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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (14439)	6/14/2000 3:35:00 PM
From: J. M. Blackburn	Respond to of 15132

Mr. GJ Re: Annually there are spikes in the price of power generally for a few hours because...... I believe this is starting to change and will be passed down to the customer. The retail companies must pass on their cost eventually and government regulation has limited this so far. re: If anything in recent years there has been a GLUT of electrical power on the market driving down the price of generators which are being sold off relatively cheaply throughout the northeast. Why are generators being bought up cheaply? Because the asset they produce electrical power has been coming down in price over the years.? It is my experience that the plants sold have received a very good price considering that they either are very old and uneconomical to run, have environmental problems, and other potential risks. Most companies I'm familiar with, bought these plants to become a player in the game. There are many plants on paper, which will not be built and will never get permits or financing but the companies who own existing plants are in a much better position to get permits and financing. Two major companies New England Power and Boston Edison received good prices for their plants. Nuclear plants have special pricing rules and this is why power is cheap at times. This is will change in time. Re: ISOs in various states especially in the northeast which is mucking things up... It could be said the ISO I'm familiar with has so far hurt the producers by rules that favor the new plants at the expense of the old. If I bid $100/MW power and they put me on, after several days of running at my bid price the price reverts back to the clearing price which may be below my costs. I am forced to run below my costs because I don't have the right to arbitrarily pull out of the system. If a plant is ordered on and ISO thinks there is price gouging they don't pay the clearing price even though the plant only runs a few weeks a year and has fixed costs. These problems are being contested. Re: transmission constraints This is a problem and will not be solved soon. You have good arguments but until we build the new plants with 6500 Heat Rates verses the typical old plant 10-11,000: get the transmission system straightened out; diversify fuel; and make it truly a free market system, with minimal government interference, it looks like higher costs to me. Thanks. Please remember these are only my opinions, I'm an engineer not an MBA. Jim