The PJM Interconnect’s Reliability Pricing Model generally has succeeded in attracting and retaining low-cost generation and demand resources to maintain resource adequacy. But sluggish demand and low prices have weakened the market for long-term capacity contracts. Suppliers aren’t willing to lock in current low prices, and buyers don’t want to pay more for future certainty. Is the market dysfunctional, as some state lawmakers suggest, or does the lack of long-term contracts indicate a rational balance of supply and demand?

Financial players and load-serving utilities are looking for power asset deals.

Despite talk of wide bid-ask spreads in the past two tumultuous years, some 60 sales of generation assets have been announced. These sales cover more than 22 GW of capacity, valued on a cash-and-debt basis at approximately $11 billion. A wide variety of buyers and sellers have participated in the sales activity, with a pronounced entry by financial players (investment banks and private equity firms) and load-serving entities (LSEs) looking for capacity to serve their load.

John J. Carney has joined Solomon Associates as a power generation consultant. During Carney's 25 years of management experience, he has worked for Florida PowerCorp., Carolina Power and Light Co., and Florida Power and Light.

News Digest

 

EEI's contract is ready to go for physical trades of electricity, but the architects say it's likely too late to make a difference this summer.

Five commission chairs from states in all phases of deregulation ponder their changing roles. Will market success make them obsolete?

As most state electric competition plans are implemented within the next few years, regulators face an uncertain future. And they're already reflecting on their role in a changing industry.

Regulatory commissions in both Illinois and California have created panels to discuss the issue and the National Association of Regulatory Utility Commissioners (NARUC) has held closed-door sessions on the subject.

THE PRICING TURMOIL THAT STRUCK MIDWEST POWER markets during the week of June 22, with allegations of price gouging and calls for a wholesale price cap imposed by the Federal Energy Regulatory Commission (see Docket EL98-53), made for good copy but has obscured what's really going on.

"In the pleadings to FERC, I saw no evidence of price gouging," says attorney Jeffrey Watkiss, who represents power marketers who have asked the Commission for wholesale market reform.

A MASSIVE, WORLD WAR I-era building in downtown Baltimore houses Constellation Power Source, an unregulated, wholly owned power-marketing subsidiary of Baltimore Gas and Electric Co. Upon introducing the new company in February, BG&E announced that Goldman Sachs would serve as "exclusive advisor" for the start-up.

Later, when asked to clarify the relationship between the two companies, Charles W.