Markets

FERC’s proposed standard market design (SMD) for U.S. wholesale power markets is likely to benefit power marketers, wholesale generators and independent transmission companies, while potentially placing integrated utilities at risk, Fitch Ratings said in a special research report released on Monday.

Monday’s huge surge of cash bullishness came to a near-standstill Tuesday, and several NGI sources indicated they expect a gradual price slide to begin Wednesday. Other than moderate increases in the Northeast, Rockies/Pacific Northwest and California and stronger gains in Western Canada, most points were flat to less than a nickel higher Tuesday (a few scattered small declines also were part of the mix).

Ready once again to jump into the U.S. power markets after a less than triumphant start, Nymex Chairman Vincent Viola said Friday that the exchange plans to launch a revamped electricity futures contract for the PJM interconnection as soon as January. Viola, in Houston for a press briefing on the plan, told participants that once the PJM contracts are up and running, the long-range plan is to revive electricity contracts nationwide.

The power industry is returning to more than just a “commodity business,” and long-term contracts, low-cost supplies and strategic plant locations are going to increasingly determine winners and losers in the industry, according to a Calpine Corp. senior executive who spoke last Wednesday at the three-day Lehman Brothers “CEO Energy/Power Conference” in New York City.

Prices ranged from flat to mostly moderately higher Friday in all regions except the Rockies. They got some follow-through momentum from Thursday’s screen run-up following a below-expectations storage report, and traders also were looking ahead to the return of Northeast temperatures in the 90s as this week begins.

The cash market threw some traders a curve Tuesday. Instead of following the example of Monday’s screen plunge as had been expected, flat to barely lower numbers dominated at most points. Most declines were 3 cents or less, and only a few points fell by more than a nickel. The only significant upticks of more than a dime came in the Rockies with Kern River-Opal, Northwest Domestic, Cheyenne Hub and CIG all showing gains of 10 to 20 cents.

Except for only slightly lower numbers on most Rockies pipes and gains at related Sumas and Westcoast Station 2, all points recorded double-digit (triple-digit in the case of Transco Zone 6-NYC) losses Friday. There was still plenty of hot weather to go around, especially in the South, Mid-Atlantic and desert Southwest, but enough moderation had occurred from the severe levels earlier in the week that prices succumbed to the drag of a bearish storage report/screen the day before and the usual demand slump over a weekend.

Continuing turmoil within the wholesale markets and an awful month of June for gas versus power prices have forced American Electric Power (AEP) to re-think its 2002 earnings forecast. On Thursday, the company predicted its earnings would be 10% lower than expected this year.

Continuing turmoil within the wholesale markets and an awful month of June for gas versus power prices have forced American Electric Power (AEP) to re-think its 2002 earnings forecast. On Thursday, the company predicted its earnings would be 10% lower than expected this year.