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Enron Mail |
California's Price Caps Raising Average Cost of Power=20
The retail price caps imposed in California are leading to higher average= =20 prices for longer periods of time as demand responsiveness is dulled and=20 supply is retarded, according to a report released by Morgan Stanley Dean= =20 Witter. Traders interviewed by the firm said that calendar strips for 2001= =20 through 2003 have traded in excess of $100/MWh, or around $30/MWh higher th= an=20 a month ago. What's more, the firm said, the expected trough in the forward= =20 curve =01* projected in the 2002-2003 time frame =01* "continues to move ou= t in=20 time."=20 The Dean Witter study reported that the change in futures pricing for the= =20 California Oregon Border (a proxy for Northern California pricing) and at= =20 Palo Verde (a proxy for Southern California pricing) trading hubs show=20 similar upward trends from June through August.=20 The study said the most alarming thing for the state is the increased threa= t=20 of power outages. Higher priced regions like the desert Southwest and the= =20 Northwest "will suck exports out of the state and deter imports," Dean Witt= er=20 said. The tight supply situation is pushing average prices higher, more=20 often, and increasing the risk imports won't arrive at all when they are=20 truly needed.
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