Title: The West Enters a Bust 	
URL(s):	

http://www.cera.com/eprofile?u=35&m=2810;


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RADICAL SHIFT IN WESTERN MARKET DYNAMICS

The western power markets are entering a bust period as a result of the 24,000 
megawatts of power plant additions and demand decline brought on by last year's 
high prices and the current economic softness. This bust period is likely to 
last for several years. Western gas markets have also entered a bust with the 
delayed start to winter and full storage inventories exerting downward pressure 
on both North American prices and western basis differentials. Through the 
remainder of this year and into well into next, western regional gas and power 
markets will remain soft and possibly weaken further.

*  Power operating reserves should rise to above 15 percent by next summer in 
the Southwest and California, pushing power prices down and improving 
reliability.

*  Power demand is expected to shrink by 11 percent in the fourth quarter; 
market contractions will return demand in 2002 to levels experienced in 1998. 

*  Full gas storage inventories, huge declines in year-over-year demand, and 
the onset of significant pipeline capacity additions will keep a lid on West 
Coast differentials.

**end**

Follow above URL for complete Monthly Briefing (11 printed pages).

E-mail Category: Monthly Briefing                                  
CERA Knowledge Area(s): Western Energy


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