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Many factors converging as energy firms ready bids
ON MAY 7, energy companies will participate in an auction to make electricity generation capacity available to utilities within the 13-state power grid operated by PJM Interconnection. And while the capacity purchased at the base residual auction won't be needed until 2015, the effects of the auction could be felt immediately.
New drilling techniques in the Marcellus Shale have freed up domestic supplies of natural gas, helping drive prices to a 10-year low. Meanwhile, the federal Environmental Protection Agency is pushing tough new rules on power-plant emissions that could make new coal-fueled plants unviable.
Frank Felder, head of the Center for Energy, Economic and Environmental Policy at Rutgers University, said those are both good signs for the natural gas industry, though they come at a time of sluggish economic growth, which generally means sluggish demand for electricity.
"So it's really an open question," Felder said. "If EPA really tightens down on existing coal plants and prevents new coal plants, then yeah, new natural gas looks pretty good, even in a mild growth scenario."
Stefanie Brand, director of the state Division of the Rate Counsel, said she believes this is part of a larger shift in the region's energy infrastructure to natural gas, "but it's going to take a while."
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