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PUCO to rule on AEP, FirstEnergy PPAs; CEO leaves SunEdison yieldcos


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PUCO to rule on AEP, FirstEnergy PPAs; CEO leaves SunEdison yieldcos


Ohio regulators appear ready to rule on proposals byAmerican Electric Power Co. Inc.and FirstEnergy Corp.subsidiaries that guarantee income for older, less economic power plants. ThePublic Utilities Commission of Ohio has added the cases to its March 31 agenda.The decisions on the controversial subsidy plans will come more than ayear after PUCO rejected AEP Ohio's rate rider and power purchase agreement forits roughly 20% share of the OhioValley Electric Corp.'s Kyger Creek and Clifty Creek coal plants.

The U.S. EPA is working toward a legallyunassailable framework for regulating oil and gas industry methane emissionsfrom existing sources, Administrator Gina McCarthy said. "Whileit may seem boring, it is the linchpin of how we can move forward to captureour methane more effectively and reduce pollution that is generatinginstability in our climate," McCarthy said. "It is … an opportunityfor us to require the sector … [to] provide us the data that we need tounderpin a strong and legally binding rule."

The capital market has been pretty selective as towhich coal companies it is opening its door for lately, but a few investorsthink that may change down the road as the market continues to work out what arestructured, stabilized coal market looks like. Jerrod Freund, a managing directorwith Deutsche Bank, said the primary thing investors are looking for is whereexactly a coal asset sits on the cost curve and how sustainable that structuremay be. Access to capital in the future, he said, will depend on the evolutionof the coal market, something difficult to predict.


* Months after taking the helm at the companies,Brian Wuebbels has resigned as president, CEO and board director ofTerraForm Power Inc.and TerraForm GlobalInc. An office of the chairman has been created to leadthe two SunEdisonInc. yieldcos on an interim basis. Peter Blackmore, an independentdirector and chairman of TerraForm Power and Terraform Global, will lead thenew office of the chairman. He will be joined by fellow independent directorsChristopher Compton, Hanif Dahya and Jack Jenkins-Stark.

* According to Reuters,Appaloosa ManagementLP had called for the removal of Wuebbels as CEO of TerraForm. Thehedge fund, which owned 9.5% of TerraForm's outstanding class A shares viaaffiliates as of Dec. 31, 2015, is also seeking the removal of Blackmore,Jenkins-Stark and Compton from the company's conflicts committee in a lawsuit.The lawsuit claims that predecessors were replaced by SunEdison so that itsdeal with Vivint SolarInc. could come through.

* While SunEdison's undoing is at the hands of thecompany itself, bankers and investors are also to blame. BloombergNews writes that the yieldco structure under which TerraForm was buyingSunEdison assets and awarding its shareholders dividends, prompted the companyto acquire more assets to maintain the growth trajectory resulting in the moundof debt, which now threatens the business.

* HP Inc. has committed to achieve 100%renewable electricity usage across its global operations by joining RE100,a global initiative of top businesses committed to renewable energy. By2020, the company hopes to achieve 40% renewable electricity across operationsby increasing the use of on-site and off-site renewable power.

* Leading Republican presidential candidates DonaldTrump and Ted Cruz both say they will have the U.S. EPA its determination that carbondioxide emissions pose a threat to public health and welfare, a finding thatenabled the U.S. EPA to form federal climate regulations for the utility sector.

* Moody's placed all of the long-term and short-termratings of Basin Electric PowerCooperative on review for downgrade given weak consolidatedfinancial coverage metrics for the fiscal year 2015.

* Puerto Rico Electric Power Authority officials have securedtime until April 7 to file their petition with the island's energy commissionto create a securitization charge that would help repay debt used torestructure about $9 billion owed by the utility, BloombergNews reports.


* Cutbacks in capital expenditures and drilling byU.S. oil and gas producers are helping balance the market, but a full recoveryis still many monthsaway, Morningstar analyst David Meats said. "Production in theU.S. is certainly rolling over and that's a good thing, and at least you havethe first signs of discontent in the Middle East," Meats said in aninterview. "I'm fairly skeptical on real cuts coming in the Middle East,except that you have countries like Saudi Arabia and Russia that are actuallytalking about this stuff. But a second year of substantial capex cuts and thecollapse in rig counts [in the U.S.] is starting to have an effect."

* SandRidge Energy Inc. is evaluating strategicalternatives to its business, including filing for Chapter11 bankruptcy protection, given the prevailing conditions in the industry.The company had $3.6 billion in debt outstanding as of Dec. 31, 2015, and hadpreferred stock outstanding with an aggregate liquidation preference of $542.0million, the company said in a Form 10-K filing.

* Kinder Morgan Inc. said it has suspendedfurther work on the Palmetto pipeline project following what it says an"unfavorable action" by the Georgia legislature regarding eminentdomain authority and permitting restrictions for petroleum pipelines."While this legislative action was disappointing, we remain committed toproviding customized transportation solutions to our customers," thecompany said.

