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Boston, July 9, 2003 -- The summer of 2003 will be marked by weak electricity sales and peak demand declines. Economic growth is providing a positive, albeit weak, influence on electricity demand this summer according to a new report by Wood Mackenzie's North American Power team.
"The positive influence of the economy is more than outweighed by the negative influence of a normal summer weather pattern following the hotter-than-normal weather of the summer of 2002," explained Joe Sannicadro, Head of North American Power research for the company. "At the same time, generating capacity additions will be at record levels, and reserve margins will continue to climb in almost all regional markets."
Summer peak demand will decline in many regions this summer following the weather-driven demand growth of 2001 and 2002. In 2002, US peak demand increased a surprising 3.1 percent, as the second consecutive hotter-than-normal summer drove peak demand growth. In 2003 the US peak demands are expected to decline 1.1 percent. The Northeast and Midwest regions show the largest drops, with some regions of the South showing moderate growth.
Generating capacity additions set a record with almost 65,000 megawatts of new supply during 2002, with over 20,000 megawatts beginning operation during June. The flood of new supply continues in 2003, with another 65,000 megawatts scheduled to be on-line before the end of the year. The majority of this capacity is scheduled to begin commercial operation before the peak demand period, with almost 30,000 megawatts scheduled to begin operation in June and July.
The tight supply/demand balances in North American natural gas markets has led to soaring gas prices and concerns over the summer outlook for gas demand for power generation, claims Wood Mackenzie, and it looks like the weak summer electricity demand will provide some relief for the natural gas markets, as year-over-year gas consumption declines.
Wood Mackenzie (www.woodmac.com) provides a comprehensive range of research products, both qualitative and quantitative, delivered via the new Wood Mackenzie Insights Internet platform. The breadth of Wood Mackenzie's expertise extends beyond its high quality research, with a significant proportion of its revenues generated from specialist consulting.
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