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FERC judge: Shell, Iberdrola must pay $1B-plus in refunds; Calif. blackout warnings overblown

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FERC judge: Shell, Iberdrola must pay $1B-plus in refunds

Eventhough the Western energy crisis of 2000-2001 ended nearly 15 years ago, a FERCadministrative law judge made several key determinations in a case that could haveimportant broader ramifications. In particular, Judge Steven Glazer found that thewidespread outrage over the energy crisis is one of those rare instances where modifyinga bilateral contract would be in the public interest. He further concluded thatShell Energy North America (US) LPand Iberdrola Renewables LLCshould collectively pay more than $1 billion in refunds for the power they soldto the California Department of Water Resources, or CDWR, under long-term contractssigned during the crisis.

Calif. blackout warnings overblown, consumer advocates argue

Californiastate regulators oversold the risk of power outagesresulting from Southern CaliforniaGas Co.'s Aliso Canyon gas storage facility leak, consumer advocatescontended. Claims that the Los Angeles area could experience 14 days of blackoutsover the coming summer, along with other energy disruptions in the following months,are "unsupported" and "misleading," Bill Powers, a consultingenergy and environmental engineer, said in a report published by Washington, D.C.-basedFood & Water Watch.

Companies recently filing bankruptcy produce more than 2/3 of PRB coal

Now thatPeabody Energy Corp. hasfiled for bankruptcy,more than two-thirds of the coal produced in the Powder River Basin comes from acompany that has recently filed for bankruptcy. According to an analysis of SNLEnergy data, about 44.3% of the coal produced in the U.S. came from a company thathas filed for bankruptcy court protection since 2012. More than 69% of the coalproduced in the Powder River Basin came from coal companies recently filing bankruptcy.


* missed a $2.6 millionbond payment earlier in April raisingnew concerns about a company that already faces technical default forfailing to provide financial statements on time, Bloomberg News reported. The bondpayment due April 1 was on SunEdison's 2% convertible notes due in 2018 and thetrustee, Wilmington Trust Corp., confirmed the missed payment on April 11. A graceperiod extends through May 1.

* TheOklahoma Corporation Commission ruled against Oklahoma Gas and Electric Co.'s request to approve tariffs for customers with distributed-generatingsystems that include demand, energy, fuel and customer charges, as well as a newnet-metering rider for the OGE EnergyCorp. subsidiary's customers, TheOklahoman reported.

* TheTeacher Retirement System of Texas' plan to finance up to $250 million of the by came under scrutinyfrom state lawmakers over conflict of interest concerns, TheTexas Tribune reports. Hunt Consolidated is leading the group of investorsthat plan to purchase Energy FutureHoldings Corp.'s transmission and distribution arm in a deal valuedat $12.6 billion.

* may be nearing a decision on the saleof a 5,000 MW portfolio of power plants in the U.S. Midwest. CEO Nick Akins toldBloombergNews that the company had been sharing confidential data to potential buyersthough did not indicate if DynegyInc. was barredfrom that process.

* TheMaine House of Representatives made progress on a bill designed to encourage solardevelopment in the state, though doubts remain. Backers hope that a planned amendmentto the bill will garner enough Republican support to override a veto from Gov. PaulLePage who is opposed to the proposal, the PortlandPress Herald writes.

* TheOhio Supreme Court upheld the Ohio Power Siting Board's decision to for EverPower Wind Holdings Inc.'s 275-MW Buckeye wind project in Champaign County, the Springfield(Ohio) News-Sun reported. EverPower is backed by Terra Firma Capital Partners Ltd.

* subsidiary APLPHoldings LP secured two credit facilities totaling $900.0million to prepay an existing senior secured term loan of $447.9 million, plusaccrued interest, and to meet certain debt obligations.

Natural gas/midstream

*Generating interest in energyissues on the campaign trail and in Congress will be difficult in 2016, observers and legislators said at an eventhosted by the American Petroleum Institute in Washington, D.C. Sen. Joe Manchin,D-W.Va., said the U.S. would need to "hit a wall" in order for energyto take the spotlight in the 2016 presidential election.

