Power generators need suppliers to survive and prosper

摘要

What once was considered a "sleepy" industry that offered secure investments to conservative investors is now viewed as a high-risk bet on the future of the U.S. power market. The aftershocks of deregulation, the Enron debacle, the California meltdown, the sluggish economy, 9/11 and the collapse of the merchant development boom are fundamentally transforming U.S. power generators and the supply chain that supports them. In the past, access to "cheap" capital drove largely unsuccessful investments by utilities and independent power producers (IPPs) in geographic expansion, power trading operations, merchant power projects, and non-core businesses. Now, with $90 billion of debt coming due for repayment over the next four years, profits diminished and financial risk elevated, capital has become difficult and costly to raise. Power generators and energy merchants have responded to difficult capital markets and declining profits by restructuring their balance sheets and focusing on improving cash flow. To do this, they are exiting volatile merchant generation and trading operations, selling non-core businesses, reducing capital spending and downsizing existing core operations. So dra-conian have the cuts been, that even the operations and maintenance budgets for core generation operations have been drastically cut, opting to defer prudent expenses today in exchange for the risk of lower reliability and higher O&M expenses in the future.