Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Neel Mitra - Simmons & Company International.
Neel Mitra - Simmons & Company International
I'm looking at the economic factor in your presentation, which increased for both 2009 and 2010 in MISO and decreased in PJM from your last call. What dynamic is causing this? Does it have anything to do with the seasonal plant model in MISO or is MISO more attractive than PJM relative to the last quarter?
Mark Jacobs
As you know we use forward based commodity prices to report that outlook and so really what your seeing is just a change in the forward curves that may imply a little bit more or a little bit less generation and you are going to see that bounce around a little bit from quarter-to-quarter.
Neel Mitra - Simmons & Company International
Mark, on a longer-term basis, what do you think needs to occur in the MISO market for your three coal plants to run as typical base-load units rather than load-following units?
Mark Jacobs
Well I would separate those Neel. I think Avon Lake has the capability to run as a more significant base-load plant. That really at the end of the day is a plant that is driven by the gas-coal spread and so when we saw our market conditions like we did in 3Q of this year with a very depressed gas-coal spread, we got the results that we are going to see.
But if you look at the forward curve or the recovery net spread, we would expect to get more generation volume from Avon Lake perspectively. The other two units are more mid-mar and I would say that’s more governed by the boiler characteristics that we have in those plants.
Another factor I would point at in terms of the economics of the MISO assets, as you know MISO does not have an established capacity market like PJM does.
One of the things we are watching very closely is whether First Energy does indeed complete its move into PJM. I think that's likely to happen in the first part of next year, reach a conclusion on that.
If that happened, those three coal plants would move from MISO into PJM and that would provide them the opportunity to have a little bit better capacity value play as well.
Neel Mitra - Simmons & Company International
It looks like your coal hedge volume has almost doubled for 2010 after your last call with previously hedged prices. Was that because you differed some of your coal deliveries in 2009 or was it something else?
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