2002 Will Be a Pivotal Year

Fortnightly Magazine - January 15 2002
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What a difference a year makes. As 2000 ended, wholesale power markets were subject to skyrocketing natural gas prices and a high-profile energy crisis in California. Power producers were licking their chops at what looked like high-price, high-volatility market conditions.

In 12 months, things have changed dramatically. Natural gas prices have dropped, huge amounts of generating capacity have entered the market, and much more is on the horizon. And, seemingly out of nowhere, the largest market participant collapses and virtually disappears from the market. To top it off, it appears that economic conditions and other forces are putting downward pressure on demand in the near term. Now, wholesale power market participants are wondering: how low prices will go, and how long will they stay down?

In Outlook for Power in North America 2001, RDI Consulting's annual national wholesale power price forecast for North America, we provide our answers to those questions. Perhaps more importantly, we examine the fundamental forces that are currently driving markets and discuss how things are likely to shake out.

In our view, 2002 will prove to be a pivotal year. While 2001 can be characterized by uncertainty, by the end of 2002, we should know a lot more about what power markets are likely to look like over the next five to 10 years. 

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