electric developments consulted kevin took oars trying answer question well questions raised drew e mail found steve question economics would determine developer could site power plant new mexico maybe 3 000 mw build line grid california versus us expanding deliver gas power plant california really asking comparative economics energy delivered wire versus energy delivered pipeline analysis considerations 1 original capital cost construct facilities 2 operating cost facilities including energy loss 3 environmental permitting considerations engineers tell us rule thumb high voltage transmission lines tower facilities cost approximately 800 000 1 mm mile construct turnkey figure comparable 1 mm mile rule thumb use turnkey construction mainline diameter 30 36 high pressure steel pipeline terms operating costs anything 100 miles length three 3 basic sources energy loss electric transmission 1 transformation loss 2 radiation loss efm 3 heat loss across conductors rule thumb electric transmission loss 3 number comparable actual fuel used compression transwestern pipeline critical issue impacting construction high voltage transmission lines area permitting many new transmission lines approved suggested one source electric transmission project order posited example could take anywhere 6 10 years secure authorization issues electromagnetic field emf radiation around high voltage power lines along wildlife endangerment concerns significant obstacles securing permits right way short answer economics face appear comparable construction operation natural gas pipelines electric transmission lines protracted permitting process electric transmission lines tips scale considerably towards immediate returns available investment natural gas pipeline infrastructure drew questions 1 key factors determine power plant developer puts plant purposes exercise assuming talking gas fired generation developers generally describe four considerations deciding site new electric power plant 1 market area demand distributive transmission access market 2 water rights turbine cooling 3 ease permitting environmental encroachment fed state local regulations affected agencies jurisdiction 4 proximity natural gas pipeline supply infrastructure 2 transmission access pricing rules various utilities power pools vary much order 888 tariffs pretty much ferc order 888 889 require public utilities commit standards conduct file open access tariffs affecting transmission among utilities power pools various operating regions ferc ordered public utility transmission owners provide transmission access comparable service competitors functionally separate transmission reliability functions wholesale merchant functions rulemaking analogous open access requirements ferc order 436 500 636 affecting interstate natural gas pipelines pretty obvious california example past summer respect overall operation deregulated power market individual states particularly concerns establishment regulation independent system operators iso substantial room improvement possible ferc involvement open access final rule order 888 commission issues single pro forma tariff describing minimum terms conditions service bring nondiscriminatory open access transmission service public utilities control operate interstate transmission facilities required offer service others pro forma tariff must also use pro forma tariffs wholesale energy sales purchases order 888 also provides full recovery stranded costs costs prudently incurred serve power customers could go unrecovered customers use open access move another supplier 3 ipp decide fuel supply strategy works best e buy bundled delivered fuel someone vs buy gas storage transport etc separately experience one size fits formula strategy example past seen calpine take hands approach supplying ipp projects mid late 80 build several qf cogens calpine bought natural gas reserves ground dedicated project today market calpine scavenged gas basis traders statoil set natural gas desk purchase transportation management gas supplies needed western u power projects projects developer owners lenders satisfied less active role securing gas supply transportation project short projects look liquidity gas supply transportation market deciding whether achieve project economics secure reliable supply taking bids rfp gas supply transportation whether take hands approach ala calpine 4 rto rule care last december ferc issued order 2000 final rule regional transmission organizations rto order 2000 builds foundation orders 888 889 issued 1996 according ferc chairman jim hoecker order 2000 makes persuasive case separating control grid operations influence electricity market participants therefore order 2000 seen natural outgrowth perceived limitations functional unbundling adopted orders 888 889 continuing balkanization electric transmission grid based corporate state regional boundaries well pressure provide guidance acceptable forms privately owned transmission companies ferc prescribes voluntary approach rto participation order initiates regional collaborative process foster rto formation order also imposes filing requirements privately owned public utilities subject ferc jurisdiction requires private utilities describe filings attempted accommodate needs transmission owning state municipal cooperative federally owned systems ferc believes regardless format rto offer following benefits 1 alleviate stress bulk power system caused structural changes industry 2 improve efficiencies transmission grid management better pricing congestion management 3 improve grid reliability 4 remove remaining opportunities discriminatory practices 5 improve market performance 6 increase coordination among state regulatory agencies 7 cut transaction costs 8 facilitate success state retail access programs 9 facilitate lighter handed regulation critics point emphasis flexibility voluntary rto formation transmission rate reforms e incentives order 2000 defers case specific disposition many tough issues must resolved order create operational rto moreover order 2000 compel transmission owner join rto provides regulatory guidance incentives willing participants well veiled threat consequences hold outs final part question care presumably development fully functioning rto network promote efficiency market transparency goals original ferc orders ferc reads future gas fired generation merchant utility systems depends efficiently operated open access transmission system therefore promise rto stimulate competition ongoing investment new generation infrastructure unfortunately sources tell voluntary nature rto program may ultimately cripple effectiveness meeting stated goals 5 5 mmbtu gas killed gas fired power market natural gas prices 5 mmbtu kill gas fired power plants instances 1 economical alternatives natural gas fuel 2 demand electric power offset demand side management 3 natural gas environment short supply expressly prohibited use power plant fuel western u marketplace particularly california see viable alternative natural gas fuel electric power generation renewable resources currently meet less 5 total electric resource requirements 32 barrel oil prices give fuel oil clear economic advantage natural gas even 5 mmbtu price moreover california environmental permitting regulations make installation new electric generation based anything natural gas fuel renewable resources virtually impossible demand side management programs politically correct approach meeting resource needs historically served minor role offsetting growth electric power final point unable comment risk future legal regulatory restrictions governing use natural gas boiler turbine fuel steven harris 10 26 2000 10 05 kevin hyatt et enron enron cc jeffery fawcett et enron enron subject electric developments since expert area need know economics would determine developer could site power plant new mexico maybe 3 000 mw build line grid california versus us expanding deliver gas power plant california could let know next friday would appreciate kevin hyatt 10 25 2000 04 32 pm sharrisl enron com cc subject electric developments steve see drew asked help meeting kh forwarded kevin hyatt et enron 10 25 2000 04 34 pm enron energy services drew fossum 10 25 2000 01 49 pm dari dornan et enron enron lee huber et enron enron tony pryor et enron enron maria pavlou et enron enron susan scott et enron enron jim talcott et enron enron kathy ringblom et enron enron cc michael moran et enron enron kim wilkie et enron enron kevin hyatt et enron enron john dushinske et enron enron shelley corman et enron enron subject electric developments originally decided use staff meetings graduate education one hot topics electric industry first lesson topic shelley electricity seminar last summer john kevin graciously agreed join us tuesday 1 30 discuss recent developments electric markets nn tw efforts attract power generation load system specific topics hope cover include following 1 key factors determine power plant developer puts plant 2 transmission access pricing rules various utilities power pools vary much order 888 tariffs pretty much 3 ipps decide fuel supply strategy works best e buy bundled delivered fuel someone vs buy gas storage transport etc separately 4 rto rule care 5 5 mmbtu gas killed gas fired power market depending deeply get topics may need schedule follow session later date look forward seeing tuesday df