You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
Many regulators say that new technology makes it cheaper and easier to build and operate electric generating plants. Fired by cheap natural gas, these new plants (simple- and combined-cycle combustion turbines) open the business to new players, giving a reason to deregulate electric generation ...
Inexpensive to run:
"[S]maller and more efficient gas-fired combined-cycle generation facilities can produce power on the grid at a cost ranging from 5 cents per kWh to less than 3 cents per kWh."
(em FERC, Dkt.RM95-8-000, RM94-7-001, March 29, 1995
Easy to build:
"Simple-cycle combustion turbines can be put into operation in about two years ... the cost is one-third to one-fourth less than the cost per MW of a conventional coal-fired plant."
(em Texas PUC, Dkt. 13444, April 17, 1995.
A boon to competition:
"[A]dvances in combined-cycle gas-turbine technology have exposed a gap ... Greater competition and increased customer choice ... now seem possible."
(em Mass. DPU, DPU 95-30, Aug. 16, 1995
Nevertheless, last year saw an apparent rise in natural gas prices, plus a drop in volume of natural gas sold to electric utilities for electric generation. Will regulators change their tune?
If prices rise:
"If natural gas prices were to suddenly rise ... a region or a state which has a large number of natural gas fired plants would be affected."
(em Nev. PSC, Dkt. No. 95-9022, June 28, 1996
A recognition of risk:
"[F]uel price risk remains an issue ... there must be a recognition of the risks. ... Although a low-capital-cost, high-efficiency generating unit that relies on natural gas appears economical, based on ... gas-price projections, such a generating unit may not be economical if the natural gas cost exceeds these projections in the future."
(em Tex. PUC, Dkt. No. 15100, Feb. 11, 1997
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