Course

Dominion is on course to add 1,100 MW of natural gas-firedgeneration to its electric portfolio in Pennsylvania by the secondquarter of 2004 to help meet growing energy demand in the region.The merchant power facility will sell competitive energy to buyersin newly opened wholesale markets.

Energy and Environmental Analysis, Inc. (EEA) released a reportyesterday warning that the North American gas market is on coursefor entering the winter heating season with dangerously low storagelevels.

An attempt to slow development of merchant power plants inFlorida has been derailed, at least temporarily, but independentpower in the sunshine state still faces some governmental hurdles.

For those who would generate and sell electricity in thecompetitive marketplace, the future is one of many opportunitiesand at least as many challenges. “There’s no guaranteed costrecovery. You’re going to have to manage your fuel cost and youroperational excellence outside of the rate base mentality,” saidWilliam J. Grealis, chief strategic officer and vice president forcorporate services for Cinergy Corp. “You’re going to have tounderstand with your generation portfolio how many additionalmillion megawatt hours can you generate at what price to dispatchinto the market to make money.

For those who would generate and sell electricity in thecompetitive marketplace, the future is one of many opportunitiesand at least as many challenges. “There’s no guaranteed costrecovery. You’re going to have to manage your fuel cost and youroperational excellence outside of the rate base mentality,” saidWilliam J. Grealis, chief strategic officer and vice president forcorporate services for Cinergy Corp. “You’re going to have tounderstand with your generation portfolio how many additionalmillion megawatt hours can you generate at what price to dispatchinto the market to make money.

Although many signs have been pointing to a major rally infutures prices lately, Wednesday’s trading at the New YorkMercantile Exchange just may put an end to that talk. Aftermanaging to rise above key resistance at $2.50, the spot Augustcontract saw major selling by funds and locals, so much so thatAugust fell to a low of $2.41 before settling the day down 1.9cents at $2.450.

The futures screen “fell like a rock” Monday and, of course,cash prices then had to do likewise, said a Gulf Coast producer.Some points were essentially flat, such as Northwest (both domesticand Sumas) and NorAm-east. Others dropped 2-9 cents, with declinesof a nickel most common. Activity was fairly light, especiallysince some traders hadn’t returned yet from the holiday weekend, amarketer noted. But what prices lacked in volume they made up involatility as a number of points saw double-digit ranges. Onesource said his Chicago deals went from $2.64 early on to $2.49 atthe end.