Gray Davis Caught New Deals Insure High Prices For A Long Time

[tm37]

Well Davis Has fixed your problems folks. Here it is You will Buy power at prices ABOVE THE ON THE SPOT PRICES. These Deals are as long as 10 YEARS LONG. Davis has Morgaged the future here and you will foot the bill. Well I guess Democrats won't have any one to blame but themselves. The liberal way make a problem worse. He has locked in to these high price with those power plants coming on line hext year. What A Moron!

Power Deals Exceed Prices on Spot Market

Calif Gov. To Release Details Of Long-Term Contracts

Mirant To Sell Pwr To CDWR Despite Contract Info Release

State Still Seeks to Veil Portions of Power Pacts

Get the full run down off Stories with a republican Slant @ www.rogerhedgecock.com

 

[SuperTool]

I don't see the Republicans doing anything for us here.
Besides, the prices he secured are at about 10 cents for KW*hr from what I heard on NPR.
I hate to explain to you the concept of futures and options to someone from Minnesotta (You guys did elect Jesse Ventura after all), but here is a little primer for you. We need to manage risk here. Sure we could be at the mercy of the energy manufacturers, and maybe we would have gotten electricity at 5 cents, but then we might have had to buy it at 20 cents.
I personally am not happy with this whole scenario, but I think Davis did what he had to, given that the feds let the electricity companies gouge us.
Also, the reason the prices on the spot markets came down is that we locked in these contracts, so we don't need to buy power on the spot.
Basically, this gives predictability.
Another thing to keep in mind is that as our electricity demand grows, this will be smaller and smaller percentage of our price, and that if natural gas prices go through the roof tomorrow, the locked in electricity price won't.

 

[SuperTool]

If these contract prices are much higher then what electricity is available for, we can try to weasel out of these contracts.
Also, even if we are stuck with these contracts, we can just pass a law in CA taxing all profits beyond certain price per kw/hr at 100%.
Remember, all it takes in CA is to put a proposition on the ballot.
So I wouldn't be too concerned.

 

[compuwiz1]

Well, I have a simple solution to this problem for me........move the hell out of here. The reasons not to live here are starting to far outweigh the reasons to live here.

 

[SuperTool]

Compuwiz, you are right about that.
When it comes to settling down, I don't think I will be buying a house in the Bay area.

 

[AndrewR]

<< I don't think I will be buying a house in the Bay area >>


What? Are you not a multimillionaire or something?

My wife would really like for me to be stationed at Travis AFB, but I think the cost of living is probably just too high. Anyone know what the area around Beale AFB is like? I'm trying to decide my wish list.

Davis isn't as smart as he thinks he is. He's too liberal for the majority of the country, and I suspect a run for president during the next election would prove that because that's all he's bucking for lately.

 

[etech]

SuperTool, I don't see the Republicans doing anything for us here.

You must learn paitence young grasshopper.

dailynews.yahoo.com
WASHINGTON (Reuters) - The Bush administration would not be opposed to some additional limits to rein in California's soaring electricity prices, Energy Secretary Spencer Abraham said in a Washington Times interview published on Saturday.

 

[XMan]

Besides, the prices he secured are at about 10 cents for KW*hr from what I heard on NPR.
I hate to explain to you the concept of futures and options to someone from Minnesotta (You guys did elect Jesse Ventura after all), but here is a little primer for you. We need to manage risk here. Sure we could be at the mercy of the energy manufacturers, and maybe we would have gotten electricity at 5 cents, but then we might have had to buy it at 20 cents.

Considering that we've been paying 14-15 cents a KWH for a long time, I'd say you guys got a pretty sweet deal. But then again, that's just me.

 

[RichieZ]

Well lets see, if Davis really wanted to do something he could use the power of eminent domain

 

[tm37]

<< Also, the reason the prices on the spot markets came down is that we locked in these contracts, so we don't need to buy power on the spot. >>



Most of these contracts haven't gotten started yet that had nothing to do with the down turn.



<< I hate to explain to you the concept of futures and options to someone from Minnesotta (You guys did elect Jesse Ventura after all), >>



I am From San Diego, I was there when this mess started. I have only lived in MN for 6 Months so I had nothing to do With Jesse.



<< If these contract prices are much higher then what electricity is available for, we can try to weasel out of these contracts >>



Ahh the liberal way, Just like sports stars. Change the deal after the fact.



<< Remember, all it takes in CA is to put a proposition on the ballot >>



Medicinal Marijuania

These are BAD DEALS for California. Davis INSURED that Californians will pay high prices for some time. He Also DIDNOT eliminate the current problem. This was done for PURELY POLITICAL reason. Davis wants to say&quot; Look I ficxing the problem. The major problem is That by the time these deals are in effect the new power plants will be online and the price SHOULD be coming down.

 

[tm37]

<< Considering that we've been paying 14-15 cents a KWH for a long time, I'd say you guys got a pretty sweet deal. But then again, that's just me. >>



Well THat was at the peak of the alledged gouging. If they were gouging then the price will come down naturally right. THe only group this a sweet deal for is power producers. At some point Davis is going to pay the piper and it isn't going to be pretty. If the prices were artifically high as he claimed why did he sign a deal to insure high prices for years to come?

 

[XMan]

Well THat was at the peak of the alledged gouging. If they were gouging then the price will come down naturally right. THe only group this a sweet deal for is power producers. At some point Davis is going to pay the piper and it isn't going to be pretty. If the prices were artifically high as he claimed why did he sign a deal to insure high prices for years to come?

