Monday, August 15, 2011

For Coal Plants, A Game Of Chicken

For Coal Plants, a Game of Chicken - NYTimes.com

"In a research note released late Friday, Bloomberg New Energy Finance said that capacity payments in 2014 and 2015 would reach a level equal to $7 per megawatt-hour of electricity sold — in other words, about $7 on the monthly bill of that suburban house, or seven-tenths of a cent per kilowatt-hour. The national average retail price of a kilowatt-hour is about 10 cents, although in some parts of the Northeast it can be triple that amount.

Higher capacity payments are one of the mechanisms through which surviving electric plants will get the revenue needed for add-on antipollution devices.

Charles Blanchard, an analyst at Bloomberg New Energy Finance and author of the research note, said in an e-mail that capacity payments may reach 25 percent of total revenues as supply is reduced."

This article, from the New York Times, is very important to electricity markets, but my myopic Ontario outlook demands I note the 'capacity' market stateside is equivalent to the debt retirement charge we have in Ontario.

Interesting - and likely not a coincidence at all.