Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Haim R. Branisteanu who wrote (38422)	9/19/2003 9:17:11 PM
From: yard_man	Read Replies (1) of 74559

Haim, Operating profit (profit before covering fixed costs) varies -- just like the cost of the fuel. You are right in observing that rates are usually set to recover some operating margin AND a return to fixed costs. But for a regulated utility, it is profit or margin with respect to system costs when supplying load that the utility is required to serve. Generally, for us -- we might operate a plant with a very slim operating profit if the alternative is to purchase just a bit above that or if it looks like the slim margin for a few hours would be rewarded with potentially higher margin later -- there is a sunk cost associated with starting a unit and that has to be taken into account when making the decision to shut down or not shut down a unit. Your cost for a CC is too high -- more like $500 - $530/kw to construct right now. I'm sorry you are paying 17.6 cents/kWh. There is a solution -- move. <g> here I think we pay something like 6.0 -- have to look at my bill next time.

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