Benchmarks

RDI research finds that if you deregulate it, they will build.

Electric power shortages and high prices in many areas of the country have put the industry in the public spotlight, and sparked demands for re-regulation of the industry. However, our research indicates that these price spikes and shortages will be temporary, and that as early as next year, some regions could face a glut of oversupply in the wholesale electricity market.

In just two years-2000 and 2001-we expect more new capacity will have been added to the U.S. grid than was added during all of the 1990s-as much as 75,000 megawatts. More than 290,000 MW of capacity has been proposed. In regions such as Texas and the Northeast, additions will increase supply by at least 25 percent against an estimated demand growth of less than 5 percent. Due to transmission constraints that will hinder moving the output of the new power plants to other regions, oversupply conditions are likely to prevail for some time in regions like Texas and the Northeast. Oversupply will translate directly into lower prices for consumers, but generators also will have to bear lower returns on their new investments.

The table, "Forecast of Market Conditions," summarizes our findings for each NERC region. Bust regions are assumed to have 5 percent more capacity than needed, and boom regions are assumed to have at least 1 percent less capacity than needed.