Wholesale power transactions continue to grow. During 1995, utilities spent more than $58 billion on bulk power and, for the first time, investor-owned utilities spent more for electricity ($30 billion) than for fuel ($29 billion) to generate it. The reasons for the expansion can be traced to more aggressive marketing strategies by electric utilities, an increasingly competitive group of independent power providers, and the presence of power marketers as a formidable and growing group of power traders.
Expansion in wholesale markets is hardly new. Transactions have been increasing steadily for the past 20 years. However, today, a larger portion of power transactions are shorter in term than in previous years. Liquidity in wholesale power markets as evidenced by the explosion in trades by power marketers (nearly 70,000 gigawatt hours in the third quarter of 1996) and an increase in the number of non-requirements transactions among investor-owned utilities (up 6.6% in 1995) are clear signs of the changing dynamics of today's power markets.