* FERC allowed El Paso Natural Gas Co. LLC to the gas export capacity flowinginto Mexico at border-crossing facilities in Cochise County, Ariz. The Monument90 border-crossing facilities are part of a network of assets used by KinderMorgan, the parent of El Paso, to serve domestic and internationaltransportation customers. Kinder Morgan has been active in expanding facilitiesat the U.S.-Mexico border and inside Mexico.

* Houston-based oil and natural gas companySwift Energy Co. wonapproval from Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington,Del., to exit chapter 11 protection by swapping $905 million in bond debt fornew equity in the restructured company, TheWall Street Journal reports.

* Atlas Energy Group LLC secured a second-lien debt to reduceits first-lien debt by $36 million, resulting in a position of $35 million,according to a company statement. The first-lien debt will also incur a reducedcash interest calculated as LIBOR plus 150 basis points as opposed to LIBORplus 800 basis points previously, and will also include an 11% per annumpayment "in-kind" feature.

* Minnetonka, Minn.-based will contributeall of its oil and gas assets to Black Ridge Holding Co. LLC under arestructuring agreement with its subordinated lender Chambers Energy ManagementLP. The new entity will be controlled and majority-owned by Chambers Energywhile Black Ridge Oil & Gas will continue to manage the oil and gas assetsin exchange for a management fee, according to a news release.

* Harvest Pipeline Co. affiliate Arrowhead OffshorePipeline LLC extendedthe binding open season for its Point Comfort Pipeline project to 5 p.m. CT onApril 15 from 5 p.m. CT on March 31. Once complete, the project will permitArrowhead to transport crude petroleum from points in Jackson County, Texas, tothe Port of Calhoun in Calhoun County, Texas.

* Midstates Petroleum Co. Inc. has raisedconcerns over its ability to continue business and believes a Chapter 11filing "may provide the most expeditious manner in which to effect acapital structure solution." The company had $1.8 billion in outstandingdebt as of Feb. 26, excluding borrowings under its credit facility, and $81.1million in cash and cash equivalents as of Dec. 31, 2015.


* Peabody Energy Corp. said it is 235 positions atits North Antelope Rochelle Mine in the Powder River Basin to align theworkforce with customer needs. "While our asset position and contractingstrategies give us relative strength, we are taking these actions to matchproduction with customer demand," Peabody President – Americas KemalWilliamson said in a statement.

* Separately, Peabody and Bowie Resource Holdings LLC are taking time to negotiatean alternatepayment scheme for a contract under which Bowie subsidiary Western MegawattResources LLC was to acquire Peabody's El Segundo and Lee Ranch coal mines inNew Mexico and its Twentymile mine in Colorado. Bowie was to pay $358 millionin cash but is now considering both cash and non-cash consideration.

* Murray Energy Corp.'s CEO and founder Robert Murray willput his financialweight behind Republican presidential candidate, Sen. Ted Cruz ofTexas next week, continuing the support of the senator that began last year."That does not mean that he's my candidate," Murray said,according to a Politico report. Cruz "has been the strongest on ourproblems and therefore I am going to help keep him in the running with DonaldTrump because he needs the money. I feel that we need to keep this acompetitive race for a while longer."


* The technical condition in natural gas improved atthe start of the final trading week in March as the market retested levels thatwere held as resistance just a week earlier. Trade in mid-March to test resistancefrom the 40-day moving average and the Fibonacci 38% retracement of the Jan. 8through March 4 downtrend near $1.95/MMBtu. The market peaked on March 18 at$1.957/MMBtu, which indicated that a fall back toward the bottom of theFibonacci pattern at $1.611/MMBtu was possible.

* After ending its first day in the lead role up 1.5cents at $1.996/MMBtu on Wednesday, the fresh front-month May natural gasfutures contract toyed with gainsand losses overnight ahead of the Thursday, March 31, open, and themidmorning release of the weekly storage data, as still-robust inventoriesreturn pressure to the market alongside ongoing midrange weather support.

* Power prices at the daily markets Thursday, March 31,as traders consider predominantly declining load forecasts for the close of theworkweek but also recent firmness at the natural gas futures arena.

* The weekly natural gas inventory report to bereleased by the U.S. Energy Information Administration at 10:30 a.m. ET onThursday, March 31, is expectedto show a return to withdrawals from natural gas inventories in theweek to March 25. The survey of analysts and traders leading up to the report'srelease outlines a net change for the review week ranged from a 16-Bcfwithdrawal to a 33-Bcf pull, with a consensus formed at a 24-Bcf drawdown fromstocks that would compare against a five-year average withdrawal of 22 Bcf andthe 10-Bcf drawdown reported for the same week in 2015.

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"The main hurdle for electric vehicle adoptionin the Yukon Territory will be vehicle performance in below-freezingtemperatures," consulting firm ICF International said in a on the feasibility ofelectric vehicles in Canada's Yukon Territory.

Theday ahead

*The EIA natural gas storage report is due out today.

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