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Western Power Market Stands 'Poised on the
Precipice' According to the ICF Kaiser Consulting Group's 1999 Bulk Power Outlook FAIRFAX, Va., June 1 /PRNewswire/ -- Power markets in the Western System Coordinating Council are ``poised on the precipice'' of capacity shortfalls and extreme price volatility this summer and next, according to a new study of the regional market by the Energy Practice of the ICF Kaiser Consulting Group. ``The West stands at least a one in three chance of experiencing price spikes similar to those seen in the Midwest market during the summer of 1998,'' said Judah Rose, a Senior Vice President with the Group and the director of the ICF study. ICF's analysis of the West points to a number of key near-term implications: Regional Capacity Deficits. The region is in a delicate supply/demand balance, with most sub-regions of the West relying on a capacity surplus in the Pacific Northwest to meet near-term peak capacity requirements. Because demand growth is outpacing new supply additions, those deficits will only become more extreme over the next two years. Volatility Exacerbated by Hydroelectric Dependence. A fifth consecutive year of above-average hydroelectric generation -- the principle cause of the Pacific Northwest surplus -- will again mask the West's precarious supply/demand balance in 1999. However, if the drought conditions of the early 1990s resurface, the West will find itself at an even greater risk of price spikes. Upward Pressure on Prices. Prices are on an upward trend for 1999 and 2000, the result of both higher regional spot natural gas prices and the increasing value of ``pure capacity'' -- the value of ensuring reliability for consumers. The study also evaluates the long-term future of the Western market and highlights the following key results: Capacity Requirements Growing Steadily. The region's underlying demand growth is strong, creating a long-term regional capacity need totaling more than 18,000 MW by 2005, unless there is a serious economic downturn in the region. Energy Prices Trending Downward. The trend for long-term energy prices is for negative real growth through 2010, but the region will remain susceptible to near-term volatility while market institutions continue to evolve and new supply is slowly added over the next few years. Capacity Prices Rising Slowly. Current low capacity values will continue to rise (but still remain below many other regions) as new, more efficient generation is added. Strong Gas Demand Growth at Stable Prices. Gas demand for power generation is poised to more than double by 2010, with the most explosive growth in the Rocky Mountain and Southwest subregions. Even so, the West region's vast gas supply potential appears capable of meeting this growth with little, if any, real price appreciation through 2010. ``The Western U.S. Region volume of our Bulk Power Outlook, along with the other five regional volumes, offers comprehensive insights into the rapidly changing North American power markets,'' said Sudhakar Kesavan, President of the ICF Kaiser Consulting Group. ``No other firm can match our analytic capabilities -- which are based on an understanding of the fundamentals driving electric power markets -- and the knowledge gained from working one- on-one with the market's key players.'' About the ICF 1999 Bulk Power Outlook ICF's analysis of the Western market is part of the 1999 Bulk Power Outlook, an authoritative assessment of North American regional bulk power markets through 2010. The study also provides the analytical basis for ICF's extensive and well-respected consulting services providing market assessment, asset valuation, and project due diligence evaluations for the North American electric power and natural gas industries. The 1999 Bulk Power Outlook is available for six regional markets -- West, Northeast, Midwest, Southeast, South Central, and Canada -- well as a National Subscription, which includes the six regional studies and a North American summary volume. Additional information on the 1999 Bulk Power Outlook, including a prospectus, sample volume, and order form, can be found at http://www.icfkaiser.com/consulting/products/BPS.htm. The 1999 Bulk Power Outlook is part of the ICF Kaiser Consulting Group's growing family of products and services. Related studies on energy and environmental issues recently completed by ICF include the SO2 Allowance Market Outlook and the Ozone Transport Region: NOx Allowance Study, which detail ICF's views on air emissions allowance markets. For information about the 1999 Bulk Power Outlook and related studies, or any of ICF Consulting Group's products and services, call Aldyn Hoekstra at 415/507-7188 or Cheryl Aronson at 415/507-7151. Additional information the ICF Kaiser Consulting Group can be found on ICF's Web site at http://www.icfkaiser.com/consulting. About the Company Headquartered in Fairfax, Virginia, ICF Kaiser is one of the United States' largest engineering, construction, program management, and consulting services companies. Its more than 4,000 employees, located in 60 offices around the world, provide fully integrated capabilities to clients in four related market areas: environment, infrastructure, industry, and energy. ICF Kaiser reported gross revenue of more than $1.2 billion for the 12 months ended December 31, 1998. All references to ICF Kaiser indicate ICF Kaiser International, Inc. and any of its subsidiaries. Forward-Looking Statements and Certain Factors Affecting ICF Kaiser and Its Businesses This release contains ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995, which are identified by the use of forward-looking terminology such as ``may,'' ``will,'' ``could,'' ``should,'' ``expect,'' ``believe,'' ``anticipate,'' ``aim,'' ``intend,'' ``plan,'' ``estimate,'' or ``continue'' or the negative thereof or other variations thereof. Such forward-looking statements are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates, that may cause actual results to differ materially from those stated or implied by these forward-looking statements. These forward-looking statements also are subject to company-specific risks and uncertainties such as the company's ability to maintain existing contracts (including contracts with the federal government) at their existing or at improved levels, to accurately estimate and recover costs incurred on fixed- price contracts, to sign new contracts in established or new markets (including international markets), to conclude and implement successfully certain acquisitions and joint-venture relationships, and to avoid significant environmental fines, penalties, or liabilities. SOURCE: ICF Kaiser Consulting Group
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