Although California's energy crisis was initially viewed as an isolated problem, more recently it has been seen as a harbinger of what could happen in other regions. The Northeast in general and New York in particular are seen as prone to California-style power shortages, and potential blackouts, this summer. Western states will probably see shortages, though demand should be met through cutting back to big industrial customers that have interruptible power contracts. While such capacity problems are obviously a problem for power consumers, they are just as obviously an opportunity for those in the business of supplying power. Eager to meet those demand needs, companies have been rushing to the markets for funding to build new power plants.
Investors are clearly enthusiastic over the prospects for the business.
Perhaps they should also be a little wary, recalling the lessons they have just learned in tech stocks. The market responded to this by generously funding those that would work to meet that demand. There was a flurry of initial public offerings, a tremendous buildout of plants making everything from semiconductors to telecom equipment. When demand slowed, the undercapacity problem turned into an overcapacity problem so fast it was like someone threw a switch. For the time being, though, it looks like overcapacity is far off in the power business.