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Frontlines

Fortnightly Magazine - November 15 1999

of 2003. That implies no mathematical relationship between generation costs and the shopping credit set by the PUC.

WHAT WOULD A SELF-GENERATOR CHARGE TO SELL BACK TO THE GRID? Would that rate offer a clue on how to price competitive energy? I posed that question to Bill Shanner, at Celerity Energy in Fort Collins, Colo., an engineer who develops and installs distributed generation resources for power customers.

"Try to go to the Chicago Board of Trade and sell a bushel of corn. You can't do it. It ignores the transactional cost. By analogy, you can't expect to get a market price for a block of power smaller than what they are trading on the power exchange."

Shanner believes the economics are "all fouled up," and says that tariffs don't begin to reveal all the factors that affect electricity prices. He continues, "The people who need the energy the most - who will use it to make money - actually pay the least. You've got to factor in the effect of outages on productivity and yield. Capacity is worth a lot more than energy."

Shanner sees little hope for competition to be achieved through regulatory policymaking. "You don't want to be the guy who stands up in the utility church and says there is no god."

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