Computers, their manufacture and use, the Internet and the rapidgrowth of the nation’s communications infrastructure are not onlyrevolutionizing the energy industry, they’re fueling demand forelectricity and will continue to do so, according to Enron CEOKenneth L. Lay.

Enron is poised to begin trading all the commodities it deals inover the Internet (see Daily GPI, Oct. 27). It and like-minded companies canthank technology for making e-commerce possible. While energy marketshave become more efficient and prices have dropped — thanks in partto technology — electricity demand growth has in fact surpassed whatincreased efficiencies have done to lessen the pull on the nation’spower supply, said Lay. Put another way that reveals something of anirony, technology has boosted efficiency and therefore diminisheddemand. But lower prices and the thirst for computing power havereally created a net growth in demand. More, better, faster makes formore demand.

While prices for primary energy sources, such as gas and oil,have become de-coupled from the gross domestic product, electricityprices have not, Lay told attendees at PowerMart ’99 in HoustonWednesday. And electricity’s share of the U.S. energy mix has grownsteadily, from about 13% in 1950 to 36% in 1998.

“We’re using electricity for so many additional purposes,including, more recently, computers and, of course, the wholetechnology revolution that we’re going through.” The primary driverof electricity demand growth, according to Lay, is a 30% decreasein real electricity prices over the last 20 years, thanks in partto lower fuel prices due to deregulation, competition and newtechnologies, such as gas-fired, combined-cycle generation. Andlook for power prices to decline further, noted Lay.

“Today, new natural gas combined-cycle plants can generateelectricity at three cents per kilowatt hour or less, probably lessin most cases.” Microturbines weigh in at about five cents perkilowatt hour, “and those costs are coming down, too. So we’llcontinue to have a lot of downward pressure on price, somethingthat most of us in this industry have gotten used to. With thederegulation [of the electric industry], like we have nickel nightsnow for telephone service, we may soon have nickel nights forelectricity service or one or two cents per kilowatt hour forelectricity service.”

Looking at the computer industry’s role in growing electricitydemand, Lay cited statistics from several sources. In 1995, theU.S. Department of Energy estimated that 5% of all U.S. electricitywas being used by the computer industry to manufacture anddistribute computers and by the computers themselves. Anothersource in 1997 said the figure was probably around 9%, Lay said. Astudy released a few months ago and cited by Lay said as much as13% of electricity use could be attributed to computers, theInternet and the communications infrastructure they depend upon.

During his talk, Lay also turned to a year-old annual reportfrom the Federal Reserve Bank of Dallas that ambitiously chose torank the 10 most important relatively recentinventions/discoveries. Numbers one, two and three are electricity,the microprocessor and the computer. Those three and No. 7, theInternet, are now linked and are working in concert torevolutionize the energy industry.

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