KMEA Operations January 2017

In 2007 Gas Generation was on margin, meaning setting the price of energy, 75% of the time. Today Gas Generation sets the marginal price for energy just under 50% of the time.   This has been driven primarily by an increase in wind technology in the marketplace.   Wind Generation now makes up greater than 15% of all installed generation in Southwest Power Pool.  Wind Generation only sets the market price when there is an excess of energy and units are priced to come off line … in other words when, prices are very low.   What does all this mean to you?

The past two years the difference between a gas vs. coal unit on margin has been irrelevant because gas prices have been low. This has translated to real time energy prices being proportionally very low.

Currently we have opposing market conditions, rising gas prices with a decrease in gas units on margin. Coal and Gas unit’s prices are starting to diverge creating a condition where we could see more swings in the real time energy price.  Hopefully, overall average prices will stay proportionally low but we could see a lower correlation between on peak and off peak prices.

KMEA member cities invested in a 24/7 operations staff that is positioned to respond to the real time market. KMEA staff monitors the market and is able adjust schedules and instruct dispatch to meet potential increase in price volatility.