This Market Alert explores the implications the 2011 run-off will have for both U.S natural gas and electricity prices and the national supply/demand balance.
Even during the strongest hydro seasons in recent history (2006 and 2008) Mid-C power prices did not turn negative until the peak run-off period in May and June. Yet, in 2011, several instances of negative prices occurred as early as February. Negative electricity prices occur only when there is excess supply of electricity on a system and generation operators are forced to literally pay customers to take electricity from their units.
Water for Nothing and Power for Free
explores how the extreme hydropower season experienced in 2011 will impact U.S. natural gas and electricity pricing as well as the national supply/demand balance.