Patrick CrowNext year, the U.S. Congress finally will pass legislation reforming retail electricity marketing, predicts Washington International Energy Group (WIEG).
That was one of the Washington, D.C., energy consulting firm's predictions in its annual outlook.
"We expect to see more activity (on electricity reform) in Washington," the firm said. "Comprehensive federal legislation is not likely to pass in 1999, but, by the turn of the century, we expect to see an elaborate Christmas tree-like comprehensive package that could be enacted in early 2000 before presidential electoral pressures take over."
The firm said the omnibus bill would allow consumers the choice of electricity suppliers and repeal the Public Utilities Holding Company Act. It predicts major battles over the Clinton administration's desire to boost renewable fuels through electricity reform legislation.
"We do not expect many more states to aggressively pursue customer choice in 1999. Only when the threat of federal legislation is real will many states decide to act to assure that they can craft legislation to meet their own peculiar needs."
Gas issuesWIEG predicts more convergence of the gas and electric industries through mergers and innovative joint ventures.
"We particularly like the gas industry's turn of phrase in defining generating plants as 'gas conversion facilities.'
"We expect to see additional gas pipeline industry consolidation around more-defined regional lines. We expect Canadian gas companies to be more aggressive in the U.S. marketplace in acquiring local distribution companies and pipeline assets."
The firm said a total of more than 40,000 MW, in equivalent capacity, of merchant power plants is planned in the U.S.
"We expect a flurry of merchant plant activity, enough real action to prove to skeptics once and for all that merchant plants are the wave of the future.
"It will not be until after 2000 that we will begin to see merchant plant failures and the emergence of an industry that looks too much like the commercial office real estate business.
"Nearly all of the new plants built will be gas-fired. But even if we have very cold winters, we do not expect to see significant increases in the price of natural gas."
Lessons from oilThe firm said electric and gas executives have a very high level of confidence that gas supplies will be adequate and that deliverability will not be a problem.
"The new Canadian gas from the Maritimes-initially from Nova Scotia and later from Newfoundland-will provide the (U.S.) East Coast with a steady stream of new resources."
It said that, in the electricity industry, "There is growing recognition of the relevance of the oil industry's experience.
"The oil industry's dramatic learning curve in doing the impossible through drastic cost-cutting and technological innovation-and the potential to apply the wisdom of that experience to compete against the electric and gas companies-looks more like the right model."
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