Thanks for sending this article. It is short, to the point, well written, well illustrated, and absolutely correct in its prediction that gas prices have a lot lower to go. The storage overhang, coupled with the elimination of winter-summer spreads and gas price volatility, have essentially killed greenfield gas storage development.

Mark Lively of the NCAC-USAEE recommended this posting. You might find my recent posting about offshore Maryland wind, on “International Energy”, the weblog of the IAEE, of some amusement, although you will not agree with it.

There doesn’t seem to be much of a disagreement that the standard operations and maintenance costs of wind, and the apparent construction costs, do not justify these sorts of escalating payment schemes. Might it be the case that the offshore wind suppliers are facing some sort of financing constraint from banks, conceivably worried about reversals of government support, and are thus trying to get these schemes put into the legislation to address them? For Cape Wind, you have this escalation for a long period of time. But if a Republican administration moves into the State House in Boston in a few years, and cancels all Massachusetts involvement, the accrued escalation would be sufficient to pay the banks. It would be better to have this addressed directly, through some sort of insurance scheme, but apparently that is politically impossible. So might it be understood that these schemes are a second-best that is feasible given the risks?

Sincerely yours,

Mr. Julian Silk

As Jim points out, the nice weather being experienced in the area meant that the system had operating margins sufficient to allow the dispatch prices to return to $40/MWH within 20 minutes.

Nice job, electric system.