Fitch U.S. Regional Power Forecast: Excess Capacity, Flat Growth to Persist in Midwest.Business Editors CHICAGO--(BUSINESS WIRE)--April 6, 2004 Regional oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies and stagnant demand growth will continue in the near term for most of the Midwestern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. in its latest U.S. regional power market forecast report. While credit implications of the forecasted wholesale markets are neutral for investor-owned utilities (IOUs) and public power entities, independent power producers (IPPS IPPS International Parallel Processing Symposium IPPS International Plant Propagators Society IPPS Industrial Pollution Projection System IPPS International Pelvic Pain Society IPPS Integrated Personnel and Payroll System IPPS Institute for Public Policy Studies ) and generation companies (gencos) with uncontracted assets will remain under considerably more stress due to relatively low energy consumption, generation overcapacity, and the dominance of coal as the primary source of fuel in the Midwest. 'The predominance of baseload coal and nuclear generation is greater in the Midwest than nationally due to the existence of fewer suitable sites for hydroelectric power hydroelectric power: see power, electric; water power. hydroelectric power Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. , relative proximity of coal in the region and low cost of transporting western coal resources into the region,' said Karen Anderson, Director, Fitch Ratings. 'Environmental compliance costs is a noteworthy issue in the Midwest due to the presence of coal, with large coal producers such as American Electric Power American Electric Power (NYSE: AEP) is a major investor-owner electric utility in various parts of the United States. It is headquartered in Columbus, Ohio. It serves parts of 11 states, and is currently the largest electricity generating utility in the United States. and Cinergy actively addressing environmental concerns despite the potential of an uncertain regulatory environment.' Exacerbating the already weakened profile of IPPS and gencos are the current electricity prices in the region, which are expected to remain flat through 2007. Gencos, in particular, may see earnings and cash flow decline over the next few years, especially gas-fired capacity in the areas experiencing oversupply. Despite Fitch's projection of 1.6% demand growth per year in the Midwest through 2012, it will remain among the lowest in the nation as overall power consumption in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. is expected to grow approximately 1.8% annually. Fitch's power forecast also incorporates a decline in reserve margin starting in 2010 as net capacity additions decline and load growth remains stable. 'The most pronounced decline in reserve margins will likely be in market areas with significant near term capacity buildout such as Cinergy, while increasing reserve margins are expected in the Wisconsin area by 2008,' said Anderson. The 'Midwest Regional Wholesale Market Report' is a companion to two other regional forecast reports published on March 29 by Fitch, 'ERCOT Regional Wholesale Power Market' and 'Southeast Regional Wholesale Power Market'. The latest report is available on the Fitch Ratings web site at 'www.fitchratings.com'. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion