Gas-Fired Generation Drives Electric Changes
Technological changes and the natural gas industry probably will
do more to push electric industry restructuring than Congress or
federal regulators ever do, according to Washington, DC-based
representatives for a national group for large energy consumers and
the electric utility industry's trade association, speaking at the
GasMart/Power 2000 meeting in Denver earlier this month.
Between combined-cycle natural gas merchant power generating
plants and the development of distributed generation, gas-related
technological advances will help unleash more competition and
corresponding lower energy prices, officials from the Electric
Consumers Resource Council (ELCON) and Edison Electric Institute
(EEI) told participants at a forum on "The Importance-or not-of
Electric Restructuring Legislation."
From the large energy customers' perspective, the natural gas
suppliers are now providing more than just a commodity, and it is
incumbent on electric suppliers to do the same, said John Anderson,
executive director of the consumers council.
"It is a remarkable difference in tone with the way the customer
is actually approached now by gas suppliers," Anderson said. "It
can happen in the electric industry. The technologies are there.
They have been invented; they just haven't been implemented. The
question is will it happen? Existing but unimplemented products
aren't any good."
The seeds for today's electric restructuring through the
development of gas-fired merchant power plants were sown back in
the 1960s with the massive jet turbine research and development for
the airline industry, said Charles Linderman, EEI's director of a
newly formed alliance between merchant and utility generators.
"The one challenge the gas industry does face with technology
comes from the environmental emphasis put on electric catalytic
reduction systems. This has potential to limit locations of power
Linderman noted that the push to cutback on hydro-electric dams
in the Pacific Northwest particularly could result in even more
natural gas-fired generation being developed in California. For
him, it is another example of environmental concerns driving energy
"Watch the environmental issues," he told the GasMart attendees.
"Some in Washington would like to put an environmental emphasis on
electric industry restructuring bills. I frankly believe that
technology is producing changes faster than legislation can
interpret them. In many ways, all of this type of technological
change does not wait upon the legislative process."
However, ELCON's Anderson expressed skepticism about the
regulated utilities' ability and willingness to implement the
technologic advances to benefit large power consumers. He said one
of his largest members, Intel Corp., the computer chip
manufacturer, operates its own power quality programs in its plants
because local utilities can't provide comparable services.
"We have to protect captive customers from the monopolies
exploiting their market power. Regulatory action must assure fair
and nondiscriminatory access," Anderson said.
"Electrons flow according to the laws of physics, not in
response to state boundaries. States should not inhibit the flow of
power. Electricity flows in interstate competition more than any
other commodity in this country."
Anderson said the large industrials' council sees what he calls
"real competition" bringing lower prices, but as an economist by
training he sees a "dichotomy between the technologically advanced
telecommunications, entertainment and financial industries and the
technologically challenged electric industry." He doesn't think
this dichotomy can last much longer.
Anderson criticized utilities, regulators and attempts by
Congress to pass electric restructuring legislation. He said that
"confusion reigns" in most states in terms of energy restructuring,
and he cited New York as an example where he said the policymakers
are going in "six or eight different directions." Ultimately,
Anderson predicted some sort of national legislation would be
necessary, although he cautioned that it needed to be free of
dominance from the regulated utility sector, which he characterized
as wanting a "one-size-fits-all solution that ends up fitting
EEI's Linderman warned his industry audience to watch
environmental developments because he thinks that electricity
reforms now are being driven by an environmental agenda, and that
is not necessarily positive for electricity suppliers or customers.
Ultimately, he sees the natural gas and electric generators working
closely in the formulation of future policies.
"Despite all the talk about electricity restructuring
legislation, it may not be the key to the electric and gas industry
futures," Linderman said. "Environmental legislation and the
ongoing EPA war on coal are more likely to drive gas demand for
power generation than is restructuring."
Richard Nemec, Denver