Disappearing

With disappearing heating load and the previous day’s screen plunge exacerbated by the extra reduction of industrial demand associated with a long holiday weekend, cash prices tanked by more than a dollar — more than $2 in quite a few cases — across the board Friday.

Calpine Corp., one of two West Coast merchant power plant developers to take it on the chin last Thursday, reported depressed second quarter financial results, mirroring unprecedented low wholesale electricity prices nationally in which the average spark spread between fuel prices and power prices are at historic lows below $5. Both PG&E Corp. (see separate story) and Calpine reported net income that was reduced for the quarter compared to the period a year earlier.

Even with much of its cold weather support disappearing, thecash market still found cause for moderate bullishness Wednesday.But that’s expected to pale in comparison to the fireworks thatsources were predicting for today after the screen exploded withgains of more than 35 cents in both the November and Decembercontracts following AGA’s below-expectations storage report.

The Federal Energy Regulatory Commission needs to “do a completeoverhaul of its cost of service ratemaking model,” according toproducer attorney Katherine Edwards, because the rates currently inplace on many pipelines no longer reflect the costs.