Examples of Energy Consulting Experience …
Cost-based rate making analyses
Environmental compliance impact analyses
Electricity standard market design position strategies
Market Forecasts & Asset Valuation
Electric power markets in the United States are seeing significant changes with the maturity of standard market designs, stricter environmental compliance requirements, and aging power plants. An understanding of electricity markets is crucial to making decisions around power generating assets, power sales, and power hedging. L. E. Peabody & Associates, Inc. provides owners of power assets an understanding of asset value and risk as well as support for economic decisions needed to optimize asset and portfolio value.
The Firm’s experience and capabilities are based on a unique combination of business acumen, analytical skills and communication skills. We have years of experience quantifying and optimizing value around electric generating assets, including specific experience with unit bidding and dispatch, trading, origination, supply and transportation of fuel, contract management, regulatory affairs and strategic analysis covering a number of electricity markets throughout the United States.
Our services include asset value and risk assessments, power and fuel contract structuring and negotiations, portfolio hedging strategies, policy impact analyses and budget forecasting. We rely on proprietary databases and tools to quantify the real option value of power assets and to assess market supply and demand drivers in determining where an asset sits in its market.
Examples of Electric Power Experience …
- Real option asset valuations with dispatch simulation
- Market assessments utilizing generation stack analysis
- Portfolio risk assessment and hedging strategies
- Cost-based contract analysis and negotiation
- Market and environmental policy impact analyses
Coal & Natural Gas
The Natural gas and coal markets in the United States have seen significant changes in the past decade. The coal market has seen an increase in price correlation to other energy commodities, namely natural gas, and large shifts in demand driven by environmental compliance. L. E. Peabody & Associates, Inc. has experience analyzing coal markets across the country, including the Powder River Basin and other Western basins, Illinois Basin, and the Appalachian Basin.
The Firm has supported over 60 electric utilities with market and contract analyses related to coal and natural gas supply and transportation. For these clients, the Firm analyzes fuel production costs and the determination of the relationship of such costs to market prices and existing fuel supply agreements. We also focus on the interrelationships among fuel supply, fuel transportation and related equipment, and infrastructure needs to improve our clients' position within power production markets.
The Firm has been actively engaged in negotiating coal and natural gas supply contracts for various users throughout the United States. These engagements include buy-out analyses, brokering, and modifying existing fuel supply agreements. The Firm's fuel supply assignments have included the analysis of alternative fuels to determine the impact of operating and maintenance costs on delivered fuel price, unloading costs, shrinkage factors and by-product savings.
The Firm has also helped clients negotiate transportation rates and has helped clients match natural gas transportation service levels to electric generation facility needs. We have also developed natural gas procurement plans for electric utility clients. These plans consider the client's tolerance for risk and ability to manage volume uncertainty. These procurement plans typically involve the use of financial hedging to manage natural gas price and volume risk and to ensure that the management of natural gas risk is aligned with the management of overall risk for the generating facility.
Examples of Coal and Natural Gas Supply and Transportation Experience …
Coal and Natural Gas supply and transportation contract negotiations, including the valuation of embedded optionality
Fundamental price forecasting through production cost modeling
Analysis of economic supply alternatives that meet emissions and equipment specifications
Analysis of economical coal delivery alternatives, pipeline options for electric utilities
Coal car fleet lease versus buy analyses, rail capacity analyses
Matching of transportation service levels to electric generator needs
Development of commodity procurement and hedging strategies
Commodity and basis price forecasting
Natural gas markets have seen significant changes in the past decade with advancements in production methods that have led to the United States having several significant production regions. As pipeline capacity catches up with production increases, natural gas markets will continue to see downward pressure on prices and more supply and transportation options for consumers until supply and demand approach an equilibrium.
L. E. Peabody & Associates, Inc. is particularly well-suited to assist in both pipeline improvement and expansion projects and new pipeline development projects. Our involvement and understanding of the energy and utility markets ensure that you will have all the help you need. We have provided natural gas consulting support across major functions, including field operations, construction, and maintenance.
Emissions compliance has played a significant role in the economics of power generation since the 1990's. With the enactment of the Clean Power Plan and subsequent proposed repeal, emissions will continue to play a significant role in fuels and power economics for the next several decades. For over 30 years, the Firm has been assisting clients with their emissions compliance decisions.
One example of our emissions compliance experience is our assessments of coal fired power plants ability to comply with EPA regulations such as the Mercury and Air Toxics Standards (“MATS”). We also have extensive experience in compliance evaluations for sulfur dioxide, nitrous oxide, mercury, particulate matter, and carbon dioxide. The Firm has assisted electric utility clients with strategies involving capital expenditures for pollution controls, retirement planning and allowance trading.
Our asset valuation models consider price and cost uncertainty related to power, natural gas, coal and operations when evaluating emissions compliance strategies. The Firm also provides clients with insights on how emissions compliance requirements, existing or proposed, impact power markets and where a client's assets reside within the market. Our market assessments of emissions compliance consider emission allowance costs, changes in dispatch order, and correlations with market prices for power and fuels.
Examples of Emissions Experience …
- Comparison of the economic value of various emissions compliance strategies
- Pollution controls capital decision support
- Analysis of emission allowance pricing on power and fuels pricing
- Emission allowance trading and hedging strategies