html>

**Calpine Gets OK to Build Calif. Power Plant**\
California regulators on Wednesday approved a Calpine Corp. project to
build a 1,087 megawatt gas-fired power plant. The San Joaquin Valley
Energy Center, in central California, would have a base load capacity of
820 MW with an additional 287 MW available during peak demand periods.

<http://biz.yahoo.com/rc/040114/utilities_calpine_california_2.html>

**Petroleum**

**Fuel Tanker Truck Crashes in Maryland, Kills 5, closes I-95** At least
five people were killed Tuesday after a tanker truck carrying a
flammable liquid plunged off a highway overpass at 3 pm and exploded
into a fiery mass on other vehicles along Interstate 95 near Baltimore,
officials said. The tanker landed in the northbound lane of I-95, just
below the overpass carrying the southbound lane of Interstate 895,
police said. The fire which raged for one hour closed I-95 in both
directions for four hours. The southbound lanes of I-95 were reopened
Tuesday evening. The northbound lanes were opened about 3:30 a.m.
Wednesday, Maryland Transportation Secretary Robert Flanagan said. I-895
also was reopened about 3:30 am today, after the structural integrity of
the bridge was determined.to be sound.
<http://www.cnn.com/2004/US/South/01/13/tanker.highway.accident.ap/index.html>
WWMX-FM "Mix 106.5" radio report 0700 January 14, 2004
<http://www.cnn.com/2004/US/South/01/14/maryland.crash/index.html>

**Gasoline Price Jumps 5¢**

US drivers can't find relief at the gasoline pump as the national price
for motor fuel is at the highest level since last October, the Energy
Information Administration said on Monday.

Oil Daily, January 14, 2004

**NYMEX Heating Oil Declines for 3^rd^ Day on U.S. Inventory Gain** New
York heating oil futures fell for the third day after the U.S. Energy
Information Administration reported inventories of the fuel rose to a
nine-week high last week. Bloomberg News, 1314 January 14, 2004

**Natural Gas**

# Northeast Gas Association Requests Voluntary Gas Conservation 

The Northeast Gas Association (NGA), the coordinating organization for
the region's natural gas suppliers and distributors, is requesting
customers in eastern and central Massachusetts, New Hampshire and Rhode
Island to take steps to conserve natural gas from today, Wednesday,
January 14, through Friday evening, January 16, 2004. The New England
region is in the midst of the coldest weather in decades, with
temperatures plunging to record lows. As a result, the region is also
seeing record-breaking demand for natural gas usage. Although NGA
expects there will be adequate natural gas supplies to meet demand
during this severe cold wave, it reminds everyone to use energy wisely.

Natural gas companies report that supplies are adequate even for this
level of extreme temperature because of planning that was undertaken
last summer and fall. All types of extra supply - including liquefied
natural gas (LNG) and propane -- are now being used in the system to
bolster pipeline deliveries.
<http://www.northeastgas.org/publications/news_releases/gas_conserve.cfm>

**Algonquin restricts Gas Shippers' Ability to Deliver More Gas**

Shippers and point operators are may not exceed their scheduled delivery
volumes by more than 2% as of January 14^th^ until further notice.
Algonquin will charge shippers a penalty of \$15 per dekathem over the
2% tolerance that they exceed. Bloomberg News, 1044 January 14, 2004

**Nova Gas (Canada) Encourages Shippers to Reduce Volumes on Pipeline**

Shippers are not allowed to have more gas on the system than they
nominated since the lineback on its Alberta pipeline system is over the
target. Bloomberg News, 1116 January 14, 2004

**SES Will File for LNG Terminal**

Sound Energy Solutions (SES) confirmed it will apply for permits by
month-end to build and operate the \$400 million, 1 Bcf/d, Long Beach,
California, facility. SES, a major contender to build California's first
liquefied natural gas (LNG) terminal, wants the Long Beach facility in
operation by 2008. Oil Daily, January 14, 2004

**Other News**

**Report on Pepco and Conectiv\'s Performance After Hurricane Isabel
Released** James Lee Witt Associates (JLWA) today released for public
comment the draft of an independent analysis of how Pepco and Conectiv
power companies performed during Hurricane Isabel. \"We found that Pepco
and Conectiv performed according to generally accepted utility practices
during Isabel,\" said James Lee Witt, President of JLWA. \"However, we
found vital areas within their preparedness and response operations
where they must improve to maximize their effectiveness in responding to
future large scale outages.\" The draft report asserts that the storm
should have been addressed by the utility as a community-wide disaster,
as opposed to a large electrical outage. It specifically recommends that
the company: **·** Improve its partnerships with the community by
jointly developing restoration priorities; increasing their
participation in emergency drills; and expanding public education
efforts on preparing for power outages. **·** Sharpen its focus on
customer service, public information, and media relations during
disaster situations. **·** Strengthen the emergency management function
by enhancing emergency planning and coordination with public officials,
public works and emergency management offices, and other service
providers. The public comment period will cover January 13, 2004 to
February 16, 2004.
<http://www.pepcoholdings.com/news/news_release_40.html> (Pepco Press
Release) <http://www.wittassociates.com/PHIReport.pdf> (Full Report)

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (1        | Ago**     | Ago**      |
|                               | /14/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 34.58     | 33.64     | 32.38      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.73      | 6.61      | 5.20       |
|                               |           |           |            |
| **Henry Hub**                 |           |           |            |
|                               |           |           |            |
| \$/Million Btu                |           |           |            |
+-------------------------------+-----------+-----------+------------+

> Source: Reuters, Wall Street Journal

**This Week in Petroleum** from the Energy Information Administration
(EIA)

[*http://tonto.eia.doe.gov/oog/info/twip/twip.asp*](http://tonto.eia.doe.gov/oog/info/twip/twip.asp)

Last Updated on January 14, 2004

**Weekly Petroleum Status Report** from EIA**\
**[*http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html*](http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html)

Updated after 1:00pm (Eastern time) on Wednesdays

**Natural Gas Weekly Update** from EIA

[*http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp*](http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp)

Last Updated on January 13, 2004