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HEADLINES FROM THE 2009 STATE OF THE MARKET REPORT SOUTHWEST POWER POOL, INC. PowerPoint PPT Presentation


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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.

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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


Map of spp balancing authorities l.jpg

MAP OF SPP BALANCING AUTHORITIES


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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


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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


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MONTHLY PEAK ELECTRIC ENERGY DEMAND (MW) FOR SPP

6


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TOTAL ELECTRIC ENERGY USAGE (MWH) WITHIN SPP BY MONTH AND YEAR


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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


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COMPARISON OF AVERAGE MONTHLY ON-PEAK SPPELECTRICITY PRICES AND PANHANDLE NATURAL GAS PRICES


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ELECTRICITY SALES IN THE EIS MARKET BY MONTH


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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


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EFFECT OF THE FERC AND SPP OFFER CAPS IN 2009

13


Shares of eis market sales for all market participants anonymously ranked for 2009 l.jpg

SHARES OF EIS MARKET SALES FOR ALL MARKET PARTICIPANTS (ANONYMOUSLY RANKED) FOR 2009

14


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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


Percent of five minute intervals with at least one flowgate congested l.jpg

PERCENT OF FIVE-MINUTE INTERVALSWITH AT LEAST ONE FLOWGATE CONGESTED


Number of binding and breached flowgate intervals from 2007 to 2009 l.jpg

NUMBER OF BINDING AND BREACHEDFLOWGATE INTERVALS FROM 2007 TO 2009


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2009 TOP 10 CONGESTED FLOWGATESBY AGGREGATE SHADOW PRICE IN SPP


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SPP 2008 AND 2009 EIS PRICE CONTOUR MAPS

2008 Map

2009 Map


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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


Days of transmission outages by month for 2006 to 2009 l.jpg

DAYS OF TRANSMISSION OUTAGES BY MONTH FOR 2006 TO 2009


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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


Climate change policy l.jpg

CLIMATE CHANGE POLICY

  • 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)


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CLIMATE CHANGE POLICY (Continued)

  • 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


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CLEAN AIR ACT REGULATIONS OR LEGISLATION

  • 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


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NATURAL GAS PRICES

  • 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)

  • 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)

C. Price Expectation


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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


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RECOMMENDATIONS

  • 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


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QUESTIONS


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