Time to Build

The benefits of increased competition being introduced into the US electricity sector are being undermined by high demand, low supply, and price volatility. Recent acceleration in power demand is compounded by a lag in power plant construction and new generation. Recent assessments indicate that over 10,000 MW of capacity nationally will have to be added annually through 2008 to keep up the 1.8% annual growth rate. Transmission capacity is also becoming scarce in some regions. Recommendations for policymakers to foster adequate generation and reliability are listed and emphasize support of transparent pricing that reflects the market value for power, adoption of uniform interconnection standards, and avoiding long-term use of price caps in competitive power markets.