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The timing of E.on's announcement that it would follow smartly on the heels of its German rival RWE with an even larger sterling and euro-denominated bond deal has led to accusations of dirty play. E.on announced its EUR5-7 billion deal on April 19, the very day RWE priced its EUR5 billion offering. News of the offering was leaked to the press three days earlier, note bankers.

Element Re is looking to start offering cross-commodity weather products and is developing a gas and power trading capability to support the effort. Charlie Collins, v.p., said the products will feature structured payouts around weather and gas and power prices. The offerings are part of a broadening of the product line for the Stamford, Conn.-based shop, which has also started actively marketing load demand derivatives. Collins explained that the payout in these structures can be aimed at hedging against cooler summers, which result in a lower load and falling volumes.

Underscoring the change in financing sentiment for merchant development, Dave Freeman, senior v.p. at Panda International, told attendees that while the Teco Power/Panda $2.2 billion loan from last year received many plaudits, the ground rules are different this year. "That deal is not going to get done today," he said, referring to the pure merchant exposure and the size of the bank facility for the 4,350 MW development.

Nuon and Shell International Renewables (SIR), a wind and solar energy unit of oil giant Shell, have been named the preferred bidder to develop a 100 MW off-shore wind farm at Egmond, the Netherlands, and are likely to finance the deal with non-recourse debt, says an official at SIR. He adds the consortium has retained ING to advise on financing.

Juno Beach, Fla.-based FPL Group may need to ratchet up the $200-300 million in equity it plans to issue to fund its $836.6 million acquisition of an 88.2% stake in the Seabrook Nuclear Generating Station to shore up its ratings status. In the wake of the Seabrook announcement, Moody's Investors Service put the company on review for a possible downgrade because of the debt associated with its growing unregulated portfolio and nuclear acquisition.

Even with the deluge of project cancellations, the U.S. power markets are facing the addition of 150,000 MW of fresh capacty by 2005, inflating reserve margins and therefore quelling volatility in power prices, according to George Given, senior economist at consultant Henwood Energy Services. He told the conference that this level of additional capacity will send reserve margins to 20-30% in many markets and even as high as 40% in some markets. "[The 150,000 MW] is well above what is needed for any reasonable reliability criteria," he said, adding this will keep power price volatility at low levels. On a much longer-term horizon, however, the view is more positive for power generators and traders. Henwood is forecasting that by 2015 the market will need 175,000 MW of new capacity to meet demand increases, Given said.

New York City topped a number of speaker lists for the market most likely to face a supply crunch this summer. "New York is in trouble. Big trouble," according to John O'Brien, principal at consultant Skipping Stone, during a session on transmission. Kevin Howell, president at Dominion Energy Clearinghouse, also picked the Big Apple as a location most susceptible to power price spikes this summer. "There is still a very low reserve margin [in New York City]," he told the audience in a separate Q&A session.

Houston-based Reliant Resources is preparing a corporate level loan that could top out at $1.93 billion to pay off two non-recourse mini-perms maturing in the fourth quarter. Bankers holding paper in the two project loans have been told by facility agents to expect the new deal details around the middle of next month, says one project financier. Bill Waller, treasurer at Reliant, declined all comment.

The New York Mercantile Exchange is looking to start allowing members to clear over-the-counter gas and power trades, as part of its aimed re-entry in to the power trading market. Brad Leach, senior director, told the conference the exchange is already offering an e-confirmation function for trading. The exchange is looking at ways of ensuring liquidity is higher in its hub power contracts when they eventually relaunch, and it views clearing as a way of generating interest and improving liquidity. NYMEX delisted its power trading contracts in February because of lackluster trading on some of the hubs, and is currently looking at which contracts should be fired up again.

Newark, N.J.-based PSEG plans to tap the stock market this year to increase the size of its acquisition war chest. CFO Tom O'Flynn told analysts in a recent conference call the company had planned to issue stock--or an equity-like structure--next year, but is now looking at doing the deal in 2002. The financing will come under a $1.5 billion debt and equity shelf filed last week. The shelf is geared toward funding general corporate purposes and can be used to fund acquisitions, says spokesman Paul Rosengren. He adds the changing time frame reflects the fact the prices for power assets are low at the moment and that could create opportunities for the company.