Where will power come from? Conservation and efficient appliances can put off the need for new power plants; Austin replaces 89,000 air conditioners
The great heat wave caught the Northeast off guard this summer, creating a demand for electricity that was wasn't expected in some instances until the early 1990s. In New England, for example, temperatures soared above 90 degrees every day for more than three weeks, and relative humidity of at least 60 percent blanketed the region most days. As a result, power companies throughout the Northeast reported record or near-record use of electricity, as people sought relief from the sultry weather with the cooling blast of air conditioners.Skip to next paragraph
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So for power company executives, the heat wave was more than a present plight. It posed a question for the future: Where will power come from, as society requires more and more electricity?
The classic response - build another power plant - has lost some steam over the years. In the case of nuclear power plants, the costs of building a plant and generating electricity are so high that they pose a financial risk to utilities.
``The utilities that have not been doing well financially have been the ones stuck in the middle of huge construction projects, usually nuclear projects,'' says Scott Fenn, energy program director at the Investor Responsibility Research Center in Washington.
Over the past five years, he says, most new plants coming on line have required a ``prudency disallowance.'' This means that the regulators don't allow the full costs of that plant to be passed through to ratepayers.
``So we certainly see a utility's awareness and ability to adopt sensible conservation and load-management strategies as being one indicator of whether it's likely to be in good financial health,'' Mr. Fenn concludes.
Conservation - or ``energy efficiency'' - is being promoted by regulators, and even being initiated by some power companies on their own, as a way to meet at least some electricity demand without building new power plants.
Efficiency can make a real contribution, supporters say. Worldwatch Institute, in a paper issued in March, said that ``since 1973, the world has saved far more energy through improved efficiency than it has gained from all new sources. The energy savings of the industrial market economies alone exceed the combined energy use of Africa, Latin America, and South Asia.''
Under energy efficiency, consumers of electricity don't give up any of the quality of lighting or mechanical power they now receive from power companies. Instead, they use types of lights, air conditioners, refrigerators, and other appliances that gobble up less juice but perform as well as or better than other models.
``For the same dollar that you'd be spending on a new power plant, you could get perhaps more energy just by tightening up efficiency standards,'' explains Michael Foley, director of financial analysis at the Washington-based National Association of Regulatory Utility Commissioners.
Among the power companies that are promoting efficiency are Central Maine Power of Augusta, Maine; Carolina Power & Light Company of Raleigh, N.C.; Duke Power Company of Charlotte, N.C.; Florida Power Corporation in St. Petersburg, Fla.; Florida Power & Light of North Palm Beach, Fla.; Wisconsin Power & Light Company of Madison, Wis.; Texas Utilities Company of Dallas; Bonneville Power Administration of Bonneville, Wash.; Seattle Power and Light; and Salt River Project of Phoenix.
``The companies who are in the tightest pinch, as it were, for needing more capacity the soonest are the ones generally who are showing the most interest in conservation and efficiency,'' says Fenn. ``If you look at the industry as a whole, there are a group of probably 10 or so utilities that stand way out above the rest of the industry.''
``There's a scattering all over, big and small, public and private,'' adds Amory Lovins, director of research at the Rocky Mountain Institute of Snowmass, Colo., which derives most of its income from showing utilities how to save electricity.
``They found they can sell efficiency for fun and profit, and they can make more money selling negawatts than they used to make selling megawatts.
``The reason is straightforward enough in any other business, but new to the thinking of many utility CEOs [chief executive officers] - that is, that it's OK to sell less electricity and bring in less revenue, as long as your cost goes down more than your revenue. In other businesses, we call this moving from a volume to a margin business. In the utility business, it's heresy, because they've sold more every year for a long time and brought in more money every year.''