tuj

Will the New DBC and DBA Be More Volatile?

Where will DBC put its NG exposure? In the front month, or across the strip?

Commodities, Cap and Trade and Natural Gas

You also don't "dispatch" hydro. Its already the lowest priced generation in the stack, so the dispatcher will always take as much hydro as possible (and the hydro generators will operate that way). If anything, sometimes you get *too much* hydro in the sense that it overwhelms the transmission network (Hydro Quebec), much like the wind in West TX.

Commodities, Cap and Trade and Natural Gas

"Hydro power is another example of dispatchable power. An operator opens a valve in the dam to run water through a turbine. An almost instantanious response to electrical demand."

You are incorrect; much hydro is run-of-river and is dependent upon scheduled flows. Even reservoir hydro has limits as to how much draw-down can be done at a time. Pumped storage however *is* dispatchable and can run AGC which is a huge benefit.

Commodities, Cap and Trade and Natural Gas

"UNG is still a good vehicle for Natural Gas- when NG goes up UNG will go up just as easily. "

Makes me wonder if you're paying attention. Look at the prompt month Henry continuation chart and compare it to UNG; its not working. Besides the roll issue, there is the unit creation/redemption issue that ended up halting trading this week on UNG. If you want exposure to NG, own one of the shale producers that did good forward hedging when prices were $10+ last year; those guys are NOT shutting in production.

Then consider that if you don't drill with a number of years, you lose the lease to the land. Given the prices paid for some of the lease blocks, there is much hesitancy to lose these blocks.

Finally, you do not seem to understand that the pipeline infrastructure of the US remains rather limited. This puts large constraints on the CNG vehicle initiatives, as well as limiting the number of combined cycles you can build. After all, if you can't get firm gas, you can't run your unit. Expansions are occurring, but it takes time.

And your NG plant still has carbon to take care of, and its not *that much* less than a coal plant.