Peaking

The cash market pushed on to new heights in most cases Tuesday, spurred by Nymex matching its all-time open outcry record high of $10.10 — if only fleetingly — and continuing winter weather across most of the U.S. and Canada that was penetrating even farther south to Houston and South Texas. It appeared that a growing near-panic over the adequacy of storage inventories was the primary driving force behind the move higher that brought some new point-specific price records.

In contrast to energy deregulation skepticism that has become prevalent in various states following the California debacle, more than three out of four Virginians say they are interested in the Commonwealth’s move to a competitive energy supply market, according to the latest Virginia Energy Choice (VEC) survey. The results show an increase from another survey taken earlier this year.

U.S. electricity generating capacity margins are likely to peak in 2003, but fall in subsequent years with the possibility of power shortages appearing as early as 2006, according to an analysis of electricity and natural gas supply and demand unveiled last Monday by an energy analyst with New York-based investment bank Williams Capital Group.

Minneapolis-based NRG Energy Inc. is buying a 2,255 MW project portfolio from Indeck Energy Services Inc., which includes combined-cycle and peaking power plants serving the Chicago and upstate New York marketplace. The assets include the Rockford I and II Energy Centers, located 75 miles west of Chicago in Rockford, IL; Bourbonnais I and II Energy Centers, 50 miles south of Chicago; and the Ilion Energy Center in central upstate New York. No financial details were disclosed.

Minneapolis-based NRG Energy Inc. is buying a 2,255 MW project portfolio from Indeck Energy Services Inc., which includes combined-cycle and peaking power plants serving the Chicago and upstate New York marketplace. The assets include the Rockford I and II Energy Centers, located 75 miles west of Chicago in Rockford, IL; Bourbonnais I and II Energy Centers, 50 miles south of Chicago; and the Ilion Energy Center in central upstate New York. No financial details were disclosed.

Even with stepped up state efforts for developing peakingplants, conservation and new power contracts, the key wild card forwhether California survives this summer’s expected supplyshortfalls is fickle hydroelectric power that is tied to anunpredictable, complex set of weather and environmental factors.With the end nearing for the West’s typical rainy season, stateofficials are newly optimistic about California’s hydro resourcesbeing at normal levels this summer, but in the Pacific Northwestthe prospects continued to be dour Monday as Seattle basked insunny, 60-degree weather.

Kinder Morgan Inc. (KMI) and Williams signed one of the largesttolling agreements to date, a deal covering 3,300 MW of combinedcycle peaking capacity Kinder Morgan is building in theMidcontinent and the Southeast regions of the U.S. Williams willprovide the fuel to the six gas-fired plants and market the entirecapacity under a 16-year agreement. Financial terms of the tollingagreement were not disclosed.

Weather that either was already bringing snow or was expected todo so soon in several regions, accompanied by some initial screensupport, pushed the cash market sharply higher Thursday at nearlyall points. Only the PG&E citygate and Southern Californiaborder registered drops amid overall gains of about 50 cents ormore. Many of the larger increases were clustered in the snowyRockies/Pacific Northwest.

By 2005, Calpine Corp. expects to have an operating goal of70,000 MW of electric generating capacity in place, including60,000 MW of baseload capacity and 10,000 MW of peaking generation,which would position the San Jose, CA-based company as one of thelargest power providers in the United States.