--- In [EMAIL PROTECTED], Matt Grimaldi <[EMAIL PROTECTED]> wrote:
>
>After looking at the difference in wholesale market prices from a year ago
>and today, I find it extremely hard to believe that it is
>the result of fair players responding to natural market forces.
>
>The base prices have, in the course of a year, jumped from $20-$60
>per megawatt-hour (MWh) to $180-$420 / MWh. In no way has demand
>increased by 600%, nor has supply decreased to 17% of its former
>capacity in the last year, yet the prices increased by 600%-700%
I really don't understand your math. First of all, this is the spot price
for electricity. Thus, this is the electricity that is available after all
the fixed contracts are fulfilled. I don't know what fraction of the total
of the electrical power produced in the US is on the spot market, but I
think it is small ( <5%). It may even be very small (<1%).
Given that, its EZ to see how a small fluctuation in the balance between
supply and demand can hit this price hard. I'll give another example from
the oil industry, where there are no fixed price contracts. Variations in
the supply/demand balance of only about +/- 3% have resulted in factor of 3
differences in price. It can't be just an energy company conspiracy because
what sort of idiot would drive prices down to $11/barrel.
So, with enormous demand for power, and no reduction in demand due to higher
retail prices, the utilities bid up the price of the spot market.
>So far, the only believable explanation is price gouging.
These are big companies selling to each other. Why shouldn't one
corporation charge another what the market will bear?
Dan'm Traeki Ring of Crystallized Knowledge.
Known for calculating, but not known for shutting up
_________________________________________________________________
Get your FREE download of MSN Explorer at http://explorer.msn.com
