ENERGY

Decisions on Restructuring

RESTRUCTURING EFFORTS by Utah lawmakers are unlikely to be on the agenda during the 1998 legislative session. In late November, a bipartisan management committee of the Utah legislature listened to the pleas of Governor Michael Leavitt and the committee's own electrical deregulation and customer choice task force to go slow on the issue until things shakeout in California, where much of the state's retail electricity market was
scheduled to be opened to competition by January 1. The management committee decided the issue was too full of unknowns to proceed before the full effects of deregulation in other states become clearer. The state's Public Service Commission (PSC) favors deregulation but will not act without the approval of the legislature, which under state law has the legal authority to manage the electricity.
Utah is not the only state that is now taking a wait-and-see attitude.
Wisconsin, which was once a leader among states considering retail competition, has now decided the state's existing infrastructure cannot accommodate wholesale competition, let alone retail competition. One of the major concerns, according to the PSC, is that utilities that own transmission facilities would be able to treat themselves more favorably in power transactions than potential competitors because of the state's constrained transmission system.
Meanwhile, state legislatures in Illinois and Massachusetts okayed
restructuring legislation, and a large scale pilot program got under way in Michigan. The staff of the Mississippi PSC has produced a restructuring plan that would give retail electric customers a choice of energy suppliers beginning in 2001, and the Maryland PSC has decided to phase in retailcompetition and customer choice beginning in April 1999,

Energy Management

NEIMAN MARCUS, a specialty retailer with operations in 16 states and theDistrict of Columbia, has chosen PG&E Energy Services, a subsidiary of SanFrancisco's PG&E Corp., to supply energy information and billing managementservices to its facilities nationwide.
Under the multiyear agreement, PG&E will install and manage electricand gas metering, data management, and information analysis, andconsolidate and manage the retailer's utility bills nationwide. Theinformation system will provide data on energy consumption and powerquality that should pinpoint new ways for the stores to save money.
North America's market for energy management services totaled $207.1billion in 1997, according to Frost & Sullivan, a Silicon Valley marketing firm. By 2004, the market will be worth $357.1 billion.

New Micro-Turbine Generator

LATER THIS YEAR, a Walgreen's drug store in Peoria, Ill., will begintesting a promising new pint-sized power plant designed to provide back-upgenerating capabilities, eliminate the need to buy power at peak rates, andserve as an independent power source for commercial and industrial powerusers.
Another experimental generator was scheduled for installation late lastyear in an energy-efficient McDonald's in Bensenville, Ill., outside
Chicago. It should be operational in the first or second quarter of 1998,according to Bob Langert, director of environmental affairs and energymanagement for McDonald's. The 75 kilowatt micro-turbine generator runs oneither oil or gas and has only one moving part. These small generationunits are modular, relatively inexpensive, and require far less lead timeto build than a typical large power plant. The cost of electricity shouldbe between 6 and 6.5 cents per kilowatt hour, including fuel and capital costs.

Lower Prices To Come

THE RESTRUCTURING of the nation's electricity markets I will produce abouta 20 percent drop in the average price of electricity by 2020, according tothe Energy Information Administration (EIA).
EIA's "Annual Energy Outlook 1998," released in part late last year,
predicts electricity prices will decline from 6.9 cents per kilowatt hourtoday to 5.5 cents/kwh by 2020. However, total U.S. energy consumption isexpected to rise, from 94 quadrillion BTUs in 1996 to 118.6 quads in 2020. That's an increase of 4 percent.
EIA said, however, that its projections "do not represent the full
impact of moving to competitive prices" because it only considered impactsupon prices by those states or regions that already have formalrestructuring plans in place.

ADM Custom Publishing Group
FOR ADDITIONAL INFORMATION PLEASE CONTACT:
AREA DEVELOPMENT AT (800)735-2732