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FERC revokes affiliate waivers in Ohio PPAs case; opponents call on FERC to halt pipe reviews

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


FERC revokes affiliate waivers in Ohio PPAs case; opponents call on FERC to halt pipe reviews

Top news

FERClate on April 27 revoked waivers of affiliate power sales restrictions thatwere granted to FirstEnergyCorp.'s and AmericanElectric Power Co. Inc.'s Ohio utilities. As a result, thecontroversial affiliate power purchase agreements that are the centerpiece ofan Ohio generation subsidy plan will have to be filed with FERC, and the agencywill have to approve them before they can be implemented.

's recent announcedacquisitions of a large gas utility and a distributed infrastructure technologyfirm represent efforts to accommodate evolving U.S. energy needs, SouthernChairman, President and CEO Thomas Fanning said April 27, and not, as some havequestioned, a way for electric utilities to hedge against any threat fromrooftop solar generation.

Toomuch pipeline capacity is being built out of the Marcellus and Utica shaleregion, and FERC is to blame, according to a report commissioned by opponentsof the Mountain Valley and Atlantic Coast natural gas pipeline projects.

West Virginia subpoenas Alpha Natural lenders over coal minereclamation

TheWest Virginia Department of Environmental Protection subpoenaed lenders on April 26 to produce documents concerning the company's ability topost bond and meet coal mine reclamation obligations, according to bankruptcycourt filings.

Power

*Terming the FERC ruling a "disappointing surprise" for AEP andFirstEnergy, Guggenheim Securities LLC said AEP is more "agnostic to theruling" as the company is "likely" to include the approximately3,000 MW of underlying assets with the 5,000 MW of generating assets it hadalready placed on the auction block — "a bigger [8,000 MW] package dealbut at a lower $/KW price." At FirstEnergy's current valuation level, "the marketwasn't pricing an approval of the PPAs," the brokerage noted.

*Separately, Morgan Stanley Research North America views the decision in linewith its expectations. The brokerage expects FirstEnergy's shares "to beweak" on heels of the news and expects "modest weakness" in AEPshares. On the other hand, the brokerage sees the news as "positive"on the margin for sentiment on merchant generators, including

*Amid calls to halt all work on the now-stayed Clean Power Plan, the U.S. EPA isadvancing a related earlyincentive program designed to spur development of renewable and energy efficiencyprojects in the years prior to the carbon rule's implementation.

*Proponents of the planned 468-MW Cape Wind project off the coast of Massachusetts have appealed adecision by the state Energy Facilities Siting Board to deny request forextensions of critical subsea and permits for the on-shore transmissionfacility, the Cape CodTimes of Hyannis, Mass., reports. In its appeal to the Supreme JudicialCourt, the Energy ManagementInc. subsidiary CapeWind Associates claimed that the board "exceeded itsauthority" and that the decision was "based on errors of law."

*Texas business groups are urging the state Public Utility Commission to grantHunt ConsolidatedInc.'s motion for rehearing in connection with its planned purchase ofOncor Electric Delivery Co.LLC. Ina letter to PUCT, the groups said Hunt's proposal "represents the onlyexpedited completion" of the Energy Future Holdings Corp. bankruptcy proceeding andthe "only feasible option" for Oncor to remain under local control.

*Ameren Transmission Co. ofIllinois won a conditional approval from Missouri regulators tobuild the 345-kV MarkTwain transmission line in the state, according to a newsrelease. As part of its decision, the state Public Service Commissionimposed a condition whereby the Ameren Corp. subsidiary would need to acquire countycommission permissions before the certificate of convenience and necessity forthe 95-mile project takes effect.

*First Solar Inc.shares fell more than 6% in after-hours trading April 27 after the companyannounced that James Hughes is resigning as CEO and that the manufacturer and projectdeveloper reported first-quarter revenue that fell short of analysts' estimates.

Natural gas/midstream

*Suncor Energy Inc.has entereda C$937 million agreement to purchase Murphy Oil Corp.'s 5% interest in the Syncrude CanadaLtd. oil sands project in northeastern Alberta. The company's share in theSyncrude joint venture will increase to 53.74% as a result. The announcementcomes as the company books a first-quarter 2016 operatingloss of C$500 million given low commodity prices; the company had reportedC$175 million in operating earnings during the first quarter of 2015.

*Methane emissions data has improved materially in recent years, but thenumerous studies have also revealed gaps in understanding and technology, ICFInternational said in a guide to the literature. The report, issued April 26,compared and synthesized 75 studies on methane emissions from the gas industry,along with the U.S. EPA's greenhouse gas inventory.

*ConocoPhillips Co.has loweredits 2016 capital expenditure guidance to $5.7 billion from $6.4 billion afterwidening its first-quarter adjusted net loss to $1.2 billion, or 95 cents pershare, from $222 million, or 18 cents per share, in the first quarter of 2015.

