The industry has moved beyond the debate.
Betsy Vaninetti is Senior Consultant with RDI Consulting, a unit of Platts, in Boulder, Colorado. Will Dailey and Steve Piper, also Senior Consultants with RDI, assisted in the development of this piece. Platts is the energy information, research, consulting and marketing services business of The McGraw-Hill Companies.
Steve Mitnick's response ("Overbuilding? Fuhgeddaboutit!", Public Utilities Fortnightly, Jan. 15) to my Nov. 15 article extended the great industry debate over whether the recent power plant construction boom would result in near-term over-supply. The only problem is, the industry has moved on. The debate is over, at least in the near-term. Even taking into account the recent acceleration of cancellation notices, most markets will face some level of excess capacity as a result of the current power plant construction boom. That does not mean that new plant developers are doomed. It just means it's going to be harder going than they had hoped.
Mr. Mitnick's response had two themes. First, he claimed that forecasts of over-supply (like RDI's) fail to take into account developer's ability to respond to forecasts and cancel projects. Second, he points out that new plants will likely chase older, less-efficient capacity from the market. But, RDI's forecast takes both of these dynamics into account.