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FERC's Bay to resign; Peabody revises reorganization plan

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FERC's Bay to resign; Peabody revises reorganization plan

Top News

FERC's Bay to resign, leaving commission's hands tied

In an announcement that most likely will leave FERC without the quorum needed to vote out orders for some time, Norman Bay on Jan. 26 announced that he will leave the agency Feb. 3. In a move that was not made public until earlier that same day, Cheryl LaFleur took the agency's gavel from Bay on Jan. 23 after President Donald Trump appointed her acting chair.

AltaGas/WGL deal seen as harbinger of utility M&A but may face regulatory fight

The deal by Calgary-based AltaGas Ltd. for mid-Atlantic utility holding company WGL Holdings Inc. signals more utility M&A in the works, equity analysts said, but regulatory experts see headwinds ahead. "We view the takeout price and the all cash nature of the deal as positive data points as it relates to the utility M&A trend, particularly on the gas side," Wells Fargo Securities LLC analyst Sarah Akers said. "We still think the sector is ripe for consolidation and that there will be enough acquirers willing to pay up for strategic deals."

Peabody revises reorganization plan, expresses concern with alternative

Peabody Energy Corp. disclosed an amendment to its plan of reorganization, settling claims related to worker pensions and a letter expressing its concerns with an alternate bankruptcy reorganization plan presented by a committee of creditors. Separately, Peabody secured approval from the U.S. Bankruptcy Court for the Eastern District of Missouri to solicit votes from creditors on its proposed plan of reorganization, according to a company statement. Aside from the disclosure statement, the court also approved the company's plan support, private placement and backstop commitment agreements.

Power

* 8point3 Energy Partners LP booked fiscal fourth-quarter 2016 adjusted EBITDA of $18.3 million, a sharp increase from $8.1 million in the same quarter of fiscal 2015. Net income attributable to 8point3 Energy class A shares rose to $27.1 million, or $1.27 per share, for the most recent quarter. It had booked net income attributable to class A shares of $18.7 million, or 94 cents per share, in fiscal fourth-quarter 2015.

* Stakeholders, including wind interests, weighing in on a proposed new FERC rule that would require all new generators to have the ability to provide frequency response, were mostly supportive of the initiative.

* Legislation for a performance-based model for determining utility revenues passed the first reading in the Hawaii House of Representatives on Jan. 25. Under H.B. 1283, the state Public Utilities Commission will establish performance incentive and penalty mechanisms that directly tie utility revenues to the achievement of performance metrics.

* American Electric Power Co. Inc. will continue to pursue restructuring of Ohio's electricity market and is open to support for nuclear generation, depending on who picks up the tab. "AEP will not invest in new generation in Ohio unless we have a clear path to recovery of our investment, so enabling legislation is critical," AEP Chairman, President and CEO Nicholas Akins said Jan. 26 on the company's fourth-quarter 2016 earnings call.

* Bechtel Corp. plans to start construction of the planned 1,100-MW Cricket Valley Energy Center in Dover, N.Y., later this month, according to a news release. The combined-cycle facility is expected to go online in 2020. The $1.584 billion new-build gas-fired power project is positioned as a likely beneficiary of the planned retirement of the Indian Point nuclear power plant complex outside New York City.

* The U.S. Nuclear Regulatory Commission agreed to formally review an application that calls for building and operating a spent nuclear fuel consolidated interim storage facility in Andrews, Texas. Waste Control Specialists seeks to store 5,000 metric tons uranium of spent fuel from commercial nuclear power reactors across the country, according to a news release.

Natural gas/midstream

* TransCanada Corp. has reapplied for a presidential permit for the Keystone XL oil pipeline, two days after President Donald Trump signed a memo encouraging the action and paving the way for a swift review of the project, which was quashed under the Obama administration.

* Enbridge Energy Co. Inc. is taking Midcoast Energy Partners LP private by agreeing to acquire all the partnership's outstanding publicly-held common units for $170.2 million, or $8 per unit. Enbridge Energy Partners LP formed Midcoast Energy to serve as its primary vehicle for owning and growing its natural gas and NGL midstream business in the U.S. Enbridge Energy Partners is undergoing a strategic review.

* Jagged Peak Energy Inc. expects to generate approximately $397.1 million in net proceeds from its IPO. The Denver-based independent oil and natural gas company priced its IPO of 31,599,334 common shares at $15 apiece. Jagged Peak Energy said it is offering 28,333,384 of its shares, while the rest are from selling stockholders, including Quantum Energy Partners LLC affiliate Q-Jagged Peak Energy Investment Partners LLC.

