Technological changes and the natural gas industry probably willdo more to push electric industry restructuring than Congress orfederal regulators ever do, according to Washington, DC-basedrepresentatives for a national group for large energy consumers andthe electric utility industry’s trade association, speaking at theGasMart/Power 2000 meeting in Denver earlier this month.

Between combined-cycle natural gas merchant power generatingplants and the development of distributed generation, gas-relatedtechnological advances will help unleash more competition andcorresponding lower energy prices, officials from the ElectricConsumers Resource Council (ELCON) and Edison Electric Institute(EEI) told participants at a forum on “The Importance-or not-ofElectric Restructuring Legislation.”

From the large energy customers’ perspective, the natural gassuppliers are now providing more than just a commodity, and it isincumbent 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 customeris actually approached now by gas suppliers,” Anderson said. “Itcan happen in the electric industry. The technologies are there.They have been invented; they just haven’t been implemented. Thequestion is will it happen? Existing but unimplemented productsaren’t any good.”

The seeds for today’s electric restructuring through thedevelopment of gas-fired merchant power plants were sown back inthe 1960s with the massive jet turbine research and development forthe airline industry, said Charles Linderman, EEI’s director of anewly formed alliance between merchant and utility generators.

“The one challenge the gas industry does face with technologycomes from the environmental emphasis put on electric catalyticreduction systems. This has potential to limit locations of powerplants.”

Linderman noted that the push to cutback on hydro-electric damsin the Pacific Northwest particularly could result in even morenatural gas-fired generation being developed in California. Forhim, it is another example of environmental concerns driving energydevelopments.

“Watch the environmental issues,” he told the GasMart attendees.”Some in Washington would like to put an environmental emphasis onelectric industry restructuring bills. I frankly believe thattechnology is producing changes faster than legislation caninterpret them. In many ways, all of this type of technologicalchange does not wait upon the legislative process.”

However, ELCON’s Anderson expressed skepticism about theregulated utilities’ ability and willingness to implement thetechnologic advances to benefit large power consumers. He said oneof his largest members, Intel Corp., the computer chipmanufacturer, operates its own power quality programs in its plantsbecause local utilities can’t provide comparable services.

“We have to protect captive customers from the monopoliesexploiting their market power. Regulatory action must assure fairand nondiscriminatory access,” Anderson said.

“Electrons flow according to the laws of physics, not inresponse to state boundaries. States should not inhibit the flow ofpower. Electricity flows in interstate competition more than anyother commodity in this country.”

Anderson said the large industrials’ council sees what he calls”real competition” bringing lower prices, but as an economist bytraining he sees a “dichotomy between the technologically advancedtelecommunications, entertainment and financial industries and thetechnologically challenged electric industry.” He doesn’t thinkthis dichotomy can last much longer.

Anderson criticized utilities, regulators and attempts byCongress 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 policymakersare going in “six or eight different directions.” Ultimately,Anderson predicted some sort of national legislation would benecessary, although he cautioned that it needed to be free ofdominance from the regulated utility sector, which he characterizedas wanting a “one-size-fits-all solution that ends up fittingnobody.”

EEI’s Linderman warned his industry audience to watchenvironmental developments because he thinks that electricityreforms now are being driven by an environmental agenda, and thatis not necessarily positive for electricity suppliers or customers.Ultimately, he sees the natural gas and electric generators workingclosely in the formulation of future policies.

“Despite all the talk about electricity restructuringlegislation, it may not be the key to the electric and gas industryfutures,” Linderman said. “Environmental legislation and theongoing EPA war on coal are more likely to drive gas demand forpower generation than is restructuring.”

Richard Nemec, Denver

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