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To: UnBelievable who wrote (7892)	8/2/2000 12:52:46 AM
From: NOW	Respond to of 436258

Clearly the short commercials are looking sooner rather than later. And whoever is scooping up all the treasuries in the thirty year range thinks deflation is the operative word going forward.

To: UnBelievable who wrote (7892)	8/2/2000 4:14:17 AM
From: patron_anejo_por_favor	Read Replies (4) \| Respond to of 436258

Got megawatts? interactive.wsj.com August 2, 2000 California Cuts Price Cap For Electricity Once Again By REBECCA SMITH Staff Reporter of THE WALL STREET JOURNAL FOLSOM, Calif. -- Pushed by the state governor, California officials slashed the price cap on wholesale electricity to $250 a megawatt hour from $500 -- the second time this summer they have intervened to restrain market volatility. The action comes as the state teeters on the brink of rolling blackouts as a result of an insufficient supply of electricity amid a heat wave. The decision by the California Independent System Operator, the state's grid operator, to lower the price cap was inspired by a politically disastrous doubling of residential and commercial electricity bills since June in San Diego, the only city in the nation served by a utility that has sold its power plants and buys all of its power through the spot market. Though it lowered the cap on prices that can be charged by generators and marketers, the ISO board offered no guarantee that the action would push down average wholesale prices that have exploded as reserves of electricity have worn thin and bidders have found that -- except for the price cap -- they can, at times, name their price. The average power price in California charged to residential customers last month was 14 cents a kilowatt hour, not including power-delivery charges, compared with 3.9 cents an hour a year earlier. While the board debated the measure, broiling heat throughout the West stressed the limits of the state's electric system. Reserves of electricity plunged to 3% of demand by midafternoon Tuesday, and officials feared that level would fall further, forcing them to implement emergency procedures for the first time in which thousands of customers are dropped in rolling blackouts. In such a situation, grid operators "shed load" rather than risk a catastrophic collapse that could occur if dwindling reserves suddenly were wiped out by the failure of a big generating plant or high-voltage transmission line. "We're riding the fine edge, minute by minute," said Terry Winter, chief executive of the California ISO. "Nobody has anything left to give us except the Northwest," but some of that power couldn't reach California because of limitations on transmission lines. Industrial customers responded to the crisis by cutting energy usage. Defense contractor Northrop Grumman Corp., Los Angeles, turned off power to facilities in Palmdale, Calif., that work on the B-2 Stealth bomber, as well as to administrative offices at an El Segundo plant that makes parts for the F/A-18 jet fighter. Though California's electrical system was stressed, it didn't set a record for demand, evidence that the state is hitting the crisis point sooner because other states, whose own needs are escalating, have less power to share. As the summer wears on, the risk of disruptions is increasing. Repeatedly, the grid operator has called "no touch" days that prohibit owners of generating plants and transmission lines from doing routine maintenance. With a 33% increase in canceled work this year, the likelihood of equipment failure is rising just as the state heads into the hottest time of the year. Prior to the vote, several legislators said they believe generators are gouging the market. State Sen. Steve Peace, a Democrat from San Diego and co-author of the state's deregulation law, said those who think it is healthy for the state's deregulated market to get strong "price signals" to show more generation is needed "have been exploited by those with an economic interest in seeing high prices." Rich Glick, senior policy adviser to Energy Secretary Bill Richardson, said Department of Energy experts are concerned about recurrent price spikes in California. "There's something wrong with the markets," he said. Last week, Secretary Richardson met with executives of big utilities who are trying to get Congress to pass a law that would allow managers of the nation's electricity grid to impose sanctions on price gougers or others who take unfair advantage of shortages.

To: UnBelievable who wrote (7892)	8/2/2000 8:06:01 AM
From: AllansAlias	Respond to of 436258

ub, Good post. I agree with your analysis. Not sure about the inflation part though. In the very short-term I agree particularly with this: The first will be a retest of the May lows. The second will be establishing a sustainable bottom. I could see the retest of the lows taking place this month. Cheers --Allan

To: UnBelievable who wrote (7892)	8/2/2000 9:27:32 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

ub, great summary of the future.... the only point of possible contention being that the US economy hasn't slowed yet. up until now that's a myth. i still think though that my 'falling off a cliff' scenario will eventually play out, and that the stock market will signal it well in advance... the effect of the derivatives pyramid on exacerbating financial instability is going to be sorely tested eventually as well....and i am long term in the deflation camp, simply because of the extreme levels of private sector debt which overhang the economy like the sword of Damocles...