RE: power trading and heat rates

sure,

e.g. Buy Jul-Aug Cin power at $50, sell Jul-Aug NatGas at $2.885
$50/$2.85 = 17.5 HeatRate

To hedge: sell 28 contracts/month gas
50 MW = 32,000 MWhours (50 MW x 16 peak hrs x 5 peak days/wk x 8 wks = 32,000 MWh)
32,000 MWh x 17.5 = 560,000 MMBtu = 56 contracts over Jul-Aug strip

Just do the reverse math at 18 heat rate to figure P/L...

Fletch

-----Original Message-----
From: Fraser, Jennifer
Sent: Thursday, September 27, 2001 5:51 AM
To: Sturm, Fletcher J.
Subject: power trading and heat rates

Hi
Im not sure I understand how you guys trade heat rates. Is there anything around I could read to give me a brief overview? Alternatively, could you email me an explanation?
Thanks
Jen