FYI

Randy

-----Original Message-----
From: jdietert@simmonsco-intl.com [mailto:jdietert@simmonsco-intl.com]
Sent: Wednesday, April 17, 2002 2:17 PM
To: jdietert@simmonsco-intl.com
Subject: Recent Power Price Spike


An early heat wave in the Midwest, Mid Atlantic  and the Northeast has
caused electricity demand, power prices, spark spreads, and implied heat
rates to spike over the last few days in those regions as follows:

(Embedded image moved to file: pic31185.pcx)

Based on these spark spreads and implied heat rates, we suspect that the
increased electricity demand has likely caused a temporary increase in
electricity-driven gas demand (difficult to quantify, but likely to show up
in next week's gas storage numbers).  Implied heat rates and spark spreads
have been high enough to bring simple cycle peaking units as well as
combined cycle units into the market.  Furthermore, many lower marginal
cost coal and nuclear units are currently offline for traditional
maintenance, and the biggest beneficiary from a generation standpoint are
gas-fired units.
Temperatures in the Midwest are expected to drop today and Thursday along
the East Coast, so the spike should be short-lived and gas-fired
electricity production should come back down somewhat as a result (based on
power prices so far today, it already appears that prices are beginning to
come down).


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