• FEATURE STORY:  How much are energy marketers making in today's market?

• Wachovia, marketers team to form new gas marketing company

• Strategic margins fall to $3.85 in quarter

Wachovia, marketers team to form
new gas marketing company

To become coast-to-coast operation

Wachovia, America's fourth largest bank, has entered the natural gas marketing business via a 50-50 joint venture with a Denver-based E&P company.
     Wachovia and Resolute Holdings, the parent of Resolute Natural Resources, began commercial operations of Odyssey Energy Services, to provide energy marketing and trading services to E&P companies, and industrial, commercial and utility customers.
     Odyssey Energy Services taps into the energy marketing expertise of Resolute, and the energy derivatives capabilities and financial strength of Wachovia, said John Roncevich, head of commodity derivatives at Wachovia.
     Wachovia went into commodity derivatives last year when its customers asked for help -- "particularly in energy,” he said.

Strategic margins fall to $3.85 in quarter

Strategic Energy's second quarter earnings plunged to $3.7 million compared with $9.3 million in the 2004 quarter.
     Parent Great Plains Energy assigned much of the blame to the Seams Elimination Cost Adjustment (SECA) meant to compensate transmission owners in PJM and the Midwest ISO for lost grid revenues (RT, 5/2) when FERC eliminated through-and-out grid charges between the two markets.
     Strategic along with Quest Energy is appealing the controversial charge that cost it $7.2 million in the quarter making it a far larger factor in its earnings plunge than poor hedges.
     If SECA survives a court challenge (RT, 6/3) it's likely to cost the marketer $1 million/month through March of next year, Great Plains said.

Direct criticizes AEP high-tech plant

American Electric Power’s plan to build a ratepayer-funded, 600-mw, high-tech coal plant is just a ploy to “undo the unbundling” of generation and delivery assets under Ohio’s restructuring law.
     That’s the view of Direct Energy Services (Centrica) and other marketers and IPPs questioning AEP’s high-stakes gambit (RT, 7/6, 4/25, 3/23).
     Building the plant -- a state-of-the-art integrated gasification coal combustion (IGCC) facility -- would give AEP “distinct competitive advantages” over competing generators.
     Unlike merchant generators, AEP would have “the luxury of recovering costs plus a rate of return from a guaranteed customer base,” testified Direct’s witness, Mark Frye, president of Palmer Energy.

Entergy gives up on market prices

Entergy really wants to focus on other things, other than defending itself against FERC charges of market power.
     It would prefer turning its attention to working out with FERC the FERC-approved independent grid coordinator.
     "The amount of transactions that we're dealing with in our home territory just isn't that great," noted Rich Armstrong, Entergy's director of federal regulatory affairs.
     In his view it doesn't make sense to do battle for market prices in a footprint awash with excess merchant generation.
     How will rates be set?