![\"\"](\"https:\/\/allenergyconsulting.com\/blog\/wp-content\/uploads\/2014\/10\/procure1.jpg\" "\\"procure1\\"")
<\/a><\/p>\nWe like to look at it as it relates to the Base run.\u00a0\u00a0 This view enables you to quickly assess the changes as function of a reference point.\u00a0 This also allows one to recalibrate to your actuals as the model is only a proxy and does not contain your exact cost structure and operational details.\u00a0 A custom PMA can be created to emulate your units cost and operational details.\u00a0 The percentage view gives a good assessment and allows easy comparison to other variables without worrying about the exact numbers.\u00a0 Based on the below graph,\u00a0 we can conclude the risk of gas prices moving up $1\/mmbtu could lead to a 20% increase in WS Lee fuel consumption.<\/p>\n
Another gas price impact view was to change the basis price.\u00a0 \u00a0In this example, we took basis around the country and multiplied it by a percentage.\u00a0\u00a0 So in the case labled 50 \u2013 we multiplied the basis spread by 50% making it half as small as the reference point.\u00a0\u00a0 Inversely the 150 case makes it 50% higher.\u00a0 The absolute and percentage cases are shown below.<\/p>\n Given the facility is located in S. Carolina, it is reasonable to expect this unit to be less sensitive to basis versus Henry Hub changes.\u00a0 WS Lee, from this analysis, does not have to worry about basis causing significant variance in fuel consumption.\u00a0 However it is prudent and reasonable to be prepared to procure ~20% from base expectations given the real possibility of $5\/mmbtu Henry.<\/p>\n For load we looked at the last 12 years of actual weather and simulated each year into the model.\u00a0 The following graph shows the changes in WS Lee coal consumption and the percentage from base.<\/p>\n Once again, because we chose WS Lee a coal plant in S. Carolina \u2013 weather variance in the winter time is less important relative to a gas unit in the Northeast.\u00a0 However weather would support procuring almost 10% above base expectations given a recent actual weather event (2010) did necessitate 7% more burn from the 10 year average.<\/p>\n Several more custom runs could be generated from nuclear to coal outages to coal pricing (transportation & mine price) that would aid in the justification of the level of coal procurement of WS Lee.\u00a0\u00a0 Using this example, a clear and precise justification can be made to procure somewhere between 10-20% more than the base expectations given the weather and natural gas market variance.<\/p>\n This demonstration used the analysis for this winter season, but this could easily be done for many months to years out.\u00a0 PMA can easily be used as a third-party validation to your procurement process.\u00a0\u00a0\u00a0 Avoid any accusations of being a fool or a gambler \u2013 sign up to PMA and start creating your custom run.\u00a0\u00a0 PMA is more than just output \u2013 it is a proven process and platform designed just for you.\u00a0 We give enough customization, but allow you to still refer to it as a third-party source due to our involvement in the process.<\/p>\n Your Looking Out for You Energy Analyst,<\/p>\n David<\/p>\n David K. Bellman<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n
\nAll Energy Consulting LLC- “Independent analysis and opinions without a bias.”
\n614-356-0484
\ndkb@allenergyconsulting.com
\n<\/a>@AECDKB
\nblog:\u00a0\u00a0https:\/\/allenergyconsulting.com\/blog\/category\/market-insights\/<\/a><\/p>\n