--- In [EMAIL PROTECTED], Doug Pensinger <[EMAIL PROTECTED]> wrote:
>
>
>Dan Minette wrote:
> > <snip>
>
> > I hope that gives a picture of what happened.
> >
>
>But the natural gas shortage has nothing to do with the California >crisis
>which has supposedly been brought about by a freeze in the >price of
>electricity when the industry was deregulated a few years >ago.
Actually, it has something to do with it. When oil and natural gas prices
were low, coal prices also dropped, and it paid to buy excess electricity
off the network and to not build power plants. The supply/demand curves
favored it. But, as these prices rose, the price of generating electricity
became higher. At the same time, demand increased, due to hot weather, and
supplying the majority of one's electricity (or a significant fraction) from
spot prices didn't seem so attractive.
In a sense, the hike in the price of electricity would be seen to parallel
the hike in the supply of natural gas, and not be directly linked. But, the
hike in the price of natural gas lowered the potential for power plants
owners to turn on marginal plants to take advantage of the great difference
between the price one can sell electricity for and the cost of generating
that electricity.
>
>I can already see from Eric's info that our price is higher than >that in
>Illinois - for 400 Kwh he would pay about $36 and I would >pay about $47.
>This gives me reason to suspect the claim of the >generators that they can
>sell their power for more elsewhere, but of >course its only one data
>point.
Retail prices are not critical. The fact that the California power
companies have to pay spot market prices, which are very high, for wholesale
electricity is critical. It doesn't matter that the retail price is lower
than the retail price in California for retail electricity. The power
plants in those states cannot cut their own customers off to sell
electricity wholesale. So, when the demand for wholesale electricity
exceeds the supply, that price goes way up. In short, retail price is fixed
(or close to it), wholesale is what the market will bear.
>Do you know what the rates are in the Houston area?
Yea, about 10c/kWh. But, as I said, that means little. Natural gas prices
went up only a fraction of the spot market price rise, but that makes sense
too.
Dan'm Traeki Ring of Crystallized Knowledge.
Known for calculating, but not known for shutting up
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