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BLM clears 2 major wire projects; High met coal prices likely unsustainable

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BLM clears 2 major wire projects; High met coal prices likely unsustainable

Top News

BLM approves major transmission projects in the West

The U.S. Bureau of Land Management issued records of decisions on two major transmission projects across western states in a signing ceremony in Coronado, Calif., with Secretary of the Interior Sally Jewell, California Gov. Jerry Brown and other notables. The federal agency approved plans for the TransWest Express and Gateway South projects, which together will span more than 1,100 miles of 500-kV and 600-kV transmission lines across Utah and portions of Wyoming, Colorado and Nevada.

Boosters, foes of Perry for energy secretary agree: Look at his record in Texas

Texas' longest-serving governor may soon be heading to Washington, bringing to the U.S. Department of Energy a track record of supporting the massive growth in the domestic oil and gas industry and a willingness to take on the environmental lobby. Rick Perry, who succeeded George W. Bush in 2001 and was elected three times in his own right, has been widely reported to be President-elect Donald Trump's pick to serve as secretary of energy in the next administration.

High met coal prices likely unsustainable, but sector gets modest lift

The outlook for metallurgical coal producers was boosted on news that the metallurgical coal benchmark price continued to increase. The $285/tonne benchmark could be the top of a market rebounding from a protracted price decline that contributed to the bankruptcy of top producers in the U.S. coal market.

Power

* Senate Majority Leader Mitch McConnell on Dec. 12 said his chamber will pursue tax reform through budget reconciliation, an expedited process that carries heightened risks for the renewable energy industry. With Republicans only guaranteed control of the executive and legislative branches for the next two years, the GOP is expected to push for a quick overhaul of the country's tax code.

* Southern California Edison Co. expressed disappointment over a recent ruling that directs the Edison International subsidiary to confer with other parties in the San Onofre nuclear plant proceeding about possible changes to a California Public Utilities Commission-approved settlement. "[SoCalEd] continues to believe the settlement reflects an appropriate allocation of costs but will begin preparing to participate in the process spelled out in the ruling to schedule a meeting and confer with other parties by Jan. 31," the company said in a statement.

* Exelon Corp. and subsidiary Exelon Generation Co. LLC are reversing about $120 million of certain one-time charges recorded in June that are related to its previous plan to permanently close the Clinton nuclear plant in June 2017 and the Quad Cities nuclear power plant in June 2018, according to a Form 8-K filing. The companies expect the facilities to operate for at least another 10 years after Illinois Gov. Bruce Rauner signed into law the Future Energy Jobs Bill.

* Innovative Solar Systems LLC has placed 300-MW blocks of solar farms on the auction block in a bid to speed up its expansion plans and prepare for an equity sale in 2017, according to a news release. The projects, which are part of the company's 10-GW pipeline in the U.S., range from 20 MW to 200 MW.

* The Tennessee Valley Authority is seeking feedback on the future handling and storage of coal ash byproducts at its Cumberland coal-fired power plant in Stewart County, Tenn. In a notice in the Dec. 5 Federal Register, the utility said it is preparing an environmental impact statement that will address the long-term management of coal combustion residuals produced at the power plant.

* BC Hydro and Power Authority has disputed certain perspectives Dan Levin discussed in an article published in The New York Times on the planned Site C hydropower project, including the "mounting opposition and legal challenges" and the need for the facility. BC Hydro questioned why the writer chose not to include a quote from the company, and instead sought a former CEO of the company to discuss the project.

* Georgia Power Co. reached another construction milestone for its Vogtle nuclear power expansion project, after the Southern Co. subsidiary placed the second containment vessel ring for the 1,100-MW unit 3 in Burke County, Ga., according to a news release.

Natural gas/midstream

* The U.S. EPA found in its final report on hydraulic fracturing that the practice "can impact drinking water resources in the United States under some circumstances," following the advice of its scientific review panel, despite the intense opposition of the oil and gas industry.

* Enable Midstream Partners signed a new 228,000 Dth/d firm transportation service agreement with Oklahoma Gas and Electric Co., a move that will support the OGE Energy Corp. subsidiary's conversion of two 500-MW, coal-fired units to natural gas, according to a news release. To support the 20-year agreement, Enable said it will build 77 miles of 20-inch pipeline and associated metering facilities.

