excess capcity, page-37

you have to keep in mind that electricity retailers enter into long term contracts for base load power. They have a guaranteed supply at a very good price throughout the year. They probably pay around $40 per megawatt.

But in summer with all the airconditioners running, the spot price for electricity can peak at around $10,000 a megawatt. In the Eastern states, base load from victorian brown coal is about to reduce. The power companies have stopped maintenance and will not invest further in these plants. So when they start to fail, baseload with reduce and prices will rise. The summer price spikes in the east will increase as supply starts to diminish.

A power retailer with a large customer base with private generation capacity will benefit significantly if this capacity provides them with long term and or peak capacity at a steady price so they avoid the spikes.