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James Kirby's picture
Retired Senior Manager At Ontario Power Generation Retired

Areas Of Expertise- Toxic contaminants, New Technology assessments, Computer Modeling, Interconnections - Reliability Assessments, Purchase and sales Forecasting, Reserve value of...

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  • Oct 11, 2021
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In my opinion, the rapidly rising fossil fuel prices are like the canary in the mine. They are warning us to plan the transition better than we have. If we failed to do that, we want to risk of a public backlash against the Green transition.

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Matt Chester's picture
Matt Chester on Oct 11, 2021

Consumers do not pay spot prices, and contracts may reduce the volatility in the average price of gas somewhat.But the spot markets are the canary in the mine. It is warning us to do a better job of planning the transition then we are.

Makes you wonder-- I've heard DOE is considering tapping into the SPR to ensure prices don't go up, which is totally understandable politically and economically, but those levers may also be dampening the seriousness of the situation in the minds of many (sort of the opposite of 'don't let a good crisis go to waste')

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James Kirby on Oct 12, 2021

Your point is well taken. An objective that involves prices not going up is completely inappropriate. The objective should be to ensure that prices reflect genuine total costs, capital and operating, for the marginal generation or load management needed to supply the load. Prices that are kept artificially low just encourage more consumption and make it much more difficult To reduce greenhouse gases. Prices that are artificially high encourage excess construction of resources.

 

There is no unique answer to the extent that the load is price-sensitive. So, the objective has to be supplying the price-sensitive load In such a way that the benefits to society are maximized and everybody is compensated or charged fairly. Having an objective to keep prices low does not necessarily achieve that objective. It starts with a vision followed by the objective. In my mind the vision should be the maximum benefit to society over the long term. The objective flows from that.

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