* U.S. oil and gas producer Energy XXI Ltd. filedfor Chapter 11 bankruptcy protection citing "challenging market environment."The company's restructuring plan seeks to eliminate more than $2.8 billion in debtand has support from more than 63% of its secured second lien 11.0% noteholders."Over the last several months, we have worked to actively manage our balancesheet, and after thoroughly evaluating our options with the help of our outsideadvisors, we determined that entering these agreements and implementing them througha court-supervised process is the best course of action," Energy XXI Presidentand CEO John Schiller said in a statement.

* Energycommittees in both houses of Pennsylvania's General Assembly set of surface regulationsgoverning natural gas drilling, but the head of the state Department of EnvironmentalProtection believes they will be approved by an independent commission.

* TheObama administration could unveil the final version of its updated offshore oiland natural gas drilling safety standard today, TheHill in Washington, D.C., reports. The blowout preventer rule would require independent verificationof design standards and new engineering standards for operations, among other things.


* TheNew Mexico Public Regulation Commission has asked Public Service Co. of New Mexico to respond to a complaintby clean-energy advocacy group New Energy Economy over a $125 million loan to to help the San Juan coal mine,TheSta. Fe New Mexican reports. The PNMResources Inc. subsidiary has 20 days to respond.

* Miningmajors BHP Billiton Group,Rio Tinto, and U.S. private equityfirm Apollo Global Management LLC are vying for Anglo American Plc's metallurgical coal assets in Australia,Reuters reported. A dealfor Anglo's Moranbah and Grosvenor could value the mines at US$1.5 billion.

* Ascoal jobs disappear from places like West Virginia, those charged with economicdevelopment not only find a revenue and jobs hole where the industry used to be,but also a challenging geography, a workforce reluctant to change tradition anda lack of infrastructure, SNL Energy explores.

* Coalmining companies should be required to purchase insurance to cover their reclamationcosts in the wake of bankruptcies as the policy of self-bonding has proven to bea failure, Tom Sanzillo and David Schlissel, directors at the Institute for EnergyEconomics and Financial Analysis, wrote in an op-ed published in TheNew York Times.

* FormerMassey Energy CEO Don Blankenship has asked the 4th U.S. Circuit Court of Appealsto allow him to remain free pending the outcome of his appeal to overturn a ruling in a misdemeanor conviction,TheAssociated Press reports.


* Afterending the prior session up another 3.2 cents at $2.036/MMBtu, May natural gas futureswere near unchanged overnightahead of the Thursday, April 14, open, amid conflicting fundamentals, as evidenceof tightening production collide against the anticipation of a modest change instocks that should leave inventories robust when the next storage data is releasedat midmorning and lackluster weather-related demand support. Moving on either sideof unchanged, the contract was last traded 0.4 cent lower at $2.032/MMBtu.

* Powervalues at the day-ahead markets could flounder Thursday, April 14, as pressure fromprospects for demand weaknessacross the bulk of the country at the close of the workweek combine with the recentlackluster trading activity at the natural gas futures complex.

*Algonquin Gas Transmission LLC system demand was higher thanin the year ago during the week ended April 12, but as pipeline utilization to historicalaverages, New England spot prices remained deflated year on year.

* Marketanalysts expect results from the MidcontinentIndependent System Operator Inc.'s annual capacity auction coveringthe 2016-2017 period will show muchweaker prices year over year. Results of the fourth annual PlanningResource Auction are slated to be released April 14.

New from RRA

* Ina quarterly review of its regulatory rankings, released on April 13, RRA that it had raised theranking of Arkansas, but made no other ranking adjustments in recent months.


"Energy'snot going to be a big issue until people start getting rolling brown-outs and blackouts,"said Sen. Joe Manchin,D-W.Va., at an American Petroleum Institute event in Washington, D.C.

"Iam hoping this can somehow stabilize our company and protect the remaining workforcefrom further layoffs. Beyond the obvious anxiety of working for a company that justfiled bankruptcy, I feel sad that my company, once so prominent, is at this point.But we carry on, hoping for the very best," said an anonymous Peabody Energy miner on the company's bankruptcy.

The day ahead

* Earlymorning futures indicators pointed to a lower 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.