New gas-fired plants may force older units to sidelines in South

Houston (Platts)--15Apr2004

Recent additions of highly efficient gas-fired generation in the
central-southern US briefly forced heat rates for power scheduled for delivery
Into Entergy for July and August to dip below the 9,000/MWh/MMBtu for the
first time ever earlier this week. The low heat rates, which are broad a
measure of generating efficiency, may keep wholesale power prices in the
region low enough to force a number of less efficient gas generators to the
sidelines this summer. "I don't know how anybody is going to make any money"
this summer, one Entergy trader said. Into Entergy heat rates were above
15,000/MWh/MMBtu in early 2002 as a generation-building boom was in full
swing. By April 2002, they had fallen to about 13,700. That summer, heat rates
in the day-ahead market came in well below prescheduled deals, averaging near
10,260, which lowered trader's expectations. In April 2001, summer heat rates
slipped below 10,000 as more generation came on-line and the market began to
see the effects of over building.

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