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The October natural gas wholesale contract continues to consolidate below the $4.00 price area before the fall weather turns cooler. The October contract was lower by $0.031 on the day, settling at $3.798. It seems that the lower cooling demand in the next few weeks is putting additional supplies available for storage injection and thus weighing on market prices in the short run. This process of going back and forth should end when the colder weather arrives next month. Tomorrow’s EIA estimate is coming in around the mid 90’s from several consulting firms with a wide range of views for this particular EIA storage figure. On the weather front, weather views show some return to above-normal temperatures in the East, but they do not appear to be sufficient to significantly boost cooling loads and push the next two weeks’ storage builds much below 100 Bcf apiece.
In the public spotlight, the Exelon/Constellation merger is drawing scrutiny from the Maryland governor’s office seeking additional renewable energy commitments prior to providing their approval. The O'Malley administration is asking state regulators to reject Constellation Energy Group's plan to sell itself to Chicago-based Exelon Corp. unless the companies provide greater assurance that the new owner can deliver reliable service to Maryland customers through renewable energy. The Maryland Energy Administration also raised concerns about the merged company's exposure to the nuclear energy business, and said it should develop more than 10 times as much state-based renewable energy resources than Constellation and Exelon have promised. The commission, the state's energy regulator, is scheduled to begin hearings on the deal at the end of October.
To ensure that the $7.9 billion deal is in the public interest, the state is proposing that Constellation and Chicago-based Exelon make greater concessions mainly; making a "substantially larger" commitment than the 25 megawatts of green energy they proposed to develop in Maryland. Previous deals proposed by Constellation have met resistance. An earlier takeover of Constellation was thwarted by regulators amid political uproar over rates while Governor O'Malley tried unsuccessfully to wrest concessions from Constellation as the company sought approval of a $4.5 billion deal to sell half of its nuclear power business to a French utility in 2009. The Public Service Commission, which is tasked with ensuring that Constellation's deal to sell itself to Exelon does not harm consumers, is scheduled to hold evidentiary hearings beginning at the end of October.
In announcing the merger in April, Exelon and Constellation executives offered a $250 million incentive package that included a $100 credit for each BGE customer as well as financial contributions to the states green energy goals. They included $4 million for Maryland's EmPower energy efficiency efforts; $10 million for the state's electric vehicle infrastructure; and more than $50 million to develop 25 megawatts of green energy in the state. The two companies also agreed to maintain Constellation's annual charitable giving of about $10 million for at least 10 years. Instead, the state wants the combined company to build solar, wind or other state-based renewable energy plants that would account for one-fourth of its obligations to meet O'Malley's ambitious green energy goals over the next decade. Under one scenario, that would require Exelon to build almost 400 megawatts of biomass and wind farm generation.
In the state of Connecticut, reasoning didn’t win out from the lawmakers as their response to the state's two major electric utilities to last month's Tropical Storm Irene was deemed inadequate and troubling, state and local lawmakers charged Monday. They recalled incidents from throughout the state, where communication was so poor that utility work crews would sit in their vehicles, seemingly paralyzed for hours until finally getting assignments from supervisors. During the first of two days of legislative hearings on the Aug. 27-28 storm, executives from Connecticut Light & Power and United Illuminating admitted that there were communication lapses, but claimed their overall response once contract crews from out of state arrived was good. The executives said that state residents need to accept a more extensive tree-trimming program to prevent the most common cause of outages which was trees falling on power transmission lines.
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