Electric Power news briefs, July 3

Panda Global Energy Co. ... Automated Power Exchange Inc. ... FirstEnergy Corp. ... Tucson Electric Power Co. ... Reliant Energy Inc. ... ENERGEX Retail Pty Ltd. .... Tipperary Oil & Gas (Australia) Pty Ltd. ... UtiliCorp United Inc.

Standard & Poor's Friday downgraded its rating on Panda Global Energy Co.'s $155 million senior secured notes, due 2004, to triple-'C' from single-'B'-minus. The outlook has been revised to negative from stable. Panda's 100-Mw coal-fired power project at Luannan, China, has recently become commercially operational, but its tariff rate is still under negotiation with the Tangshan Municipal Government, S&P said. The Luannan project is currently being paid a "testing" tariff rate of slightly below 0.20 yuan/kw-hr, which is insufficient to cover all operating costs, according to S&P. The tariff rate in the original cash flow projection is around 0.60 yuan/kw-hr, but the Tangshan municipal government is currently only offering around 0.30 yuan/kw-hour. Financial performance of the Luannan power project, the major source of cash flow support for debt service on the notes, is substantially below projections due to the low tariff rate currently being paid, S&P said. S&P said the company's major strengths include the following: both units of the Luannan power plant are commercially operational despite a construction delay; about $6 million in delay liquidated damages are expected to be collected from the engineering, procurement, and construction contractor, which may be available to support debt service; and the Brandywine and Rosemary projects in the US are performing as expected, providing cash flow support for the notes' debt service, said S&P.

Automated Power Exchange Inc., Santa Clara, Calif., said it has expanded its electric power exchange market in Illinois and Ohio to a 12-state Midwest-Eastern Market. Traders now can access more than 50 utilities with interconnected transmission in Georgia, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin. Two new trading hubs�the APX AEP Hub and the APX TVA Hub�are incorporated with two existing ones�the APX ComEd Hub and the APX FE Hub. Initial participants are AMP-Ohio Inc., Central Illinois Lighting Co., Commonwealth Edison Co., Duquesne Light Co., Edison Mission Energy, FirstEnergy Corp., FirstEnergy Trading Services, Pennsylvania Power & Light Co., Unicom Corp. unit Unicom Energy, Wisconsin Electric Power Co., and Wisconsin Public Service Corp. Energy products in the APX Midwest-Eastern Market mirror the liquidated damages, system firm, and system nonfirm products presently traded in this area for the hourly and next-day markets. Also available are renewable energy or "green" tickets, which represent the premium buyers pay for environmentally friendly power.

As a part of FirstEnergy Corp.'s 5-year rate-reduction plan, two of its electric utility operating companies�the Illuminating Co. and Toledo Edison�decreased monthly bills for residential customers by $1, starting July 1. This is the second of three scheduled reductions to total $5/month by 2001. In 2001, rates again will drop by an additional $1/month, completing the program. A stipulation agreement outlining the company's transition from regulation to competition next year is pending before the Public Utilities Commission of Ohio.

Electric rates for retail customers of Tucson Electric Power Co. were reduced by 1% July 1, the third reduction in the last 2 years, for a total decrease of 3.1%. The company's rates will now remain frozen until December 2008. TEP is a wholly owned subsidiary of UniSource Energy Corp., the second-largest investor-owned electric utility company in Arizona.

Reliant Energy Inc., Houston, reported it expects earnings for the second quarter of 2000 to be 15-20% higher than industry analysts' projections. In the second quarter of 1999, the company had adjusted earnings of $123 million, or 43�/share. Increased earnings from the company's growing multiregional generation portfolio and increased trading margins drove earnings beyond expectations for the quarter, officials said. The company plans to announce second quarter earnings July 27.

ENERGEX Retail Pty. Ltd., a Brisbane-based national retail electricity and gas distributor owned by the Queensland government, has selected Tipperary Oil & Gas (Australia) Pty. Ltd., the 90%-owned unit of Tipperary Corp., Denver, to supply gas from the Comet Ridge Coalbed Methane project. The 5-year contract calls for an increase in the gas quantities currently being delivered under a contract Tipperary entered into with gas utility Allgas Energy Ltd. in September 1998. ENERGEX acquired a major shareholding in Allgas in July 1998. The new contract calls for increasing gas volumes up to a potential of about15 MMcfd during the period June 1, 2000 through May 31, 2005. Tipperary owns a 61.25% interest in the Comet Ridge project, and the remaining interest holders will be entitled to elect to participate in this contract as well, the company said.

UtiliCorp United Inc., Kansas City, Kan., said Melbourne-based United Energy Ltd., managed and 34% owned by UtiliCorp, has closed its transaction with Shell Australia Ltd., Woodside Energy Ltd., and Ikon Energy to establish Pulse Energy, a joint energy marketing venture in Australia. UtiliCorp holds a 50% economic interest in Ikon Energy, a gas retailer managed by United Energy. Pulse Energy will retail electricity and gas to more than 1.1 million electricity and gas customers in Victoria, Australia, UtiliCorp Pres. Robert K. Green said, and has the potential to access another 9 million energy customers in the country's eastern states and in South Australia. United Energy and Ikon have a combined 50% ownership position in the new joint venture.

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