S&P tells of big price
jump for electricity

Wholesale power prices rose 50% or more last year, Standard & Poor's (S&P) reported, but merchant generators with gas or oil-fired plants saw little gain from the rise.
     On-peak prices rose to record or near-record highs in the East while Midwest prices jumped in some cases by 82%.  Westerners saw the highest prices since the California power crisis in 2000-2001 yet Florida prices rose only 17%.
     Off-peak prices rose too in most places, jumping 113% in the Midwest and 86% in Texas.      Western off-peak prices were 60-70% higher than in 2002 while Florida offpeak dropped 2%.
High natural gas prices drove down heat rates -- the cost in fuel of generating power (mmbtu per mwh) and offset still high gluts in generation capacity, S&P noted, and that's not likely to improve this year.
     S&P thinks wholesale gas prices will stay high averaging $4/mmbtu or higher in New England and New York with New York City averaging $4.53/mmbtu.
     Power prices are likely to average $57.10/mwh on-peak in New York City and off-peak at $35.30/mwh.
     Gas prices in Florida will average $3.07/mmbtu this year, S&P assumes but power will average $29.20/mwh on-peak and $22/mwh off-peak.
     Midwest prices for power will average $27.50-$27.70/mwh on-peak and $17-17.80/mwh off-peak.
     Gas plants in New York City and California will see the highest heat rates, S&P expects, averaging $10.50-$12.76.

 (Story originally published in Restructuring Today 1/21/04)