The town of Amity is soon holding its Festival of Spirits. During this festival they celebrate the Father of Time with music and dance, starting with a ceremony where one of the teenagers lights a ceremonial bonfire. This year Jazz has been voted to light the bonfire and start the festival.
The religious nature of the festival has Danny in bad spirits. He hasn't been a half-demon for long and is worried that no matter what he does in life, he'll be damned to the Underworld. Jazz notices his mood and wants to help him. At this time mother Penelope arrives in Amity.
Mother Penelope seems to be a nun from out of town. She tells father Lancer she studied at the same abby as him, causing him to like her. Lancer gives her a job as a confessional guide.
Hearing about the new guide, Jazz convinces Danny to have a few sessions with her. Danny is confused as to why Penelope's office is in the basement next to the ice room, but is ignored. Penelope assures him she will make it all better.
During the week before the festival, a Shade named Bertrand is making Danny's life difficult. He messes with Danny when he tries to do his work, and fights him at night. Getting more depressed, Danny keeps losing these battles.
Danny admits to his friends he hates his sessions with Penelope, but Jazz overhears. Danny accuses her of stalking, but sees the Shade flying towards the church. He runs of to stop it, but Jazz thinks he is running from her. She follows him, and sees Danny tranforming into Phantom.
After learning this, Jazz vows to help her brother. She doesn't believe Danny is evil, unlike Wes. Thinking their patents bad opinion is the cause of Danny's bad headspace, she tries to compensate by being extra sweet. She gets him a new scarf, as he always seem so cold. This makes Danny realise that his breath is caused by Penelope, instead of her office.
On the day of the festival, Danny follows mother Penelope. He catches her talking to the Shade. Bertrand calls her Spectra, and is her thrall. He tells her he sabotaged the bonfire like Spectra wanted. When lit, it will explode and burn the girl alive in front of everybody. They will have all the misery they could ever need! Danny gets caught, and they attack.
Spectra is a succubus-like demon. She feeds on misery to keep her young, beautifull and powerfull. She can create a Shade, Bertrand, to aid her. Practicing on the souls in the Underworld, she has mastered her silver tongue and knows exactly what to say to cause misery in others.
Danny manages to banish Bertrand, but Spectra grabs him. She taunts him with his sisters imminent death. Breaking free from her grasp, Danny races towards Jazz and flies her to safety in the nick of time.
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