The power and gas markets look very different today from what we were anticipating three to four years ago. Gas has gone from seeming shortage to seeming abundance with recent spot prices falling...
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Utility turbines bridge the capacity gap.
Texas, New Mexico and Oklahoma, is adding more efficient natural gas fired combined-cycle units and pushing the older and less efficient units higher in the dispatch stack.
SPS also is looking to purchase power from independent power producers (IPPs). The utility currently operates the natural gas fired Cunningham Station near Hobbs New Mexico that produces up to 487 MW of electricity. It also operates the nearby Maddox Station, which consists of three gas-fired units that produce a combined 193 MW.
Though neither of those plants will be retired, the utility is buying the entire output of the 600-MW Hobbs Generating Station, a new gas-fired combined-cycle plant developed by, and owned by, Boston, Mass.-based Lea Power Partners, under a long-term agreement. That plant went into operation in September.
“In that case we are the off-takers,” Haeger says. “Our units at Cunningham and Maddox aren’t as efficient. Those units will still be available though we’ve just moved them higher up in the (electricity delivery) stack.”
Finally, Xcel’s Colorado subsidiary, Public Service of Colorado (PSCo), is in the process of bidding some 1,400 MW of capacity in Colorado, as well as investing in wind and solar power projects. Further, PSCo is building its first new coal-fired electric generating unit in nearly 30 years.
At its Comanche Station near Pueblo, Colorado, PSCo is adding a new $1.3 billion, 750-MW supercritical pulverized coal-generating unit that will be combined with two existing units that generate 660 MW. Xcel says that when Comanche 3 is completed in 2009, the site will provide enough electricity for about one third of Colorado’s communities.
“In our resource plan, we expect Colorado will require roughly 1,400-MW in new capacity by the 2014-2015 timeframe. Some 800 to 900 MW of that involves existing gas-fired power-purchase agreements that are due to expire and will be re-bid, starting this fall,” Haeger says. “So gas will compete there too, along with wind and solar.”
Then there’s California.
Strict environmental standards have long ensured that natural gas is the fossil fuel of choice in California, for both investor-owned utilities (IOUs) and independent-power producers. Now the environmental bar is being raised even higher, and demand for natural gas fired generation should increase.
The state prohibits the nuclear option until the federal government finalizes its development of a waste-storage facility. Further, the state wants at least 20 percent of an electricity provider’s portfolio to be comprised of renewable generation by 2017.
While coal is all but prohibited in-state, the legislature in 2007 instituted new laws that effectively prohibit IOUs and municipal utilities from contracting for electricity generated by coal-fired stations outside the state. Under the SB 1368 Emission Performance Standard, IOUs and municipal utilities cannot establish new contracts for power from any source that emits more carbon dioxide than a new combined-cycle natural gas facility.
Finally, following the energy crisis in 2000, the state decided to allow IOUs once again to develop and own power plants. All of which has IOUs looking to develop both gas-fired and renewable power projects.
“Everybody is excited about renewable energy. But it’s