Friday, August 13, 1999
Market for electricity sizzles
BY MIKE BOYER
The Cincinnati Enquirer
Duke Energy Corp., fresh from investing more than $400 million in merchant power plants near Trenton in Butler County and in Vermillion County in western Indiana, wants to build more of the supplemental generating stations in the upper Midwest.
“Absolutely,” said Jim Donnell, president of Duke Energy North America, when asked Thursday whether the development unit of the Charlotte, N.C., power company was looking for other merchant plant sites.
“We believe the upper Midwest can support many more of these (plants),” he said minutes after the official ground-breaking on the $200 million gas-fired generating plant in a cornfield outside Trenton.
The Trenton plant, designed to produce 640 mega watts of electricity when completed next summer, is the first of four merchant plants either approved or proposed across Ohio.
Unlike large traditional generating plants built by utilities to serve a defined service area, so-called merchant plants are built to supply power to the wholesale market during periods of peak demand.
Although the Trenton plant will be able to produce enough electricity to serve a city of up to 200,000 people, it will operate only 500 to 1,500 hours annually, Mr. Donnell said.
Basically, the plant will run during the summer, when the price spread between the cost of natural gas to turn the plant's eight GE turbines and the wholesale cost of electricity — what's known in the industry as the “spark spread” — is wide enough to assure Duke a profit, he said.
The plant, which will employ 250 during construction and about 12 when it begins operating, is adjacent to Cinergy Corp.'s Woodsdale peaking station, opened in 1992.
He said Duke is now reviewing two dozen sites across the power-squeezed Midwest for potential generating sites, including others in Ohio, and expects to commit to two or three a year more in the next couple of years.
This week, Duke was planning another 640-megawatt peaking plant on 28 acres near Muncie, Ind.
A forecast by the East Central Area Reliability Council, a utility industry planning group, has estimated power supplies will be tight in the Midwest through 2003 without additional generating capacity.
That fact was brought home late last month. For the second consecutive summer, wholesale electric rates shot up 200 times their normal prices in the midst of a severe heat wave.
The lack of available power and constraints on transmitting it forced Cinergy Corp. to renege on several wholesale power supply agreements July 30, when temperatures topped 100 degrees.
Cinergy said this week that it is considering adding 200 to 300 megawatts of peaking capacity to its 11,000 megawatt generating system. July 22, customers in Cinergy's three-state service area set a peak demand record of 10,858 megawatts.
In North America, Mr. Donnell said Duke has committed to about 7,000 megawatts of merchant generating capacity and has under study plans for another 7,000 megawatts.
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