Utilities predict shortage in '90s
In New England, utility officials predict tighter electricity supplies this summer than any summer in the last decade. Long Islanders and residents of Las Vegas, Nev., are being told to expect electrical brownouts in the coming months.
And that may just be the beginning. With power plant construction at an ebb, utility experts say there won't be enough electricity to satisfy future demand. If so, power shortages could crop up around the country by the mid-1990s.
``If the trends continue, there is going to be a real danger in the 1990s,'' says Blaine Vincent, senior engineering analyst with the North American Electric Reliability Council, an industry group.
Utilities warn that inadequate electrical generating capacity could mean voltage reductions, scheduled brownouts, service interruptions, and higher electric bills for millions of customers.
The fast-growing regions in the Southwest may be affected most, analysts say. But parts of the Northeast, Midwest, and Northwest could also feel the pinch.
Since it now takes eight to 12 years to bring a large power plant on line, Mr. Vincent says, ``utilities are going to have to start planning new plants now'' to avoid future shortages.
Few, however, are doing so. A number of factors have made utility officials wary of adding more plants to their present responsibilities: the current nationwide surplus in electricity; a regulatory climate in many states that utilities say inhibits new plant projects; and the dramatic cost overruns caused by the biggest plant projects.
``Companies simply don't want to build because of the high cost of building,'' says Mark Luftig, a utilities analyst with Salomon Brothers Inc.
``In most states, the climate is very hostile,'' says Zane G. Todd, chairman and chief executive officer of Indianapolis Power & Light Company. ``Regulatory commissions have to realize that there is no commercial incentive for utilities to build new plants.''
High among utility grievances are recent decisions by state regulatory boards not to allow utilities to fully recover the cost of new plants through rate increases.
The Massachusetts Department of Public Utilities, for example, has warned utilities that if projects prove uneconomical, stockholders, not ratepayers, will have to pay for them. In Indiana, an appellate court recently held that costs of canceled plants could not be tucked into consumers' utility bills.
Instead of embarking on new plant projects, some utilities are advocating conservation measures to stem the tide of rising electricity demand. Oregon's Pacific Power & Light and the New England Electric System in Massachusetts have started weatherizing customers' homes. The Nevada Power Company offers rebates to residential customers who let the company shut off their air conditioners by remote control for 10 minutes an hour.
Amory Lovins, research director of the Rocky Mountain Institute in Old Snowmass, Colo., contends that if metropolitan Chicago power consumers adopted energy-efficient freezers, refrigerators, and air conditioners, the electricity saved would be more than double the output of a 2,240-megawatt nuclear power plant the local power company has proposed. New appliances appearing on the market will enable the average all-electric home to run on one-fifth of the power it now needs, he says.
``I doubt there's a utility in the country that couldn't save three-fourths of its load through [energy efficiency] measures,'' says Mr. Lovins.
But the economic incentive to conserve is not as strong as it once was. The relative price stability ratepayers have enjoyed recently is due in part to the same delays in plant construction that could produce energy shortages later on.
Even with conservation measures, utilities contend that shortages will occur if new plants do not come on line. While estimates of the growth of electricity demand in the next decade vary from 1 to 4 percent, all of them predict tightening supplies. The Edison Electric Institute estimates that if demand for electricity grows at half this year's 5.6 percent rate, there will be a 36,000-megawatt shortage -- equivalent to peak consumption in all of New England and New York State -- by 1993.
By that time, utility executives hope to be building plants again. Mr. Zane of Indianapolis Power says a new state law allows utilities to recover, through rate hikes, costs of plants canceled by the state regulatory board. GRAPH: US Electricity Outlook. Electrical generating capacity (in megawatts) 1984 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 604,000 estimated: 616,790 638,725 654,715 664,100 672,200 676,000 687,000 693,750 704,300 711,635 Electricity demand 1984 451,150 projected: '85 465,000 range of projections for growth: '94 567,800 2.2% growth '94 xxxxxxx 3.5% growth Source: National American Electric Liability Council