General Information on the CEC Forecasts

The graph shows the average market price for California electricity markets measured in $/mwh in nominal dollars. The average is calculated as a simple average of market prices estimated for all hours per year, unweighted by load. December 1997:Short Term (blue). This forecast extended 4 years into the future. It was based on model calculations with no additional generating capacity. December 1997: Long Term (purple) This forecast did not use models to find the market clearing price, nor did it specify the amount of generating capacity which would be added in the future. Rather, the average annual price was assumed to be the same as the cost of a new entrant. February 2000: Rapid Development (orange) This scenario envisions capacity additions that will increase margins to around 22% by the year 2003. The margin declines to 7% by the end of the forecast period. February 2000: Cautious Development (black) This scenario envisions a different pattern of capacity additions in which reserves increase to 13% by 2003. The margin then declines gradually to 7% by the end of the period.