*EQT Midstream PartnersLP raisedits full-year 2016 adjusted EBITDA forecast to $540 million to $560 millionfrom $530 million $550 million after posting first-quarter 2016 adjusted EBITDAof $141.6 million. The partnership also raised its full-year 2016 distributablecash flow forecast to $470 million to $490 million from $460 million to $480million.

*Separately, EQT Corp.postedfirst-quarter adjusted net income of $10.5 million, or 7 cents per share,compared with $153.0 million, or $1.07 per share, for the first quarter 2015.Production sales volume for the quarter was up 24% year over year to 179.9 Bcfe.

*Enterprise Products PartnersLP's first-quarter 2016 adjusted EBITDA remained flatyear over year at $1.33 billion while its operating income increased to $916million from $896 million in the opening months of 2015. First-quarter 2016distributable cash flow also increased to $1.05 billion from $1.03 billion inthe same quarter of 2015. Looking ahead, the partnership expects to investabout $2.8 billion for growth capital projects, $1 billion for the finalinstallment payment for the purchase of EFS Midstream and about $275 millionfor sustaining capital expenditures.

*Opponents of the 250-mile Nexus pipeline project are arguing that failed to explorepotentially less costly alternatives to supply gas to its regulated utilitiesDTE Electric Co. andDTE Gas Co., the MidwestEnergy News reports. Spectra Energy and DTE Energy applied to FERC inNovember 2015 for a certificate to build and operate the estimated $2 billionNexus project.

Coal

*Southern Co. CEO Tom Fanning told BloombergNews that its under-construction Kemper integrated gasificationcombined-cycle project will use coal "for the first time thissummer." The project is anticipated to come online during the third quarter.

*The National Rural Electric Cooperative Association on thegroundbreaking ceremony of a carbon research facility in Wyoming, called theIntegrated Test Center, according to an April 27 news release.

Commodities

* Inspite of a drop in supply, Transcontinental Gas Pipe Line Co. LLC Zone 6 off-systemdeliveries tumbled morethan 0.5 Bcf/d to bring the area's spot natural gas prices below $1.50/MMBtuthe week ended April 26.

*Taking the lead from the May gas contract that rolled off the board in the priorsession down 3.7 cents at a finish at $1.995/MMBtu, June natural gas futureswere biased to thedownside overnight ahead of the Thursday, April 28, open, amid the combinedpressure of expectations for an uptick in the pace of storage-building when thenext weekly inventory report is released at midmorning and lackluster demandprospects implied by milder weather associated with the calendar.

* The price of power for next-day delivery Thursday, April28, as forecasts for easing demand in much of the country at the close of theworkweek conspire with any ongoing losses at the natural gas futures complex.

*At the over-the-countermarket, California carbon allowance prices turned higher during the final week of April followingrecent weakness that saw values plunge to record all-time lows. Broker data asof April 26 showed the spot California carbon allowance contract assessed in abid-and-ask spread of $12.52/tonne to $12.57/tonne, climbing 33 cents from theweek before.

New from RRA

*On April 25, theWashington Utilities and Transportation Commission the procedural schedule inCascade Natural GasCorp.'s pending gas rate case to accommodate a settlement reachedby various parties. By April 29, the parties are expected to propose dates bywhich they will file the settlement and supporting testimony.

* ADec. 30, 2015, Wyoming Public Service Commission electric rate case decisionfor PacifiCorpraises certain concernsfor investors according to Regulatory Research Associates Inc. RRA deems thedecision to be negative from an investor perspective, and provides an overviewand commentary on the PSC order a Rate Case Final Report dated April 26.

Quoted

"Itis truly massive," Sabine Pass site project controls lead Bo Baggssaid during a tour ofthe liquefaction and export facility. "The scale is just ridiculous."

The day ahead

At8:30 a.m. ET, CMS EnergyCorp. and PPLCorp. will holdtheir first-quarter 2016 earnings calls.

At 9a.m. ET, American Electric Power Co. Inc. and will holdtheir first-quarter 2016 earnings calls.

At9:30 a.m. ET, Questar GasCo. will holdits first-quarter 2016 earnings call.

At10 a.m. ET, ITC HoldingsCorp. will holdits first-quarter 2016 earnings call.

will hold its firstquarter earnings call at 11 a.m. ET.

and will holdtheir first quarter earnings conference call at 10:30 a.m. ET and 11:30 a.m.ET, respectively.

At 3p.m. ET, SCANA Corp.will hold itsfirst-quarter 2016 earnings call.

At4:30 p.m. ET, IDACORPInc. will holdits first-quarter 2016 earnings call.

At 5p.m. ET, Cloud Peak EnergyInc. will holdits first-quarter 2016 earnings call.

*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.