macro questions hope gets mark needs let know forwarded kevin presto hou ect 03 13 2001 03 45 pm george hopley 03 13 2001 03 40 pm kevin presto hou ect ect cc subject macro questions country facing sustained tight markets general capacity margins falling last years utilities refraind building baseload capacity others focused developing primarily peaking capacity last large building boom coal plants ended early 1970 nuclear boom dropped sharply three mile island incident 1979 1990 projected capacity margins fallen 15 20 toward 10 outside california situation nyc also poses potential risk summer general however 2002 2003 amount capacity proposed region covers normal load growth meeting peak hour demand remaining question relates performance existing coal nuclear stacks also happens periods persistent drought voaltility prices remain high lessen extent capacity becomes merchant oriented focusing marginal cost economics transmission congestion persists increased volatility continue especially iso pool type environments prices reflect primary fuel dynamics especially interplay gas oil case lower prices reflect overbuild scenario beyond year coupled slowing economic activity low incidence extreme weather events fast generation added returns expected variability development greenfield capacity depends time permit state local levels construction time fairly constant general 18 months reasonable time frame concept first fire extent power plants project financed minimum 30 equity returns consistent comparable project financed opportunities available fund managers expect fully debt financed facilities near term companies make major profits owning generation long term average returns time reflect superior plant management skills effective use strategic market information portfolio approach aid case oversupply situation occurs 2003 05 timeframe significantly lower returns capital could materialize time sell generation recent market events west capacity higher historically observed values depending overbuild scenario may attractive time sell capacity still queue hoping build near term recent pool experience shows capacity owners still significant market power supply demand balance change various regions country weather normalized demand growth fairly consistent 2 3 average overtime future dynamics depend economic growth suggests load coastal tech concentrated areas short term demand reflects weather dynamics year 2000 non event eastern interconnect opposite west aggressive capacity growth suggested nepool ercot ecar main spp next two years natural gas continue capture growth virtually capacity due line gas fired however incremental supply growth could come investments existing coal nuclear stack economic marketing growth business appear interaction solicited enduser rates become dynamic late new entrants states still switching energy service providers still time enter barriers entry include capabilities brand management retail marketing effective integration risk management billing ability handful customers big winners extent economies scale aggregation opportunities exist success larger players exclusion niche player existance diffentiated strategies date marketing focused lower rates giving alternative existing service provider develop beyond significant retail opp markets retail rates high order magnitude limited 10 dollars mwh however gives opportunity trade around similar supply asset