* The White House Council on Environmental Quality's guidance on greenhouse gas emissions is gone from the White House's website and is not showing up as prominently in the U.S. EPA's fights with FERC over permitting natural gas infrastructure, according to an oil and gas attorney.

* Southern California Gas Co. has lifted an advisory that asked all customers to reduce their natural gas consumption in response to increased demand for natural gas resulting from cold weather, according to a news release. The Sempra Energy subsidiary also lifted a systemwide curtailment watch for commercial and industrial customers. On Jan. 23 and Jan. 24, SoCalGas delivered almost 4.1 Bcf of gas, the highest demand so far this winter, according to company data.

* Wolfcamp Drillco Operating LP agreed to invest approximately $450 million in EP Energy Corp.'s future oil and natural gas development in its Wolfcamp program. Under the transaction, the investor will participate in the development of an up to 150 well program in two separate 75 well tranches in areas of the company's acreage, including Reagan and Crockett counties, Texas.

* The U.S. Bureau of Land Management sold oil and gas drilling rights on 843 acres of land in northwest New Mexico for $3 million, The Associated Press reports.

* PrimeEnergy Corp., an independent oil and gas company, sold 1,600 net acres in Martin County, Texas, for approximately $31.0 million. The company will use the sale proceeds to pay down part of its revolving credit facility and help fund its 2017 CapEx.

Coal

* Combined production at Murray Energy Corp. and Foresight Energy LP mines is up slightly in the past quarter. According to an S&P Global Market Intelligence analysis of U.S. Mine Safety and Health Administration data, Murray and Foresight produced about 16.9 million tons of coal from about 13 of their coal mines in the fourth quarter of 2016. The total is up about 2.9% over production from the same mines a quarter ago and up 2.8% from the total in the same quarter a year ago.

* Norfolk Southern Corp. is blaming merchandise and coal traffic for a drop in its railway operating revenue in its recent quarterly earnings report, though recent increases in exports of the commodity have cushioned the fall. Coal revenues fell by 7% to $403 million compared to the fourth quarter of 2015, while volume fell 4% between those periods, though Norfolk said an increase in exported coal softened that decline.

* The coal rights to a 62,000-acre tract in Alaska have been sold and retired, a victory for conservation groups that further limits the state's potential to derive income from its coal reserves. Chugach Alaska Corp. sold the rights to the Bering River coal field to an investment fund managed by New Forests, an Australian firm specializing in carbon forestry and conservation finance, according to the Cordova (Alaska) Times.

* Poland expects to finish the restructuring of the country's coal mining sector by the end of this year in a bid to facilitate the sector to undergo consolidation and take development measures in 2018, Poland's Warsaw Voice reports.

Commodities

* At the depths of the oil price selloff in early 2016, default worries by drillers created stress on banks with outstanding loans to the energy industry. A year later, lending appears stronger and could eventually pressure oil and gas prices again.

* Jonathan Marcus, who as general counsel has successfully defended the CFTC's approach to consideration of costs and benefits under the Commodity Exchange Act in the U.S. Court of Appeals for the District of Columbia Circuit, is leaving the agency. Robert Schwartz, currently deputy general counsel for litigation and adjudication, will become the acting general counsel, according to a news release.

* After extending 5.0 cents higher in the prior session to settle at $3.382/MMBtu, February natural gas futures lost footing overnight ahead of the Friday, Jan. 27, open and the contract's roll off the board at the close of business amid sentiment of overbought conditions.

* Power dailies could end the workweek aimed in diverging directions Friday, Jan. 27, as expectations for elevated demand in much of the country coming off the weekend run counter to renewed losses at the natural gas futures complex.

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New from RRA

* Spending by utilities on electric transmission and distribution is expected to rise this year and even further next year. But changes in public policy and continuing investment in the aging electric grid could mean even higher spending ahead.

* On Jan. 26, the Public Utility Commission of Texas unanimously adopted a proposed order issued by the State Office of Administrative Hearings on Jan 6. As per the proposed order, the PUC approved a settlement thereby authorizing Xcel Energy Inc. subsidiary Southwestern Public Service Co. a $35.2 million (6.9%) electric base rate increase.

Quoted

"Our estimate is if all current efforts underway all pan out something on the order of 60% of eligible investor-owned utility load is going to be served by CCAs," Woody Hastings of the Center for Climate Protection said about customer load of California's investor-owned utilities shifting to community choice aggregators.

The day ahead

* NextEra Energy Inc. and NextEra Energy Equity Partners LP will hold their fourth-quarter 2016 earnings conference call at 9 a.m. ET.

* Early morning futures indicators pointed to a mixed 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.

The Daily Dose is updated as of 7:30 a.m. ET. Some links may require registration or a subscription.