AM-98-06 ELECTRIC POWER SUPPLY STRATEGIES FOR PETROLEUM REFINERS

Description:

The electric power markets are being restructured to respond to the price benefits achieved in other competitive markets. The restructuring appears to be leading toward an unregulated wholesale electric power generation market, and a regulated transmission and distribution market. Refiners will find new opportunities to manage their electric power costs in the future. Many of the price benefits in the near term will be in the wholesale power markets as the retail markets will bear most of the transition costs of restructuring. The retail markets will also continue to be subject to local regulation leading to a need to create electric power supply strategies for each region or each individual refinery. Refiners will see a convergence of the fuel markets because the marginal production of electric power is based on competitive fuel prices rather than regulatory factors. Refiners who analyze the issues shaping the new wholesale electric power market and adopt flexible energy procurement strategies will benefit most from the new market order.