Sunday, July 09, 2000

Outages predicted in some parts of U.S.




By H. Josef Hebert
The Associated Press

        WASHINGTON — As this summer moves into its hottest months, federal officials and the power industry are watching the nation's electric grids and cautioning that a severe hot spell — combined with possible supply problems — could cause power outages in some parts of the country.

        As the $220 billion electricity industry moves toward more competition, there are growing concerns that the power industry is running too close to the edge in providing electricity during peak summer demand.

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        Spurred on by the growing economy and increased reliance on computers and other electrical devices, electricity demand has been increasing 2 percent to 3 percent a year, while production has lagged. Meanwhile, the safety cushion has dropped to below 15 percent of generating capacity, far below the 25 percent of a decade ago.

        Cincinnati-based Cinergy Corp., which set a new summer peak demand during a 10-day hot spell last July forcing appeals for customer conservation, has taken a number of steps to head off a repeat this year.

        It has acquired half ownership of 1,400 megawatts of electric peaking power, including one plant near Trenton in Butler County, built by Duke Energy North America.

        Cinergy has also spent more than $24 million on its electric transmission and distribution system in preparation for higher summer demand. The utility has also done extensive maintenace on its generating plants so they will all be ready for summer, a spokesman said.

        Another initiative, called PowerShare, is designed to reduce summer power demand by offering financial incentives to large commercial and industrial customers if they reduce electric use during high demand periods. About 300 companies have signedup for that program, Cinergy says.

        Combined with other programs, Cinergy said PowerShare will allow it to shed 500 megawatts of electric demand, if necessary.

        Signs of problems have already shown up in some areas this summer.

        For most of last week, California was under a “stage II power watch” in which customers were asked to keep down electricity use and power was withheld from some commercial users because of tight supplies as temperatures soared in the 100-degree range. Two weeks earlier, rolling blackouts moved through the San Francisco Bay area after some power generators failed during a record 103-degree heat wave.

        Although milder temperatures have eased the strain on the state's electricity system, Patrick Dorinson, a spokesman for the California Independent System Operator, which manages the state's flow of electricity, says the problem isn't over.

        “Everything is on a day-to-day basis,” he said. “... We expect another heat wave next week.”

        The Energy Department and an industry-sponsored watchdog group — the North American Electric Reliability Council — say the Southwest, California and much of the Northeast, especially New York and New England, face the greatest electricity reliability concerns this summer.

        In New England, a New Hampshire nuclear power plant went down for a few days last month, triggering an appeal throughout the region that users conserve electricity. The plant quickly resumed operation and cooler weather arrived, ending the threat.

        Jim Sinclair, a spokesman for the agency that manages New England's electricity grid, said, “There will be days this summer when we need to dip into the reserve tanks” for electricity, but reserve supplies are expected to be adequate to avoid power outages.

        Others are not so certain either in New England or elsewhere.

        The power problems that already surfaced in New England and California “could be an ominous sign,” said Energy Secretary Bill Richardson, who has held regional meetings on electric reliability issues. In those meetings, he said, “the view was unanimous” that the electricity system is operating on the edge and if problems are not addressed, “we'll all end up sitting in the dark.”

        This week, the House Commerce Committee is expected to consider legislation aimed at dealing with reliability concerns. The Senate recently passed a bill that would create a self-regulating industry organization charged with monitoring and assuring the reliability of the power grids. The Federal Energy Regulatory Agency would oversee this “self-regulation.”

        “The existing scheme of voluntary compliance with voluntary industry reliability rules is simply no longer adequate,” said Sen. Frank Murkowski, an Alaska Republican who is chairman of the Energy and Natural Resources Committee.

        But Mr. Richardson wants a broader bill — as do some key House Republicans — that would address other aspects of electricity deregulation. Without moving forward on the restructuring of the electricity industry, many reliability problems cannot be fixed, he contends.

        Electricity industry experts maintain that power outages will remain a part of every summer as long as demand continues to grow faster than new power plants and transmission lines can keep up.

        “We're running a 1930s distribution system (that) ... needs to be upgraded,” Roger Gale, president of industry consulting firm PHB Hagler Bailly, recently told a congressional panel.

        Meanwhile almost half of the states have moved toward adopting — or are planning to adopt — a more competitive electricity market, putting additional strains on the system, many industry experts believe.

        “A lot of electricity is being bought and sold. ... The system is stressed,” says Bill Brier, vice president for communications at the Edison Electric Institute, the trade group for investor-owned utilities.

        New power plants, mostly small, natural gas-fired units, have been built since last summer in the Southeast, Midwest and Texas, easing supply concerns for this summer. But few plants have been built in the West and Southwest. In New England, most of the new generation is still in the planning stage.

        “Companies have been very gun-shy to make investments (in new plants and power lines) because the rules aren't clear,” says Mr. Brier. While 24 states have taken some action on deregulating the power industry, Congress has been embroiled in disputes over how much say the federal government should have in moving toward a more competition.

        Mike Boyer contributed to this report.

       



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