California Crisis Overshadows Power Plant Building Boom
By Greg McDonald, Senior Writer
Citizens throughout the country are finding there's little they can do to stop an unprecedented power plant construction boom as states seek to prevent California-sized electricity problems by building more power plants and private investors move to cash in on fears of power outages.
Although precise figures are hard to come by, an estimated 700 plants are under construction or on the drawing boards to be completed by 2007 at a cost of about $140 billion, according to Arlington, Va.-based Energy Ventures Analysis Inc., a leading consultant in the energy field.
They figured that with 11 plants in operation or under construction and at least a dozen more planned for the state, nobody would object to killing off just one. But the Indiana Utility Regulatory Commission didn't buy their argument that the natural gas-fired facility would impose an environmental threat and wasn't needed.
"I'll say this, I've learned that money talks," says a disappointed Vandergrift. "I've been fighting this but I believe I've run up against a brick wall."
Indeed, citizens throughout the country are finding there's little they can do to stop an unprecedented power plant construction boom as states seek to prevent California-sized electricity problems by building more power plants and private investors move to cash in on fears of power outages.
Although precise figures are hard to come by, approximately 700 plants are under construction or on the drawing boards to be completed by 2007 at a cost of about $140 billion, according to Arlington, Va.-based Energy Ventures Analysis Inc., a leading consultant in the energy field.
Energy Ventures, which tracks power plant permitting and construction on a regular basis, says that if building goes according to plan, the country will add 305,000 megawatts of power to an existing base now of about 800,000 megawatts.
Once on-line, the new plants will generate enough juice to power 305 million homes, or nearly three times the current number of U.S. households.
Most of the new plants will be natural gas-fired generators built in the West and Midwest, with Texas, Illinois and California leading the way. An estimated 75 percent will be privately owned and operated because of deregulation efforts that have allowed companies to build plants virtually anywhere to cash in on peak demand. But without modernizing the nation's antiquated power grid system and implementing regional transmission agreements, industry analysts caution that the building boom may not prevent future problems in some regions of the country that rely on imported power.
New York City, for instance, could experience power failures this summer, despite the location of 10 gas-fired turbines around the metropolitan area. The reason, analysts say, is the city still imports most of its power via aging transmission lines that can't handle increased loads.
"New York could be the next California. That's the city; upstate New York will be fine," says Steve Thumb, an Energy Ventures consultant. "New York hasn't built enough power plants and they are capacity strained right now. The (power lines) bottleneck right into the city."
Florida, where demand is rising almost as fast as spring temperatures, may also be facing similar capacity problems. Much of its electricity is imported and experts fear it does not have enough plants of its own to meet increased loads this summer. These industry experts say outdated regulations that have kept many independent power operators out of the state have created a California-like situation where utilities are stretched too thin to meet demand. An exhaustive permitting process has also contributed to the slow development of new plants in the sunshine state.
"Florida needs to be very careful. The situation there with rate caps, regulatory bodies and red tape resembles the situation in California where there was a stalemate for years over new power plant development," says Dr. Arnold Leitner, an energy analyst with Boulder, Colo.-based RDI Consulting.
"While that stalemate is happening in Florida, the demand for electricity is still growing...and pretty soon, BOOM, you're going to have a catastrophe," adds Leitner, who maintains one of the most extensive databases in the country on the growth of the electric industry.
Leitner's data show that while many states have put their deregulation plans on hold because of the California debacle, they are continuing to make the permitting process for new plants easier. What used to take three-to-four years now takes only nine months to a year in many states, according to Leitner's research.
In a report expected in mid-May, Vice President Dick Cheney, who chairs a Bush administration task force on energy policy, is expected to issue a national call to action in hopes of getting states to streamline their permitting regulations even more. While the Cheney report will focus primarily on the development of more oil and gas reserves, a senior administration official said it would likely warn of future electricity shortages and recommend the construction of 1,300 to 1,900 new power plants by 2020.
There are currently some 3,336 plants in operation, according to the Energy Department, although the North Carolina-based energy consulting firm E3 Ventures puts the number closer to 4,600. The consulting firm uses Environmental Protection Agency data to track existing facilities.
Energy Department officials estimate that some 2,496 plants have been sold off to investor-owned companies under recently enacted utility deregulation guidelines, leaving only 870 in the hands of publicly regulated utilities. The sell off and divestitures have proceeded at a heart-stopping pace just over the past 16 months. At the end of 1999, for example, The Energy Department still counted 2,843 plants in its publicly-regulated utility category.
Regardless of what tack the administration takes to address electricity problems, states aren't waiting for Washington's guidance. Many have already brought new plants on line and are continuing to build more. Illinois, for example, recently retooled its licensing process to ease the way. As a result 33 facilities, most of them gas-fired, are in various stages of development and construction.
Nevada Gov. Kenny Guinn also announced plans recently to streamline the permitting process for new plants. "In order to keep the lights on in Nevada in the midst of the current energy emergency we must all come together in a collaborative effort to enhance our energy supply so our people are less vulnerable," he said.
If building goes according to plan, Nevada will add up to 72 percent to its existing generating capacity and Illinois will add as much as 66 percent more, according to an Energy Ventures report. Mississippi may lead the way in the South by more than doubling its capacity and Arizona may end up leading Western construction by adding 77 percent more to its current capacity.
In the meantime, New England states are expected to add another 3,000 megawatts of power this year and Texas alone is slated to add more than 9000 megawatts by early next year, according to various industry estimates.
With some 172 plants averaging 300 megawatts each due on line this year and another 173 expected on line next year, some industry experts and activists scoff at the Bush administration's prediction of shortages. They say power problems would not exist now if the country had a better way of moving electricity from one area of the country to another.
"It's difficult to fight that (refrain), 'We need the power, we need the power,'" says Nancy Fischer, a long-time Indiana activist opposed to new power plant construction. "We're not just saying we don't want it; we've researched this thoroughly. We don't need it."
Matthew Brown, who heads the Energy Project for the National Conference of State Legislatures, also believes that if construction continues at its present rate, "by 2005 there could be almost a power glut."
Brown has just completed a book on California's power crisis. Among his observations: "No other states appear (at the moment) to be in the severe situation in which California has found itself."
But he warns that states must improve their transmission capabilities - the grid systems that transfer power to where it needs to be - to help increase supply.
Some states, such as the Carolinas, are creating regional power transmission organizations, or RTOs, that in theory are supposed to help manage the electricity flow from one area to another efficiently and cost-effectively.