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Enron Mail |
Just to clarify.
The product that is traded in New York is a financial swap that settles against the Day Ahead clearing price. It is changes to HQ's physical deliveries (0 to 1500 MW) into NY that can swing the clearing price by at least $20. This is not just due to the price that HQ sells their energy for, but is mostly due to the impact on congestion in NY of HQ deliveries. When HQ is not delivering high volumes, NY is generally uncongested and the price for the entire state is set by gas generation in the East. When HQ delivers high volumes, the system becomes congested and the west price is set by much lower cost resources and the east price is set by gas generation. The impact on the NY West price (Zone A) is at least $15 dollars. Since the majority of the OTC trades are settled against this price, it gives HQ tremendous ability to trade financially and then influence the settlement price. Large generators in New York west could also do this but it would be quite costly for them to withhold 1000 MW of generation and this would be easily noticed. HQ however, has hydro generation and can easily store their water for delivery another day. HQ trades directly in the New York OTC market as HQ Energy Services (US) Inc.. The general market realizes the impact that HQ can have on the clearing price and will often pull out of the market when HQ is trading. I have heard from a couple of sources that HQ is using Select to trade for them to avoid this problem but I cannot confirm this. Hope this helps clarify things. Tom. From: Christi L Nicolay @ ECT 09/22/2000 11:03 AM To: Sarah Novosel/Corp/Enron@Enron cc: Howard Fromer/HOU/EES@EES, James D Steffes/HOU/EES@EES, Kevin M Presto/HOU/ECT@ECT, Tom May/Corp/Enron@Enron, Joe Hartsoe/Corp/Enron@Enron, Richard Shapiro/HOU/EES@EES, Steven J Kean/NA/Enron@Enron Subject: HQ Energy Mkt. Power Tom May asked me to get a summary of what FERC reviewed and why FERC found that HQ had mitigated its market power initially. HQ's 3 year update is due in Nov. HQ, acting through Select, has the ability to move the price $20 or more. In accordance with our strategy to protest MBRs for problem utilties, EPMI will most probably protest the HQ request for continuation of MBRs. Please proceed with the RCR for Tabors and B&P to research this problem and begin work on a protest.
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