Peril dead ahead for power market

[white cloud]

The PUC’s decision to raise the wholesale price caps to $4,500 a megawatt-hour only makes the problem worse by broadening the range of potential price swings. While the higher caps are supposed to encourage more generation, even the PUC acknowledges new plants won’t come online fast enough to meet demand this summer.

Nor is the PUC’s decision to raise the price caps likely to spur new generation because banks aren’t willing to finance construction amid so much volatility.

Meanwhile, the PUC already is considering another hike in the wholesale cap, doubling the limit from $4,500 to $9,000 next year. At those prices, liquidity will essentially be gone, according to the traders I spoke with.

Just hours after the PUC’s vote on Thursday, the price of an August contract jumped by $20 a megawatt-hour. That prompted fears that prices could shoot even higher, essentially bringing the market to a halt, traders said.

And the hottest stretch of summer looms like an iceberg on the horizon.
http://fuelfix.com/blog/2012/07/02/steffy-peril-dead-ahead-for-power-market/

[mbperrin]

1. And yet, all that is needed is completion by next February of the new high speed transmission lines

to bring the wind generators currently shut in online.

This is the last gasp of the filthy generators - oil, gas, coal, and nuclear.

Why am I so sure? I just signed a new 21 month contract for windpower at 5.6 cents per KWH. That's down from 20 cents to TXU, one of the old filthy gang.

Tells me longterm prices are going down. They'll grab all they can until spring, of course, throw in a blackout or two for the rubes.

Bastids.