Message-ID: <21995616.1075861672842.JavaMail.evans@thyme> Date: Tue, 30 Oct 2001 04:34:20 -0800 (PST) From: john.arnold@enron.com To: caroline.abramo@enron.com Subject: RE: NG deal in California Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Arnold, John X-To: Abramo, Caroline X-cc: X-bcc: X-Folder: \JARNOLD (Non-Privileged)\Arnold, John\Sent Items X-Origin: Arnold-J X-FileName: JARNOLD (Non-Privileged).pst who wrote the market commentary are at the bottom of this and who wrote the rest? -----Original Message----- From: Abramo, Caroline Sent: Monday, October 29, 2001 4:44 PM To: Arnold, John; Maggi, Mike Cc: Quigley, Dutch; Griffith, John; Zivic, Robyn Subject: FW: NG deal in California sorry not to send this earlier.. i checked out the dept water resources site.. (wwwowe.water.ca.gov).. nothing too illuminating except that their power costs have come down from over $300 in march to$45 this month but due to the nature the borrowing costs associated with the LT contracts, they will not be able to pass on much savings to consumers (gotta love that). we were supposed to have received a copy of all their LT purchases in July. checking what happened there. we know that there were 54 contracts signed .. half linked to gas which covered 1/3 of cali's total needs (looks like for 10 years). some left open the possibility of the state procuring gas supplies for the plants.. dwr has signed 6 agreements w/ gas suppliers..pretty sure cali uses 25,000-45,000 MW per year which is about 70 contracts a day in gas terms. If they locked in 1/3.. it would be about 25/day.. the deal they just did was about 16/day for just cal02..probably waiting for curve to flatten further to do more.. they purchased another 500 MW in Aug - the 17th (all 10-12 years)..and to date it looks like they have not purchased anything (have been selling into the grid daily) but not liquidating any previously negotiated LT deals (LT is anything beyond 3 months). it sounds like they are planning on buying more of their gas requirements.. Sempra (who has LT power contracts with DWR and gives them the ability to buy 80% of their gas) said DWR had not purchased any gas yet. Pls note story on page 5 & 6 of todays gas daily... mentions California Dept of Water looking to hedge gas purchases for long-term contracts. over the past few days we have seen Major Inv. Bk Buying Cal 02 Nymex Calls and the same bank buying Cal 02 Socal basis calls - very good size This, we believe, is a hedge for this DWR story. The article mentions that they were "looking at ways to expand its gas purchases". The article does not mention, nor do we know, how far out they are looking to purchase. Socal basis has moved on the back of this deal.... Last week: Cal 02 = 9 cents Cal 03 = 20 cents Today Cal 02 = 18.5 cents Cal 03 = 22 cents....so the spread has moved from 11 cent contango to 3.5 cents. <<102401.pdf>> Other than the call buying we saw related to this deal, the rest of the flow we are seeing is : sellers of vol. Last night settles: Cal 02 vol 51.5% and Cal 03 vol 37.25% - and we are 1 % lower in Cal 02 since the open , and 0.5 % lower Cal 03.