Weakened regulation and fuel choice

The restructuring of the electric power industry will fundamentally affect every aspect of its relationship with the natural gas industry. The electric power industry is being restructered far more rapidly than most stategists expected even a year ago; competition at all levels of the electric power industry is here. Uncertainty itself is stifling strategic planning; long-term commitments are becoming extremely risky and therefore unattractive in the face of uncertainty concerning the electric utility industry's future. For many electric power industry participants, the prospect of industry restructuring is frightening, because it is driven by irresistible forces that they can barely influence; for natural gas industry players, it is frightening because it means pervasive change in the industry's best hope for growth. While working their way through the upheavals produced by restructuring, electric utilities and non-utility generators alike will be timid and tenative when it comes to making substantial new commitments to gas, particularly for new base- and intermediate load capacity. Competition is likely to force efficiencies that suppress overall demand for new generating capacity in many regions for quite some time, and change the nature of the challenges the gas industry must face in competing for market share with other power generation fuels. Concepts like open-quotes long termclose quotes, open-quotes fixed priceclose quotes and open-quotes assured cost recoveryclose quotes will become quaint memories, and once the dust has settled, gas will have its share of opportunities to fuel power generation resources, but will have to share far more of the risk facing power generators than it has thus far