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HEADLINES FROM THE 2009 STATE OF THE MARKET REPORT SOUTHWEST POWER POOL, INC. Presented To: SPP Board of Directors/Members Committee Presented By: Craig R. Roach, Ph.D. Boston Pacific Company, Inc. April 27, 2010. 2009 STATE OF THE MARKET: MAJOR HEADLINES.

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Headlines from the 2009 state of the market report southwest power pool inc l.jpg

HEADLINES FROM THE 2009 STATE OF THE MARKET REPORTSOUTHWEST POWER POOL, INC.

Presented To:

SPP Board of Directors/Members Committee

Presented By:

Craig R. Roach, Ph.D.

Boston Pacific Company, Inc.

April 27, 2010


2009 state of the market major headlines l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

  • EIS PRICES FALL DRAMATICALLY

  • NO EVIDENCE OF MARKET POWER

    V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

    VI. TRANSMISSION OUTAGES ARE UP AGAIN

  • BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

  • RECOMMENDATIONS



New entities expand and diversify the spp footprint l.jpg
NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

  • Adds Three New Entities

    • Nebraska Public Power District

    • Omaha Public Power District

    • Lincoln Electric System

  • Impact

    • Peak demand 14% higher

    • Consumption 11% higher

    • Miles of transmission 16% higher

    • Adds fuel diversity


2009 state of the market major headlines5 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Slide6 l.jpg

MONTHLY PEAK ELECTRIC ENERGY DEMAND (MW) FOR SPP

6


Total electric energy usage mwh within spp by month and year l.jpg
TOTAL ELECTRIC ENERGY USAGE (MWH) WITHIN SPP BY MONTH AND YEAR


2009 state of the market major headlines8 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Electricity prices compared with neighboring regions l.jpg
ELECTRICITY PRICES COMPARED WITH NEIGHBORING REGIONS

ELECTRICITY PRICES COMPARED WITH NEIGHBORING REGIONS FOR 2009


Comparison of average monthly on peak spp electricity prices and panhandle natural gas prices l.jpg
COMPARISON OF AVERAGE MONTHLY ON-PEAK SPPELECTRICITY PRICES AND PANHANDLE NATURAL GAS PRICES



2009 state of the market major headlines12 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS




2009 state of the market major headlines15 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES (ANONYMOUSLY RANKED) FOR 2009

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Percent of five minute intervals with at least one flowgate congested l.jpg
PERCENT OF FIVE-MINUTE INTERVALS (ANONYMOUSLY RANKED) FOR 2009WITH AT LEAST ONE FLOWGATE CONGESTED


Number of binding and breached flowgate intervals from 2007 to 2009 l.jpg
NUMBER OF BINDING AND BREACHED (ANONYMOUSLY RANKED) FOR 2009FLOWGATE INTERVALS FROM 2007 TO 2009


2009 top 10 congested flowgates by aggregate shadow price in spp l.jpg
2009 TOP 10 CONGESTED FLOWGATES (ANONYMOUSLY RANKED) FOR 2009BY AGGREGATE SHADOW PRICE IN SPP


Spp 2008 and 2009 eis price contour maps l.jpg
SPP 2008 AND 2009 EIS PRICE CONTOUR MAPS (ANONYMOUSLY RANKED) FOR 2009

2008 Map

2009 Map


2009 state of the market major headlines20 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES (ANONYMOUSLY RANKED) FOR 2009

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Days of transmission outages by month for 2006 to 2009 l.jpg
DAYS OF TRANSMISSION OUTAGES BY (ANONYMOUSLY RANKED) FOR 2009MONTH FOR 2006 TO 2009


2009 state of the market major headlines22 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES (ANONYMOUSLY RANKED) FOR 2009

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Climate change policy l.jpg
CLIMATE CHANGE POLICY (ANONYMOUSLY RANKED) FOR 2009

  • Set Backs, and Persistence

  • Copenhagen Negotiations

    • High expectations/disappointment

  • Federal Legislation or Regulation

    • Waxman-Markey

    • Kerry-Graham-Lieberman (sectoral)

    • Cantwell (Cap-and-Dividend)

    • EPA regulations (under Supreme Court Order)


Climate change policy continued l.jpg
CLIMATE CHANGE POLICY (Continued) (ANONYMOUSLY RANKED) FOR 2009

  • State and Regional Action

    • Regional Greenhouse Gas Initiative (RGGI)

    • Western Climate Initiative

    • Midwestern Greenhouse Gas Reduction Program

  • Impact of Recession

    • RGGI: Prices at minimum

    • Europe: Prices fall to €14 from €30


Clean air act regulations or legislation l.jpg
CLEAN AIR ACT REGULATIONS OR LEGISLATION (ANONYMOUSLY RANKED) FOR 2009

  • A Flood of Proposed Actions (and Acronyms)

    • NAAQS, MACT, CAIR, CAMR,…

    • For same pollutants (SO2, NOx, Mercury)

  • Courts Push Back; Issue is Command-and-Control vs. Cap-and-Trade

  • To Some, an All-out Assault on Coal-Fired Power

    • Retrofit or shut down

    • 64% of SPP generation from coal-fired units


Natural gas prices l.jpg
NATURAL GAS PRICES (ANONYMOUSLY RANKED) FOR 2009

  • Natural Gas Prices Drive EIS Market Prices

    • EIS prices down 48% (2009 vs. 2008)

    • Average natural gas prices down 54% ($3.32/MMBtu in 2009, $7.14/MMBtu in 2008)

    • Natural gas at margin in EIS market (61% in 2009, 70% in 2008)


Natural gas prices continued l.jpg
NATURAL GAS PRICES (Continued) (ANONYMOUSLY RANKED) FOR 2009

  • Causes of Natural Gas Price Decline

    • No precise explanation

    • Recession

    • Liquefied natural gas (LNG) surplus

    • “Revolution” in shale-gas technology


Natural gas prices continued28 l.jpg
NATURAL GAS PRICES (Continued) (ANONYMOUSLY RANKED) FOR 2009

C. Price Expectation


2009 state of the market major headlines29 l.jpg
2009 STATE OF THE MARKET: MAJOR HEADLINES (ANONYMOUSLY RANKED) FOR 2009

I. NEW ENTITIES EXPAND AND DIVERSIFY THE SPP FOOTPRINT

II. DEMAND DECREASES IN THE ORIGINAL FOOTPRINT

EIS PRICES FALL DRAMATICALLY

NO EVIDENCE OF MARKET POWER

V. TOTAL TRANSMISSION CONGESTION UP; MORE SERIOUS TYPES OF CONGESTION DOWN

VI. TRANSMISSION OUTAGES ARE UP AGAIN

BROADER POLICY ISSUES STILL CAN BE GAME CHANGERS

RECOMMENDATIONS


Recommendations l.jpg
RECOMMENDATIONS (ANONYMOUSLY RANKED) FOR 2009

  • Create Standardized Categories of Transmission Outages and Record Data by Year End

  • Monitor and Report Trends in Transmission Congestion and Use of Temporary Flowgates

  • Congestion on Temporary Flowgates Should be Included in the Calculation and Activation of Offer Caps

  • Continue expedient implementation of New Market Development to Achieve Consumer Benefits


Questions l.jpg
QUESTIONS (ANONYMOUSLY RANKED) FOR 2009


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