“Near-term electric generating capacity adequacy is expected tobe satisfactory in North America,” said Michehl Gent, president ofthe North American Electric Reliability Council (NERC) inannouncing the release of NERC’s Reliability Assessment 2000-2009,a 77-page study of future growth in supply and demand as well asthe adequacy of the nation’s transmission infrastructure.

According to NERC’s study conducted by the 18-person ReliabilityAssessment Subcommittee, electric generating capacity which hasshown a steady decline over the last several years is now beginningto pick up as new plants come online across North America.Near-term generation adequacy, defined as 2000-2004 is deemedsatisfactory, while long-term generation efficiency, defined as2005-2009, is also considered sufficient despite being harder togauge.

NERC believes electricity demand will grow by about 60,500 MW by2004, but the council also expects an addition of anywhere from109,000 to 193,000 MW to come online in that same time period. ByNERC’s count, merchant plant developers have announcedplans toconstruct over 190,000 MW of new generation in the near term, butthe council finds it unlikely that the entire chunk of new capacitywill be constructed. However, even if only 50% of the projectedcapacity is actually completed,the electricity margins will remainadequate.

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

Most of the RRC’s speculated that with proper new generation andinfrastructure their regions would be up to code for 2005-2009, butincluded the caveat that the long-term was too far off to formconcise forecasts.

NERC believes that the transmission infrastructure will operatesatisfactorilyin the near-term, but there are some concerns. Areliable level of operation will be highly dependent uponcontinually increasing coordination with surrounding systems andproper operator control. The study predicts that transmissioncongestion will get worse, and transactions will continue to becurtailed until successful congestion relief methods areimplemented, increasing the use of NERC’s transmissionloadingrelief procedures.

In the long-term, the council feels that as long as currenttrends continue, the power supply will be adequate, but warns thatnew capacity additions are increasingly being driven by marketsignals, rather than relying on calculations of a safe capacitymargin. NERC expects this method will lead to fluctuations incapacity margins which reflect normal business cycles experiencedin other industries.

The fate of transmission systems between 2005-2009 will relyheavily on thelocation of new transmission capacity. The councilwarns that unless lucrative incentives can be offered to encouragetransmission system investment, and siting problems can beresolved, new transmission facilities and reinforcements will fallby the wayside. In the end, market signals and regulatory factorswill play a key role in the location and timing of electriccapacity additions, and will also act as guidelines for theplanning of much needed transmission infrastructure additions inthe future.

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