NERC Says Electric Capacity OK for 2000-2009

"Near-term electric generating capacity adequacy is expected to be satisfactory in North America," said Michehl Gent, president of the North American Electric Reliability Council (NERC) in announcing the release of NERC's Reliability Assessment 2000-2009, a 77-page study of future growth in supply and demand as well as the adequacy of the nation's transmission infrastructure.

According to NERC's study conducted by the 18-person Reliability Assessment Subcommittee, electric generating capacity which has shown a steady decline over the last several years is now beginning to pick up as new plants come online across North America. Near-term generation adequacy, defined as 2000-2004 is deemed satisfactory, while long-term generation efficiency, defined as 2005-2009, is also considered sufficient despite being harder to gauge.

NERC believes electricity demand will grow by about 60,500 MW by 2004, but the council also expects an addition of anywhere from 109,000 to 193,000 MW to come online in that same time period. By NERC's count, merchant plant developers have announced plans to construct over 190,000 MW of new generation in the near term, but the council finds it unlikely that the entire chunk of new capacity will be constructed. However, even if only 50% of the projected capacity is actually completed,the electricity margins will remain adequate.

As part of the study, all 10 Regional Reliability Councils (RRC) were asked to evaluate their adequacy levels relating to electric generation as well as transmission. Almost all of the RRCs besides the Mid-Continent Area Power Pool (MAAP) said that with forecasted generation resources and reinforced transmission systems in their regions they would be able to meet sufficient capacity margins and reliability for the near-term. MAAP said that its planned resource additions were inadequate to supply electricity during the peak summer demand months. While its transmission system is adequate, it is possible the MAAP region would have a generation capacity deficit by as early as the summer of 2001, and would be on target for a 5,300 MW deficit by the summer of 2009. To avert disaster, the region is currently planning for additional resources, and vows to carefully watch construction lead times.

Most of the RRC's speculated that with proper new generation and infrastructure their regions would be up to code for 2005-2009, but included the caveat that the long-term was too far off to form concise forecasts.

NERC believes that the transmission infrastructure will operate satisfactorily in the near-term, but there are some concerns. A reliable level of operation will be highly dependent upon continually increasing coordination with surrounding systems and proper operator control. The study predicts that transmission congestion will get worse, and transactions will continue to be curtailed until successful congestion relief methods are implemented, increasing the use of NERC's transmission loading relief procedures.

In the long-term, the council feels that as long as current trends continue, the power supply will be adequate, but warns that new capacity additions are increasingly being driven by market signals, rather than relying on calculations of a safe capacity margin. NERC expects this method will lead to fluctuations in capacity margins which reflect normal business cycles experienced in other industries.

The fate of transmission systems between 2005-2009 will rely heavily on the location of new transmission capacity. The council warns that unless lucrative incentives can be offered to encourage transmission system investment, and siting problems can be resolved, new transmission facilities and reinforcements will fall by the wayside. In the end, market signals and regulatory factors will play a key role in the location and timing of electric capacity additions, and will also act as guidelines for the planning of much needed transmission infrastructure additions in the future.

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