* Spectra Energy Corp. and Enbridge Inc. have agreed not to consummate their proposed merger prior to 45 days after they have substantially complied with the U.S. Federal Trade Commission's request for additional information and material related to $28 billion deal. The companies also agreed not to certify compliance with the FTC's request before Jan. 10, 2017, according to a Form 8-K filing.

* President-elect Donald Trump's selection of Exxon Mobil Corp. CEO Rex Tillerson for secretary of state has sparked significant debate on Capitol Hill, where his confirmation is expected to come down to whether his experience running a multinational business outweighs his established ties to Russia.

* Boulder County, Colo., again extended the moratorium on oil and gas development to May 1, 2017, from Jan. 31, 2017. County official said they needed more time to complete drafting of regulations and outline a plan for implementing such rules, the Longmont (Colo.) Times-Call reported.

* Kinder Morgan Louisiana Pipeline LLC asked FERC to authorize a pipeline expansion that would create north-to-south firm transportation capacity for gas delivery to Cheniere Energy Inc.'s Sabine Pass liquefaction and LNG terminal.

* California Gov. Jerry Brown wrote a letter to President Barack Obama urging him to permanently prohibit new offshore oil and gas leasing in the federal waters off the coast of California and "guarantee that future oil and gas drilling is these waters is prohibited."

* Callon Petroleum Co. subsidiary Callon Petroleum Operating Co. reached an agreement to acquire certain undeveloped acreage and producing oil and gas properties in the Southern Delaware Basin for $615 million in cash, according to a news release. The assets, which include about 27,552 gross surface acres, are owned by American Resource Development LLC, American Resource Development Upstream LLC and American Resource Development Midstream LLC.

* Petrogas Co. Inc. acquired fractional interest in four oil and gas wells that produced a combined daily average of 2,571 Mcf of gas and 131 barrels of oil for the six-month period ending in May. The wells, located in Roberts County, Texas, are operated by Unit Petroleum Co. and BP America, according to a news release.

Coal

* In hopes of further clarity about a proposed coal gasification plant at Bowie Resources LLC's Bowie No. 2 mine in Colorado, local advocates requested and were granted a public hearing on the project by state officials.

* The U.S. Bureau of Land Management is inviting public participation as it evaluates the impacts of proposed developments related to the Spring Creek mine in Montana. The notice includes the sale of two coal tracts, but the BLM will not make a final leasing decision on those sales until the programmatic review is complete.

* Coal exports from the Hampton Roads facilities in Virginia reached roughly 2.0 million tons in November, according to data obtained Dec. 13 from the Virginia Maritime Association, up 16.7% compared to October's level and 9.4% year over year.

Commodities

* It is said that a reversal in any trend is never made with one data point. However, recent figures and commentary from the oil and gas drilling and production industry suggest a reversal in the trend of lower production may be upon us.

* Following a 3.3-cent retreat Tuesday to a finish at $3.474/MMBtu, January 2017 gas extended its retreat in choppy overnight trade ahead of the Wednesday, Dec. 14, open, as mixed weather projections drive varied implications for demand and the pace of storage erosion.

* Power dailies could log gains Wednesday, Dec. 14, as traders consider predominantly supportive demand expectations for the latter part of the workweek. However, traders will also stay attuned to continued losses at the natural gas futures arena.

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New from RRA

* According to Regulatory Research Associates, the Wyoming regulatory environment continues to be relatively stable from an investor viewpoint. A majority of the base rate proceedings that have come before the Wyoming Public Service Commission have been resolved via settlements, and the authorized ROEs in both settled and fully litigated cases have generally approximated or have been somewhat below prevailing industry averages.

* Southwestern Public Service Co. filed with the New Mexico Public Regulation Commission for a $41.4 million, or 19.1%, nonfuel electric base rate increase. The requested increase is premised upon a 10.1% return on equity, 53.97% of capital and a 7.83% return on an average rate base valued at $832.2 million for a test year ending June 30, 2018.

Quoted

"Coming off our largest quarter ever and with an extremely impressive pipeline ahead, it's safe to say the state of the solar industry here in America is strong," Tom Kimbis, interim president of the Solar Energy Industries Association, said in reporting solar capacity installations in the third quarter.

The day ahead

* PNM Resources Inc. will hold an analyst meeting at 10 a.m. ET to discuss Public Service Co. of New Mexico's general rate case filing and other company updates.

* 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.