auto58194@hushmail.com wrote Tue, 19 Dec 2000 13:15:09 -0500 (EST)
Raymond's pointed out that some gas plants normally idle are now running full-time to meet demand. To me this reads the same as using idle plants instead of building new ones. Perhaps not a bright move in terms of safety, efficiency and reserve capacity, but nothing that should have changed natural gas commitments.
In my initial message I stated the current rise in natural gas prices are caused by multiple factors. Natural gas prices were too low in recent years and this caused a shortage in supply. Narural gas has gained in popularity with utility companies in recent years because it is clean (relatively) and it is cheaper and easier to implement natural gas burning technologies than other fuel source technologies, ie - coal which would be cheaper but more difficult to meet current emission standards and "current" public expectations. On top of these factors I stated the greater portion of the increase was created by un-expected demand in California. Another issue in this problem, as in this month and next, is low water levels in the northwest causing lower than expected power generating capacity. In the past natural gas power plants were viewed as temporay or part-time solutions as they are relatively cheap to construct. If you have a power plant you don't expect to use you don't commit to much of a supply as you don't expect to use the plant. At this time many auxiliary power plants in California and surrounding states are being utilitized to generate power for the California market. There was recently a federal mandate that power suppliers in neighbouring markets not refuse to provide power to California utilities. Coupled with the low water situation, and the resulting decrease in hydro generated power, the increased use of natural gas powered generating capacity would be expected to cause an increase in the price of a commodity in which the increase in demand was unexpected or exceeded supply. If a power generating utility had built new power plants and commited to a fuel supply (and the accompanying infrastructure) the likelihood of unexpected prices increases would be much lower.