Electricity generators note Bush plan

Energy Boost Electricity generators note Bush's focus on more supply
Source: Fort Worth Star - Telegram
Publication date: 2001-05-19
Arrival time: 2001-05-21

Electricity generators around the country didn't need to read the Bush
administration's energy plan to know there's already a strong market for
their product.
"It's a bit of frenzy, I would say," Lane Kadel said of demand for the
natural gas-fired turbines brokered by his company, Utility Warehouse.com of
Portland, Ore. The 5-year-old enterprise, originally started to help electric
utilities buy and sell surplus equipment, has seen demand for
electricity-generating machinery move into high- voltage territory in recent
months.
With electricity already in short supply in parts of the country, headlines
of rolling blackouts in California, and growth projected to require more
power, U.S. electricity generators have announced plans for 312,836 megawatts
of new capacity. That's equal to about 40 percent of the nation's existing
generating capacity.
So it was no surprise to anybody in the industry that electricity figured
prominently Thursday in President Bush's energy plan. The plan largely
emphasizes the need to add more energy supplies, projecting that the nation
will need to add 393,000 megawatts of capacity by 2020. In 1999, the nation
added 10,266 megawatts of new capacity, according to the Energy Department.
Bush's plan also aims to speed up additions to generating capacity by easing
licensing, permitting and other regulatory review, including rules to
encourage more nuclear power plants.
The Bush plan, industry people say, apparently contains nothing to discourage
the industry's push to add supply.
"If there is, we haven't seen it," said Mark Stultz, vice president of the
Electric Power Supply Association, a group of independent power producers.
The plans for new capacity that have already been announced represent more
than $150 billion in potential investment in new electricity supply.
Not all the planned capacity will be built, at least not right away, said Tom
Rose, vice president of public affairs at TXU in Dallas. But a lot will, and
the projects that are postponed will probably still go through permitting and
land acquisition, "things that don't cost a lot of money," Rose said.
With that groundwork done, new capacity could come on line all the faster
when the market justifies it, he said.
The emphasis on adding supply doesn't please everyone in the electricity
business.
Jerry Davia, president of Orion Energy in Sausalito, Calif., would rather see
the government encourage investment in energy efficiency. Davia's company
consults with companies, including San Antonio-based H.E. Butt Grocery Co.,
to design and finance energy-saving systems.
"There's tons of new, energy-efficient technology out there all the time," he
said. "There's enough conservation to tackle any problems we have."
Energy users are probably in the best position to decide which energy
efficiencies make sense financially, but the government could make the
economics more attractive with tax credits and other incentives, he said.
"I don't see anything that bodes well" in the Bush plan as far as subsidies
and credits, he said. "And there's nothing just for California."
That's fine with Karl Rabago, managing director of the Rocky Mountain
Institute, a not-for-profit organization that advocates efficient use of
resources, including energy.
Rabago said he doesn't want energy use subsidized, because that
short-circuits the market mechanism that forces users to reduce consumption
in response to higher prices. At the same time, he also doesn't like aspects
of the Bush plan that he believes subsidize energy production.
Jesper Michaelsen, sales manager for wind turbine manufacturer NEG Micon USA
of Rolling Hills, Ill., said he was disappointed that Bush's plan doesn't set
any specific goals for increasing the amount of power generated from
renewable sources. Wind and solar sources account for just 2 percent of the
nation's total electricity market.
But Allen Barnett, who heads solar panel maker AstroPower of Newark, Del.,
said he's thankful for any attention at all, given the oil-and-gas
backgrounds of many Bush advisers. The Bush plan does include tax credits for
people who purchase solar panels.
"It's the most we could hope for," Barnett said. "I didn't expect them to
abandon their roots."
The Bush electricity measures that don't deal with adding generating capacity
address ways to build a bigger transmission system to carry power from
generators to users.
Two major recommendations include the creation of a national electricity grid
and giving federal regulators power to condemn private property for
infrastructure improvements such as new electrical transmission lines and
natural gas pipelines to deliver fuel to new generators.
Today, the United States has three regional electricity transmission grids:
Western, Eastern and Texas, which is mostly on its own grid and - unlike
energy-strapped states such as California - has a surplus of electricity.
Texas is virtually unconnected to the two regional grids, and the two
regional grids likewise aren't efficiently linked.
"It's going to lead to a lot of new investment," utility analyst Barry
Abramson, of the UBS Warburg investment firm, said of Bush's proposals.
"Right now, the country is full of transmission bottlenecks that make the
system less efficient and hinder competition and the delivery of power."
The 1995 Texas Legislature commissioned a study into tying Texas into the
national grids and concluded that it would cost $500 million to $600 million,
TXU's Rose said.
"It is not easy," he said. "It all has to be done at the same time," because
the amount of electricity moving between grids would quickly overload one or
two connecting lines.
Rose also said many states, including Texas, already allow governments to
condemn private property, a process called eminent domain. Public
transportation projects provide the most common use of eminent domain, along
with the construction of pipelines.
Kadel said boosting the nation's electricity infrastructure might be just as
important as adding generating capacity. "Right now you don't have any way to
move the electricity, so prices are high," he said.
This report includes material from The Associated Press.