Frontlines

Forecasters seem at odds over timing for recovery of power prices and earnings.

Like the rise in the Dow and Nasdaq this summer, optimism in the energy sector is on the increase as utility earnings improve. But as there is disagreement over the strength of the U.S. economic recovery, there is considerable discord in predictions of the utility industry recovery. Much of the unease comes from conflicting and disparate forecasts. Depending on whose report you read, the recovery in power prices is expected within 4 months, 12 months, 3 years, or 6 years (some even say 10 years). Certainly, the variation in forecasts must be attributed to the different assumptions about the effect a broad economic recovery would have on power demand and supply.