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Analysts differ on SCANA recovery prospects; midstream dealmaking wave dries up

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Analysts differ on SCANA recovery prospects; midstream dealmaking wave dries up

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Analysts differ on SCANA recovery prospects for Summer decision

Analysts had a range of reactions to the July 31 announcement by South Carolina Electric & Gas Co. and state-owned Santee Cooper of the decision to abandon the expansion of the V.C. Summer nuclear plant, based largely on how much regulators allow for recovery.

Midstream dealmaking wave dries up as debt concerns mount

The recent rush of midstream energy dealmaking ? big mergers in 2016 and then simplifications and smaller-scale asset jockeying in the first part of 2017 ? has slowed to a trickle, with industry watchers pointing to midstream companies' leverage and dwindling Permian Basin opportunities.

Arch, CNX add to criticism against CSX for rail delays affecting coal

Arch Coal Inc. and CNX Coal Resources LP have joined Murray Energy Corp. in its criticism of delays and other coal shipment issues with CSX Corp. "We started seeing problems towards the tail end of Q2 and, frankly, the problems have gotten worse over the last 10 days," Paul Lang, president and COO of Arch, said in a July 27 earnings call.

Power

* The western energy imbalance market produced $39.52 million in savings in the second quarter of 2017, boosting renewables usage and cutting carbon emissions across the region, as total economic benefits grew to $213.2 million since the California ISO expanded its real-time market to neighboring grid operators in 2014, the independent system operator said in its latest quarterly report.

* BC Hydro and Power Authority exercised its right of first offer to buy Teck Resources Ltd.'s two-thirds stake in the 496-MW Waneta Dam in British Columbia, for C$1.2 billion cash. Teck will pay Fortis Inc. a break fee of about C$28 million.

* A bipartisan group of South Carolina legislators are forming an energy caucus to overhaul the review process for utility projects, following Santee Cooper and SCE&G's abandonment of the V.C. Summer nuclear expansion project, The Associated Press reported. A separate AP report notes that SCE&G parent SCANA Corp. will seek regulatory approval to recover $5 billion in outstanding costs related over a 60-year period.

* The Michigan Public Service Commission is concerned about having enough in-state power supply over the next five years even though it can import from neighboring regions.

* An analysis by Power Bureau finds that Upper Michigan Energy Resources Corp.'s proposed $277 million plan to build two natural gas-fired plants totaling 183 MW would cost ratepayers more than $372 million extra over the life of the projects, abc10up.com reported.

* Southern Co.. reported second-quarter 2017 net income, excluding losses related to certain generation projects and acquisitions, of $728 million, or 73 cents per share, compared to $704 million, or 75 cents per share, in the prior-year period. The S&P Capital IQ consensus normalized EPS estimate for the most recent quarter was 71 cents.

* Kurt Kelty, Tesla Inc. director of battery, has left the company to "explore new opportunities," the company confirmed an emailed statement to Bloomberg News.

* Elizabeth Southerland has left the U.S. Environmental Protection Agency after 30 years of service, most recently as director of the Office of Science and Technology for the agency's Water Office, The Hill in Washington, D.C., reported. In her exit letter, Southerland said: "The truth is there is NO war on coal, there is NO economic crisis caused by environmental protection, and climate change IS caused by man's activities."

Natural gas/midstream

* The Federal Energy Regulatory Commission on July 31 issued a set of guidelines to clarify how it expects natural gas pipeline companies to handle Native American sacred areas, old properties and other places of historic and cultural value on the routes of their projects.

* Williams Partners LP and Southern Co. Gas placed into service the Dalton expansion project, which expands the existing Transco pipeline system designed to deliver natural gas to power facility operated by Oglethorpe Power Corp., Atlanta Gas Light Co. and the city of Cartersville, according to a news release.

* Energy Transfer Partners LP's announced sale of a $1.57 billion stake in Rover Pipeline LLC to funds managed by Blackstone Energy Partners and Blackstone Capital Partners is good financial news for the natural gas pipeline project, which has been beset by regulatory problems and delays, industry analysts said.

Coal

* CONSOL Energy Inc. said efforts to sell its coal mining master limited partnership "did not produce compelling results" so the company will focus 100% on preparing a spinoff transaction to be ready before 2017 ends.

* Peabody Energy Corp. stock rose through the morning of Aug. 1 with the news of new debt reduction and capital return initiatives.

* Montana secured $4.6 million in funding for workforce training for Colstrip and communities in Eastern Montana affected by coal-related layoffs, Gov. Steve Bullock said in a news release.

Commodities

* Demand for natural gas will be bumped higher in the second half of 2017, cutting end-of-October storage projections and driving support for natural gas prices into early 2018, however, the market could maintain a more bearish outlook longer range, Morgan Stanley analysts said.

* After advancing by 2.5 cents in the prior session to settle at $2.819/MMBtu, NYMEX September natural gas futures slumped overnight ahead of the Wednesday, Aug. 2, open, as the market succumbed anew to fundamental pressure. At 6:50 a.m. ET (1050 GMT), the contract was 1.0 cent lower at $2.809/MMBtu.

* The price of power at the daily markets could deflate Wednesday, Aug. 2, as traders look to predominantly weaker demand expectations for the latter part of the workweek.

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New from RRA

* On Aug. 1, Regulatory Research Associates published a Topical Special Report titled "An Overview of Transmission Ratemaking in the PJM Interconnection – 2017 Update." In the updated report, which incorporates newly available data, RRA examined the Federal Energy Regulatory Commission's ratemaking framework for PJM, including a look at authorized rate bases, equity returns, capital structures and revenue requirements for the PJM participants covered by RRA, an offering of S&P Global Market Intelligence.

Quoted

"The failure to promptly confirm sufficient commissioners to restore a quorum ... is creating a serious obstacle to critical infrastructure, energy independence, national security and protection of energy consumers like the millions we serve across the United States," Electric Reliability Coordinating Council, comprised of companies including Duke Energy Corp., Southern Co., and Vistra Energy Corp., said in a letter to Senate Majority Leader Mitch McConnell.

The day ahead

* The following companies will hold their second-quarter 2017 earnings conference calls: NiSource Inc. at 8:30 a.m. ET; Dominion Energy Inc. and Dominion Energy Midstream Partners LP at 9 a.m. ET; Viper Energy Partners LP at 9:30 a.m. ET; ALLETE Inc., EnLink Midstream LLC, EnLink Midstream Partners LP, Entergy Corp. and Pembina Pipeline Corp. at 10 a.m. ET; Avista Corp. and El Paso Electric Co. at 10:30 a.m. ET; Exelon Corp., InfraREIT Inc., Northwest Natural Gas Co., ONEOK Inc., ONEOK Partners LP and TC PipeLines LP at 11 a.m. ET; Southern Co. at 1 p.m. ET; Magellan Midstream Partners LP at 1:30 p.m. ET; MDU Resources Group Inc. at 2 p.m. ET; Blueknight Energy Partners LP at 2:30 p.m. ET; and SolarEdge Technologies Inc., Tallgrass Energy GP LP and Tallgrass Energy Partners LP at 4:30 p.m. ET.

* The following companies will hold their fiscal third-quarter earnings conference calls: Spire Corp. at 9 a.m. ET and New Jersey Resources Corp. at 10 a.m. ET.

* Early morning futures indicators pointed to a higher opening for the U.S. equity markets. To view more SNL equity market indexes, click here. To view more SNL Energy commodities prices, click here.

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