Radical Shift in Western Power and Gas Market Dynamics - CERA ,
 Title: The West Enters a Bust
URL(s):

http://www.cera.com/eprofile?u=35&m=2810;


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RADICAL SHIFT IN WESTERN MARKET DYNAMICS

The western power markets are entering a bust period as a result of the 24,000
megawatts of power plant additions and demand decline brought on by last year's
high prices and the current economic softness. This bust period is likely to
last for several years. Western gas markets have also entered a bust with the
delayed start to winter and full storage inventories exerting downward pressure
on both North American prices and western basis differentials. Through the
remainder of this year and into well into next, western regional gas and power
markets will remain soft and possibly weaken further.

*  Power operating reserves should rise to above 15 percent by next summer in
the Southwest and California, pushing power prices down and improving
reliability.

*  Power demand is expected to shrink by 11 percent in the fourth quarter;
market contractions will return demand in 2002 to levels experienced in 1998.

*  Full gas storage inventories, huge declines in year-over-year demand, and
the onset of significant pipeline capacity additions will keep a lid on West
Coast differentials.

**end**

Follow above URL for complete Monthly Briefing (11 printed pages).

E-mail Category: Monthly Briefing
CERA Knowledge Area(s): Western Energy


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