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<br />003409 <br /> <br />for firm power during the time when Utility A has excess capacity. <br />Contracting for firm power lets Utility B draw power more cheaply than it <br />could have generated the power itself; Utility A sells power for which it <br />has no other market. <br /> <br />Economy Transactions. Economy transactions are usually of short duration <br />and are performed to save the purchasing utility some of its short-term <br />operating costs rather than to insure its long-term power supply. <br /> <br />Large coal-fired or nuclear generation units cannot exactly match ("cycle") <br />output to the demands upon them. Thus, utilities frequently find that they <br />need only some of the power a plant is producing. Suppose that the Public <br />Service Company of Colorado (PSCo) is operating its plants to cover its own <br />load at an operating cost of 2 cents per kwh. If this load drops for a day <br />or some other short interval, the company may sell the excess energy. <br />(There are costs associated with turning units up and down). The PSCo <br />dispatcher contacts other utilities to see if anyone would like to buy the <br />temporary excess power. One potential purchaser might be Colorado Spring's <br />Nixon unit, which has operating costs of about 2.1 cents per kwh. Since <br />"splitting the difference" is customary in economy transactions, PSCo might <br />charge the Springs 2.05 cents per kwh and both companies would gain by the <br />transaction. Economy transactions ara a very cheap source of energy but, <br />since this energy is available only as happenstance determines, they are not <br />a very valuable source. <br /> <br />Emergency Transactions. In all electricity purchases and sales, the time of <br />the transaction is important. Power that can be delivered during peak <br />periods is worth more than power that is available at other times. The <br />reason for this is that utilities build systems to meet the loads placed on <br />them and loads vary with the time of day, the season, and the climate. <br />Loads are greater during the day than at night, greater in the summer in hot <br />climates where air conditioning is used, greater in the winter in cool <br />climates where electric heating is common. <br /> <br />5 <br />