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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (2155)	2/25/2001 3:14:09 AM
From: Raymond Duray	Respond to of 46821

Energia and related topics: Hi Frank, Are you referring to high tension lines that would carry Montana power to NY City? Nope, Hydro Quebec, Niagra-Mohawk and such like. Montana Power isn't in the power bidness, it's in the telecom bidness. mtpower.com Talk about timing. Oi vey! But if such power had to be delivered, wouldn't the very need demonstrate that there was a shortage of generating capacity on the eastern seaboard? Nope, PJM is abundantly provisioned, in spite of the recent refusal of service by Hydro Quebec. PJM is the intertie grid that serves 5 states, including PA, NJ, MD and ??? Or something else? Yup, wires. Big fat honkin' wires. Not enough coming into the boroughs. Transmission is the weak link. How did you come to this conclusion, that transmission is more a cause of the problem than generation? I didn't. One of the smart people in the industry wrote a prognostication on the trouble spots to be expected in the summer. As you'd guess, California is going to be in terrible shape, and I was surprised to see the author mention NYC as a problematic location due to lack of transmission capacity. [[I've checked some bookmarked sources and can't locate the original, in order to provide the URL. Sorry.]] You get what you pay for? Hmmm, I'm more in the "ya pays ya money and ya takes ya chances" camp myself. some real concerns about the availability and future prices of natural gas, I've been looking into the natural gas market and my conclusion is that we are creating a national crisis, with the rate of success in E&P (exploration and production) growing at about 1% per annum in the US and the rate of consumption rising much faster due to significant increases in the number of gas turbine generating facilities. One of the interesting hip bone connected to the jaw bone aspects is that liquid ammonia fertilizer, a derivative of NG, is expected to be 30-40% more expensive for the spring planting season, YoY. This is going to help us get rid of a lot of marginal farmers, what with the price of most grains now at or below breakeven prices based on the old price of crop inputs. Should be really interesting in the commodity pits later this year. Some of the most horrific stories I've ever heard had to do with "backup" generators and associated switchgear provisions that didn't work just at the moment in time when they were most needed. I met a fellow electrical contractor in the Bay Area who had a contract to change out all the switchgear on a local hospital. He contacted a local rental outfit and leased a 400Kw Cat genset so he could take the critical loads off grid and keep them up. On the appointed day, he dutifully followed the instructions from the rental office about how much warm-up was needed before switching the load to the genset. Of course, ORs were up and running, dialysis machines, heart/lung machines, etc. etc. When the contractor flipped the switch, the generator slowed, sputtered and stopped. It took about two minutes to reverse the process. The most agonizing two minutes of the contractor's life. Fortunately, no one died because of the incident. To this day, no one can figure out what went wrong. Loads were well within spec. Scary, huh? Best, Ray :)

To: Frank A. Coluccio who wrote (2155)	2/25/2001 3:30:42 AM
From: Raymond Duray	Read Replies (1) \| Respond to of 46821

How about another late edit? This is really interesting stuff...NY ISO - Designed for Maximum Market Power??? Hi Frank, This stuff just blows my mind. How could the power generators get away with this horses#it? nytimes.com For example, plant owners might offer their power at prices ranging from 2 cents per kilowatt-hour upward, with most offers bunched between 5 and 10 cents. But a few offers might be as high as $1 per kilowatt- hour. On days when demand is close to overall supply, the I.S.O. has to buy that last bit of power, and under its rules every producer gets $1. Something like that happened a few times last summer, and it could happen more often as demand rises. The idea behind the bidding system is that when supplies of power are adequate, generators will make bids close to their operating costs, because if they bid too high, their power plants may go untapped. In practice, when supplies are tight, generators can be certain almost any price will be accepted. The system also encourages generators to bend bidding rules to move prices higher, said Richard Schuler, a member of New York's I.S.O. board. Generators that own several plants may even have a perverse incentive to take some of their supply out of service on hot days, since that can push up prices for the plants they do run. Though generators deny that such practices occur, the New York I.S.O. says it discovered 10 instances last year in which power suppliers manipulated the market. The most serious incident occurred June 26, when a generator withheld power from the market, making wholesale prices soar and costing consumers $100 million. Given the I.S.O.'s limited enforcement powers — federal regulations prevent it from imposing fines or even publicly naming the generators that break its rules — analysts say manipulation will increase if supplies tighten. "You've kind of given the generators a get- out-of-jail-free card," said Dr. Frank A. Wolak, chairman of the market surveillance committee of California's I.S.O. "If they continue with the pricing in New York, where they pass through the wholesale pricing, and you guys have a hot summer, wow — I wouldn't want to be at the New York I.S.O." In theory, Con Ed could protect its customers from short-term price spikes by signing long-term, fixed-price contracts with generating companies, and some consumer advocates fault the utility for not locking up more supply. But Con Ed officials say the terms that generators are offering would lead to even higher rates. Companies that buy and sell power are already expecting higher prices this summer. Natsource, a local trading company, is offering wholesale power in New York City at 13 cents per kilowatt-hour for July and August. Including Con Ed's transmission charges and other wholesale costs, that translates into a consumer rate of 23 or 24 cents per kilowatt-hour, or a monthly bill of about $120 for the average customer. Get Ready, Ben Dover :)

To: Frank A. Coluccio who wrote (2155)	2/25/2001 6:16:23 AM
From: axial	Read Replies (2) \| Respond to of 46821

Hello Frank, and Ray - Been lurking, watching the dialogue between wireless wonk and Ray on DCF, and the continuing discussion on power, its generation and transmission. As we closed out the euphoria of 2000, and stocks continued their wild ride upwards, I found myself researching back to the turn of the century in 1900, looking for parallels, and insights as to possible futures. I was reminded of that exploration by the DCF dialogue. DCF, of course, was a metric much used in attempting to evaluate the potential worth of high-tech stocks, when there was, in fact, no reliable predictive basis for doing so. It was, as tools go, a possible indicator, depending on the input: by that I mean that some unstated historical norms implicitly underlied DCF models. One of the norms was the availability of energy. Now, when one speaks of the concept of "vertical integration" one need look no further than energy for its incorporation, at every level, into societal activity. If one accepts the idea that we are facing a downturn in our ability to easily access cheap power (and obviously, I do) then I think we can start throwing our old models out the window. Going a step further, if that process (easily accessing cheap power) becomes unpredictable, then we have compounding negative consequences: we not only lack power, but we cannot predict when or how it will become available in sufficient quantity, at a price reliable enough to perform this or that activity. In other words, the unpredictability of power supplies creates a societal ripple effect. To put it another way, we begin to introduce instability in the pattern of our existence. Frank, I think I have detected some thought in that direction, on your part, though I haven't seen it explicilty stated. However, the rise, and the existence of "power ghettos" in any national economy can only have negative consequences; the same can be said of the world. The effect of such discontinuities on the telecosm, and industry, on everything will not be pleasant. Let's imagine that any one of us, right now, was planning to move from say, California, to set up shop in a place where we could manufacture our widgets. You've calculated all your costs, and figure you can pay them down in ten years. Where will you go? Where, in North America, are you certain of a reliable, predictable supply of energy, at a known and acceptable price, for the next 10 years? Ray, I think you are wise to be in cash. It is no longer a question of if the markets will begin to factor in these realities, but when. JMHO, of course, Jim