For those people that need Strategically Sourcing Electricity in Deregulated Markets in formats other than the Kindle the ebook is now available at Smashwords.com. Smashwords has the eBook in formats that are compatible with almost every reader on the market.
Over the weekend Kinder Morgan announced that it would acquire El Paso Corp. This would combine two of the largest pipeline operators in the country. I have read many commentaries about what this would mean to the natural gas industry but nothing has been mentioned about the impact on electricity.
Some points I have learned:
- their pipeline systems do not overlap very much
- their networks are big at 37,000 and 43,000 miles
- they operate terminals and storage facilities
- El Paso is getting out of the exploration and production business
With natural gas being used for electricity generation at many plants around the country the generators would see a consolidation in the common carrier pipeline arena. This could be like the railroad industry where most shippers only have one choice. The gas producers will have fewer choices to collect their gas and then transport it to their contracted buyers.
The last time I checked when a company buys another company the plan is to lower costs and increase profits. How will this happen? Sometimes the acquiring company is able to capitalize on the synergies of the combination by eliminating duplicate activities. Generally though the reduction in competition or alternative suppliers results in a price movement upward. Time will tell if this happens as a result of this acquisition but do not be surprised if it does. This will be buried down the supply chain of the generators.
Testimony of Chairman Jon Wellinghoff, Federal Energy Regulatory Commission
Before the House Energy and Commerce Committee, Subcommittee on Energy and Power, United States House of Representatives
Hearing on The American Energy Initiative, October 13, 2011
Full testimony document
Highlights of this testimony:
The development of an efficient transmission system benefits consumers by reducing barriers to trade within and among regions and thereby enhancing competition in wholesale electric markets. With this goal in mind, and recognizing that significant transmission investment is likely to be made in the foreseeable future, the Commission recently issued Order No. 1000.
–First, Order No. 1000 emphasizes regional flexibility and regional action. Order No. 1000 aligns transmission planning and cost allocation to ensure that, when a region identifies transmission projects as needed and desired by that region, the region will have
a method in place for allocating the costs of those projects.
–Second, Order No. 1000 states that those who do not benefit from new transmission facilities should not pay.
–Third, Order No. 1000 is about establishing effective processes for transmission planning and cost allocation, not about requiring specific outcomes from those processes.
–More generally, it is important to note that Order No. 1000 does not establish pre-set regional boundaries, nor does it prescribe how regions plan their systems. Under the rule, each region defines itself.
–The reforms of Order No. 1000 will: (1) ensure that all regions in the Nation produce a regional transmission plan; (2) encourage broad and open consideration by public utilities and their stakeholders of numerous potential solutions to identified needs so that transmission facilities selected in the regional transmission plan for purposes of cost allocation are appropriate solutions for that region; and (3) increase the number of transmission facilities that move from the proposal stage to operation by specifying in advance who would pay for such regionally selected facilities.
Yesterday’s report showed a 112 Bcf build in storage. This is towards the upward range of the rolling 5 year average. Going into the winter heating season this points to adequate supplies. The shale gas production does not seem to cause the storage to grow beyond the average. I wonder why this could happen? Will the storage capacity increase to accommodate the shale gas production? A few years ago the gas storage was greater than the stated storage capacity.
Along this line there was a news article reporting that Conoco had bought Marathon’s portion of an Alaskan LNG export project. This is the only facility with an export license at this time. This could make the US an energy exporter for the first time in many years. The LNG would presumably come from Alaskan fields and not directly affect the lower US.
Not sourcing electricity strategically may be costing your organization serious money. Spend analysis can point out those categories that warrant attention. If your company uses electricity in quantities significant enough to impact your profit and loss statement then you at least should review the opportunities to manage the spend. Indirect expenses can get out of control quickly and are not managed to the extent direct costs are in many companies.
the eBook Strategically Sourcing Electricity in Deregulated Markets can help your company review the choices.
My writing efforts have made it through the big Amazon.com computer approval process and is now on sale. You can see the information at this link. https://www.amazon.com/dp/B005UDQ2A4
In a day or so it should be available at Barnes & Noble online.