Nerves are on a knife's edge in the energy trading industry and the anxiety is taking a toll in the capital markets.

Reliant Resources

(RRI)

Friday scrambled to pull a recently priced debt placement after deciding that some of its power transactions were a lot like those that had earned fellow power merchant

Dynegy

(DYN)

the scrutiny of regulators.

Houston-based Reliant canceled a private placement of $500 million in 10-year notes that priced Thursday, evidently deciding that the potential bad-headline overhang and chance of downgrade threatened the deal's integrity.

"In response to news reports yesterday about another power trader's transactions involving simultaneous purchases and sales with the same counterparty at the same price, Reliant Resources undertook a review for similar transactions," the company said. Reliant "believes it had similar transactions and is working to quantify the amount and assess the impact of those transactions."

The

SEC

on Thursday widened its probe of two electric-power trades carried out by Dynegy last fall. The trades, which were executed simultaneously for the same price, didn't yield any profit for Dynegy but propped up the company's trading volume at a time when the company was trying to muscle in to the industry's top spot following Enron's collapse.

The stock was halted on the

New York Stock Exchange

at midday, down 17% at $12. The company had earlier confirmed the placement's cancellation but didn't provide a reason.