Case Study on Using Analytics to Save Money for Ratepayers
The origin of Power Market Analysis (PMA) was for power trading. However given my experience in all facets at one of the largest utility in N. America – American Electric Power – I knew the use of the knowledge of the power markets extended beyond enriching power traders. With the growth of deregulation and development of regional transmission organization (RTO), the power market has evolved as a legitimate option for power generation versus self-generation for utilities, municipals, Co-op, energy providers, and large consumers.
The power market is fascinating to me as compared to the stock market or other commodity markets as it offers a market that is pure. The power market has limited storage opportunities producing a fundamental convergence immediately not many months from now. The ability to manipulate the markets has situated from the rules of the market not the market itself.
Many utilities have only touch the surface of the power markets as they still largely depend on their own generation. This is changing as many baseload plants will be retiring over the next several years. In addition, dependence on renewable generation will lead to greater market reliance as intermittent issues are real. I have put together this case study to demonstrate and calculate a real dollar impact to the ratepayer if one can better account for the risk in the future market power prices. PMA cannot forecast the future in terms of weather, commodity prices, outages, etc… but it can let you know how much each of those variables can impact the market. This knowledge allows an informed decision on evaluating the option of using the future power market as part of your generation mix. In addition, this analysis gives you a firm and reasonable support for your decision making removing the stress from Monday morning quarterbacks. Many people understand there is much uncertainty in future events; however one should not leave decisions to chance or just assume futures markets represent reality – we can do better than a flip of a coin.
Please enjoy the case study and I look forward to your comments. CLICK HERE TO DOWNLOAD CASE STUDY – Case Study on Using Analytics to Save Money for Ratepayers – Beyond a Flip of a Coin
Your Energy Analyst Looking to Help You Succeed,
David K. Bellman
All Energy Consulting LLC- “Adding insights to the energy markets for your success.”