More on the electricity market in New England - a short situational analysis for EWC

Last year was a tough year for the Entergy Wholesale Commodities (EWC), which consists of the Entergy’s northern plants. 

http://www.kjonline.com/news/Wholesale-electricity-prices-lowest-in-decade.html

Simple regression of the recent trend could lead to panic and, in fact, may already have, after listening to our new CEO’s video message outlining our new vision, mission, business purpose, values, and strategic imperatives.  Our vision is “We Power Life” and mission statement is “We exist to operate a world-class energy business that creates sustainable value for our four stakeholders: Owners, Customers, Employees and Communities.”  I think Drucker would roll over in his grave to see Owners listed before Customers and Dr. Levitt would correctly guess that our new CEO is our former CFO. My other criticism of our company’s direction is that we appear to be limiting ourselves to producing nuclear electrical power; at least in the EWC.  EWC did purchase a natural gas plant in Rhode Island either last or the year before.     

The previous article was written in January.  This past winter exposed what may be a weakness in natural gas’ dominance in providing electrical power in New England.  The attached is a short article which explains the limitations.  This was good news for Vermont Yankee, but could have been better.  Equipment problems kept us from operating at 100% of rated power.

http://www.hartfordbusiness.com/article/20130327/NEWS01/130329866/new-england-electricity-prices-near-10-year-high

In addition, historic trends have shown that natural gas prices can be cyclical.  Factors which can affect natural gas prices are shown in the U.S. Energy Information Administration’s website.  They also recognize that winter weather influences residential and commercial demand.   

http://www.eia.gov/energyexplained/index.cfm?page=natural_gas_factors_affecting_prices

However, I’m not sure anyone recognized how significant that demand affects the New England market (Mass Hub) compared to other regional ISO markets.  The chart in the link below shows this phenomenon for the past year. 

http://www.ferc.gov/market-oversight/mkt-electric/new-england/elec-ne-east-pr.pdf

If we are truly a world-class “energy” business (not just a nuclear energy business), with this knowledge we should be looking at (and taking advantage of) this more closely, and not just talking about the difficult decisions that were continuously reiterated in the CEO’s message.

And now for a short plug for nuclear power.

http://www.youtube.com/watch?feature=player_embedded&v=rW2uXnoBYhE#!