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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (23160)	5/29/2003 6:32:43 PM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 206085

Hi Darfot, for your NG floor of 10% above #2 oil? I thought that had to do with efficiencies. I'd like to hear more on this pass through stuff. Got some links ? regards Kastel

To: Wyätt Gwyön who wrote (23160)	5/29/2003 7:15:48 PM
From: quehubo	Respond to of 206085

Darfot - gas turbine equipment is I have no doubt the most exposed to the other variable costs involved with fuel switching. Wear and tear costs are estimated at 25-50% higher for oil operation vs gas. Wear and tear costs for the new gas turbines is already very high. But you have to understand that in active markets the electricity price will be set by nat gas. There are not that many generators that can burn oil, but they will make a difference and I think the demand spike in distillates this week shows that. So if one marketer is offering power at whatever his delivered NG cost is, the other marketer can offer the same electricity with a lower all in fuel/other cost and capture a higher margin. When cooling demand hits and generators go to the market for NG the prices will be allot higher. Look at the spot prices on enerfax and see what happens in various regions as the Summer progresses. My #2 oil plus 10% is a very rough estimate and there are allot of variables across the gas turbine fleet. But I believe it is on the low side. I know first hand gas turbines ran in May on oil vs NG. I do not believe traditional regulated utilities will have a problem passing on incremental fuel costs or incremental maintenance costs. Many cash starved IPP's can burn oil now and literally liquidate their assets because the significant maintenance costs can be years away if accruals are creative. This is very common and I expect you will see IPP's continue to complain about higher than expected maintenance costs. (CPN recently).