Midwest Plans For Heat Wave

The East Central Area Reliability Coordination Agreement (ECAR) says there is a 90 percent chance that peak demand this summer in the Midwest will exceed the supply of electricity. The regional electricity reliability group says generating capacity in the region has decreased, resulting in the tightest reserve margins in 19 years. An increase in electric demand and the shutdown of Canadian nuclear plants have exacerbated the problem of tight reserves, ECAR notes.

   In response to this problem, Michigan’s Consumers Energy and Detroit Edison have received approval from the Public Service Commission for rate options for industrial customers faced with electricity supply reductions. Consumers Energy received approval for two pilot programs to encourage load-shifting and self-generation by large customers during periods of high demand this summer. The load-shifting program, available through September 15, allows customers to reduce their electric costs by shifting their electric demand away from the 11 a.m. to 7 p.m. peak period. Industrial customers also will be allowed to produce power from their own facilities during the peak demand period.

   Detroit Edison is offering a back-up power supply program to interruptible rate industrial customers whose power is interrupted during summer peaks. Detroit Edison also will make it more attractive for large customers with on-site generating capacity to operate their own facilities during these peak times.

Choice for Arizona, Iowa

Large electricity customers will be able to choose their electric suppliers beginning Jan. 1, 1999 under a plan on electric competition being drafted by Arizona’s utility regulators. The plan, which should be adopted this summer, calls for full competition for all electricity customers as of Jan. 1, 2001. Arizona’s investor-owned utilities, including Arizona Public Service and Tucson Electric Power, would have to sell off their generating assets in order to recover 100 percent of their investment in these facilities. These “stranded costs” are estimated at upward of $2 billion in Arizona, and they must be fully recovered by year-end 2004.

   And in Iowa, about 50 industrial electricity customers of the state’s largest utility, MidAmerican Energy Holdings, will be eligible to participate in an open access retail pilot program slated to begin as soon as the utility receives the required regulatory approvals. The Des Moines-based utility plans to set aside 60 megawatts, or 2 percent of its peak demand in the state, for the industrial pilot program. Businesses with annual peak demand of more than four megawatts will be eligible.

Power Glut by 2002?

The Northeast could have a power glut by 2002. PIRA Energy Group, a New York research firm, predicts the Northeast could soon become oversupplied despite the likely retirement of nuclear capacity there. The region’s electric load is not expected to grow much, and there are 25,000 megawatts of new capacity planned.

   PIRA says the West could also fall victim to excess capacity, with more than 8,000 megawatts of new generation on the books prior to 2002 and limited prospects for early retirement of hydro and nuclear generating units.

   “Regional electricity markets will become increasingly cyclical and volatile,” PIRA notes.

Record Gas Pipeline Use

NATURAL GAS consumption grew by 17 percent between 1990 and 1996, says the Energy Information Administration in a new report, Deliverability on the Interstate Natural Gas Pipeline System. The amount of gas flowing per day in 1996 had grown by 24 percent from 1990, resulting in a record high 75 percent utilization of installed capacity.

   The natural gas industry’s overall capacity to pipe gas from region to region was more than 84 billion cubic feet per day in 1997, a 15 percent increase over 1990. Pipelines in the three Canada-to-U.S. transportation corridors were operating above 85 percent capacity throughout most of 1997, thanks to the lower cost of Canadian gas relative to U.S. gas prices.

   The most extensive development of new pipeline capacity in the next few years will occur along the corridors connecting Canada to the U.S. Midwest and Northeast markets to handle ever-growing Canadian gas imports. A new corridor is being developed to bring gas from the Canadian east coast to Canadian and U.S. markets. This could add up to 8.6 billion cubic feet of gas per day to U.S. import capacity from Canada in the next three years.