Posted on 04/15/2005 8:53:50 AM PDT by Robert357
First paragraph at end..... While the market hub known as Mid-C or Mid-Columbia is only seconds away from Southern California on the DC Intertie, Platt's reports that traders require a 31% risk margin for transactions in California's administered markets versus transactions in the Pacific Northwest's open markets.
The language in the Office of Management and Budget proposal is not clear whether the intention is to raise BPA's wholesale rates to market rates on the West Coast or to bring rates to national levels. The proposal to bring rates to national levels would make little sense as a market solution, because the Western Interconnection, the states and provinces ranging from Alberta to California, are not part of eastern markets. The problem is more significant than ideology; the eastern and western systems are not synchronized. McCullough says that “this would be the moral equivalent of a federal intervention to make sure thatsoybean prices are the same in Illinois as Nevada-overlooking the difficulty of growing soybeans in Nevada. Raising BPA's prices above prices in surrounding relevant markets would only eliminate BPA's revenues, as customers would flee the overpriced federal agency in pursuit of market alternatives.
If the Administration's proposal were implemented on October 1, 2005, the gap between BPA's rate and the Mid-C forward price would be $23.66/MWh-a potential increase of 77%. If the plan was to bring BPA to California prices, the potential increase would be 118%. To avoid price shock, the Administration has proposed staging the increase in 20% increments. This would mean four increments to equalize BPA and Mid-C prices and six yearly increments to bring BPA wholesale rates to California levels.
Start of article.....In a report to its clients, McCullough Research has reported that a provision in the proposed Federal Budget has could raise Bonneville Power Administration (BPA) rates 20% per year to match market rates. While the concept of market rates is attractive to McCullough, the firm suggests that the proposal is not without its risks to the regional economy and the west.
Gray Davis has left quite a legacy! I wonder if the businesses and the voters understand his legacy?
I read that sentence and nearly fell out of my chair. Wow!
Thought you might be interested in the following article. While it is much more about the PNW and rates, there was a sentence in the article that let slip a dirty little secret about the California Energy Market that I thought you would find very interesting.
As I said elsewhere, it's a tax on people that are too stupid to permit new power plant construction, who then try to export their values elsewhere to try to stop all national powerplant construction, and then wonder why their electricity bills are so high and why they're having blackouts.
BTTT
It's worse than that. Where I live, we have people who want to shut down an operating nuclear plant, as well as a conventional power plant, because the sea water it uses for cooling slightly warms the bay where it's discharged. Although it's been doing this for 50 years, now it's considered a major problem.
Doesn't surprise me a bit. It fits the model perfectly.
Actually, Fiat's don't meet California Automotive standards so its a no go (sorry I couldn't resist the urge to do that.)
I don't think that Arnold is the problem in California. The Legislature, the State Courts, the local governments, the various state commissions, the regulations installed under earlier administrations, and finally the NIMBY mentality are the real problem.
Well, maybe the problem is that the majority of the voters are clear thinkers.
HA! They can't even blame Enron now!! HA HA HA!! Fools.
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