You missed my point entirely. Coloradons pay about 14-15 cents a KWH; the rest of the country excepting California averages around 9-10. Some higher, some lower.

Signing a contract for ten cents a KWH ensures that you will merely be paying what the rest of the country pays. But I guess we can't expect Californians not to b!tch about that, as well. :|

 

[Red Dawn]

<< But I guess we can't expect Californians not to b!tch about that, as well >>

Hey Copy boy, the last thing we need is someone like you whose claim to fame is getting dumped on by Psycho chicks passing judgement on us. I can assure you that you don't want economic choas here in California. All that will cause is a mass migration to states like yours. If you think you have Psycho Bitches in Colorado you haven't seen anything until you come across a Psycho Bitch from California. They make Loraine Bobbit look like Mother Teressa. All that Silicone does something to their mental state

 

[glenn1]

<< we can just pass a law in CA taxing all profits beyond certain price per kw/hr at 100%. >>



That would be a really, really good way to ensure that no power company ever does business with the state ever again. Ditto with plenty of other businesses apart from power companies as well. You might as well just kiss any new economic development in California goodbye.

 

[XMan]

you think you have Psycho Bitches in Colorado you haven't seen anything until you come across a Psycho Bitch from California.

Haven't met any here yet; I left them all in Indiana.

And I would be extremely interested in hearing how paying fair market value for something is going to cause economic chaos in California. I honestly don't think you'll have a logical answer because the closest thing I've ever seen you come to an intelligent answer is thinking up a creative name to call somebody. In my opinion, there a lot of weenies in Cali who like to cry and moan about anything they can - esp. gas prices and electrical prices. Your governor just locked you in at fair market electrical prices. As far as your gas prices go, we're paying about 2 bucks a gallon here in the mountains - you're paying about the same, right? Must be some vast George Bush conspiracy against poor widdle California.

Grow up, Red.

 

[Red Dawn]

<< I honestly don't think you'll have a logical answer because the closest thing I've ever seen you come to an intelligent answer is thinking up a creative name to call somebody >>

Which is much more intelligent that anything you've posted Chubby.

 

[XMan]

Which is much more intelligent that anything you've posted Chubby.

Gee, thanks for proving my point.

I would really like to know how paying what I will call fair market value (around the national average) for power is going to cause &quot;economic chaos&quot; in California.

I won't hold my breath waiting for you to come up with an answer; I'm sure your next post will be consist of calling me four-eyes or something else as intelligent. Very second-grade of you, Red.

 

[Red Dawn]

I'll give you this, you don't sweat much for a fat guy.

<< I would really like to know how paying what I will call fair market value (around the national average) for power is going to cause &quot;economic chaos&quot; in California. >>

Who says it does?

 

[XMan]

After I said, &quot;Signing a contract for ten cents a KWH ensures that you will merely be paying what the rest of the country pays. But I guess we can't expect Californians not to b!tch about that, as well.&quot;

You then said,

I can assure you that you don't want economic choas here in California.

 

[glenn1]

<< You will Buy power at prices ABOVE THE ON THE SPOT PRICES. These Deals are as long as 10 YEARS LONG. >>



And your point is? Futures/options contracts to purchase (calls) will always cost more than buying on the spot market. Every contract has two components, intrinsic value (what the value of the underlying commodity/security is at present), and a premium for time value (the value of having the right to purchase at a set price for a given length of time). The premium level for time value will be greater for a longer contract time, therefore making the contract more expensive.

The state of California could have also done essentially the same thing by selling put contracts (i.e. they would have been obligated to buy at a certain level, at the contract buyer's option), but that would have given ultimate discretion on the timing and price of the exercise of the contract to someone else, which would have been, ultimately, an unsatisfactory situation from a political and practical point of view.

 

[Red Dawn]

<< You then said, >>

the last thing we need is someone like you whose claim to fame is getting dumped on by Psycho chicks passing judgement on us

 

[tm37]

<< ? Futures/options contracts to purchase (calls) will always cost more than buying on the spot market. >>



Not true in the electrical market. Long term deals typically are at a reduced rate. However if the power isn't used you still pay for it. The problem is Davis Claims that they are being gouged @ 10 cent then locks in that rate for 10 years.

 

[tm37]

<< You missed my point entirely. Coloradons pay about 14-15 cents a KWH; the rest of the country excepting California averages around 9-10. Some higher, some lower. >>


There is a difference between WHOLESALE PRICES (what is being discussed here) and Retial (what you pay on your bill) THe contracts that california provider had before were between 3 and 7 cents. This is quite a jump.

 

[XMan]

There is a difference between WHOLESALE PRICES (what is being discussed here) and Retial (what you pay on your bill) THe contracts that california provider had before were between 3 and 7 cents. This is quite a jump.

Ah, I see. So if the wholesale prices were 3-7, you guys were paying around what, 10? So if the wholesale price goes up to 10, then the retail will be what, 13-17 cents a KWH? That's still not a bad price. Looks like Gray Davis did a pretty good thing here.

the last thing we need is someone like you whose claim to fame is getting dumped on by Psycho chicks passing judgement on us

Red, you've obviously run out of intelligent things to say, if you ever had any in the first place. You're repeating yourself.

 

[Red Dawn]

<< Red, you've obviously run out of intelligent things to say, if you ever had any in the first place. You're repeating yourself. >>

It doesn't take much to get under your skin Bwuahaha..