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Technology Stocks : American Superconductor (AMSC) -- Ignore unavailable to you. Want to Upgrade?

To: David C. Burns who wrote (569)	10/15/2003 1:35:05 AM
From: Sam Citron	Respond to of 973

That was indeed scienterrific. Thanks for sharing, David.

To: David C. Burns who wrote (569)	11/11/2003 8:44:59 AM
From: Sam Citron	Read Replies (1) \| Respond to of 973

Electric Industry Capacity Glut Jolts Investors [WSJ excerpt] The U.S. electric-power industry, lured by the promise of deregulated markets, has added far more generating plants than will be needed for years, a building boom that has thrust the industry into its biggest financial bust since the early 1980s. The construction spree hit full stride two years ago, just as the electricity market softened due to the economic downturn and as public misgivings about continued energy-market deregulation crested. In the continental U.S., nearly 200,000 megawatts of new generating capacity -- the equivalent of 400 big power plants -- has been added since 1999, boosting the total by 24% at a time when demand had flattened out. Transmission bottlenecks and widespread overcapacity in many cases keep electric companies from selling their excess power to other users. Nor will a rebounding economy provide much solace. More energy-efficient industrial plants and the migration of factories overseas means "manufacturing is not there to help the electric sector get out of this hole," says Peter Rigby, energy analyst at Standard & Poor's. Despite the surplus generating capacity in many parts of the country, the big Aug. 14 blackout in the Northeast and parts of Canada, the specific causes of which are still being investigated, appears mainly related to problems in how the nation's electrical-transmission system is managed. The last time the electric industry was in this much trouble was 20 years ago, when utility customers and shareholders shouldered billions of dollars of cost overruns from nuclear-power plants. The latest downturn is the first since regulators a decade ago created a wholesale market where electricity could be bought and sold at competitive prices by unregulated, or merchant, suppliers. That means the current troubles are being borne by investors and bankers who financed the merchant companies' building spree. ... How did this enormous reversal happen, especially since it looked like the nation was heading toward an energy shortage only a short time ago? Mainly, plants were built with assumptions about demand growth and the evolution of electricity markets that haven't come to pass. A backlash against deregulation hurt the new merchant suppliers after California's experiment in energy deregulation produced sky-high prices in 2000 and 2001 that bankrupted its energy auction. In late 2001, sector pioneer Enron Corp. collapsed amid accusations that it had manipulated markets. These two developments largely halted the growth of auction markets that would have given new suppliers an edge over owners of older, fuel-guzzling plants. Other factors also have hurt. Natural-gas prices have gone up sharply, making gas-fired plants less competitive against coal-fired plants. Another blow was the Bush administration's decision to weaken industrial-pollution rules, effective next month, which means that old power plants no longer face costly upgrades and can undercut newer, cleaner plants with high capital costs. 'Fairly Desperate Characters' This has left many companies with state-of-the-art plants, but too few buyers for the output. "We and our industry are fairly desperate characters these days," says Richard Lehfeldt, senior vice president at Teco Energy, which owns the two largest gas-fired plants in the nation. He says suppliers will sell electricity for extremely low prices just to have some cash flow. "Even a welfare rate of return is better than no rate of return." Lenders, so far, have been willing to extend debt maturities rather than press the issue. But Mr. Rigby, the Standard & Poor's analyst, says there's evidence of growing "lender fatigue." "As the economy picks up," he says, "the banks may be willing to take more write-offs and let the companies go into bankruptcy." online.wsj.com