Energy merchants lost new ground on Monday.

Two of the sectors biggest players --

Duke

(DUK) - Get Report

and

Williams

(WMB) - Get Report

-- were penalized for news of fresh subpoenas. And even Teco, the day's star performer, couldn't gain enough to make up for last week's losses from a devastating sell recommendation.

Teco

(TE)

shares climbed 13% to $11.85 after the company announced progress on its credit negotiations, saying that it is ahead of schedule with plans to enhance its liquidity situation.

"We know that there has been misinformation, rumor and misunderstanding in the markets recently," said Teco CFO Gordon Gillette. "Some of the recent analyst reports have taken a less favorable outlook on our progress than we believe is warranted."

Unable to gain full cooperation from its banking group, Teco revealed plans Monday to relieve immediate liquidity pressures by converting a $350 million credit facility into a one-year loan. The Florida-based company assured investors that it will maintain a "significant cushion" to pay out dividends for at least the next five quarters.

But the dividend at another industry giant could prove more vulnerable. Houston-based

El Paso

(EP)

made no promises about the safety of its own dividend during last week's discussions of a planned exit from energy trading.

The stock, which tumbled on recent news of trading losses, continued to slip Monday following a cautious research note from Prudential Securities. Prudential analyst Carol Coale set a $6 target price for El Paso's stock -- well below Monday's trading price of $7.60 -- and slashed her earnings expectations for both 2002 and 2003. She also predicted that El Paso might cut its dividend at its year-end meeting.

Still, El Paso's slide was slight in comparison to the pounding weathered by four energy companies being subpoenaed by the U.S. attorney in San Francisco. Duke Energy, the strongest of the lot, tumbled 5.8% to $18.81 after confirming that San Francisco prosecutors are questioning the company's California trading practices. Three other companies -- Mirant, Reliant Resources and Williams -- suffered double-digit percentage losses on news of similar subpoenas. The revelations killed a strong rally for Williams, which nearly doubled in recent weeks to hit $3 before plunging to $2.23 on Monday.

News of the subpoena ended a recent rally for Williams, which nearly doubled in a month to hit $3 last week.

AES

(AES) - Get Report

saw a similar rally cut short by new financial concerns. The Virginia-based power company slid 14% to $1.71 on news of a doomed contract with

TXU's

(TXU)

near-bankrupt European trading unit. Williams Capital analyst Christopher Ellinghaus warned Monday that AES will have little choice but to seek a less-profitable replacement contract or sell its European Drax unit at an even more depressed price than originally expected.

Despite these challenges, Ellinghaus said he still expects AES to "get by."

Ellinghaus is less optimistic about NRG, the unregulated division of Minneapolis-based

Xcel Energy

(XEL) - Get Report

. In a research note Monday, Ellinghaus said an NRG bankruptcy filing now appears imminent.

"Xcel's NRG unit has failed to make multiple interest and principal payments under various credit agreements and bond covenants, effectively defaulting," he wrote. "Why make debt payments just prior to a bankruptcy filing?"

Xcel was down 2.4% to $10.25 in Monday morning trading.