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| Dow Jones Palo Verde Electricity Index Futures |
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The Palo Verde switchyard was originally built to support the output of the Palo
Verde nuclear generating station in Arizona. The diversity of nearby power resources
has helped it develop as an important delivery and transaction location for the
wholesale power markets. The switchyard connects five 500-kilovolt lines and has
a total bulk power transfer capacity of almost 9,500 megawatts connected to various
transmission grids in the region. The Salt River Project operates the switchyard,
and the area control operators connected to the yard include the major southern
California and southwestern utility systems.
Transmission facilities at Palo Verde offer access to generating resources
and demand centers throughout the Southwest and southern California, and can
serve markets in the Pacific Northwest and northern Rockies. One of the principal
power transfer paths in the West is from the coal, nuclear, and gas-fired generators
of the desert southwest to the high load and population areas of southern California.
The location, availability, and cost of these resources are critical factors
in the dispatch of existing generation and the development of new generation
resources.
The volume of power that flows through Palo Verde, the wide area it serves,
and the diversity of its supply and demand often result in volatile pricing.
To help market participants better manage their risk and mitigate counterparty
credit risk, the Exchange provides a financially settled futures contract based
on the average peak day price for the electricity market hub at Palo Verde reflected
in the Dow Jones Palo Verde electricity index. The contract trades on the NYMEX
ClearPortsm electronic platform or transactions can be conducted off-exchange
and submitted solely for clearing through NYMEX ClearPortsm.
This is the first time that Dow Jones Electricity Indexes have been licensed
for use by an exchange. These pricing indexes are used extensively by U.S. and
European utilities, power marketers, independent power producers, consultants
and municipalities for pricing short- and long-term contracts and hedging instruments.
Dow Jones has contracts with more than 60 utilities, power marketers, and power
producers to contribute to Dow Jones all pertinent transactions for the day,
every day, making Dow Jones Electricity Indexes the most consistent, dependable
barometers available. |
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