PRIORY COUNTERS BARRONS FOOLISH ARTICLE ON POWER "GLUT"
More Power
To the Editor:
In your August 6 cover story, "Too Much Power," Harlan S. Byrne failed to take
several critical factors into account regarding the U.S. energy supply.
Due to limitations in electricity transmission, the supply/demand picture must be viewed
regionally and not simply as a national collective of current-generation facilities and
announced plans for new plants. Even during a summer of relatively low economic
growth and mild weather, several regions have set records for peak demand, and we
see strong additional growth in many areas.
The ability of the industry to add new generation is constrained by several factors not
mentioned in the article, such as a shrinking pool of skilled labor, financing issues,
limited water supply, access to fuels and grid connection -- limitations that have already
caused construction delays this summer. Duke Energy estimates that the construction
labor shortage severely impairs the ability to build more than 35,000 megawatts of new
generation each year in the United States -- far short of the 290,000 new megawatts
that Barron's predicts will be built over the next six years.
We must consider the effects of demand growth and the age of current power plants.
Even with a slower economy, we see peak electricity demand growing at 2.4% a year.
Given reserve margins across the country, Duke Energy forecasts the industry's need to
invest over $120 billion to add some 220,000 megawatts of generating capacity by
2010. These estimates do not account for replacement of older, less efficient generating
units. Nearly 100,000 megawatts of thermal generation capacity in North America is
over 40 years old. Some of this capacity will certainly be retired in the next decade,
providing opportunity for additional generation.
Energy supply and economic vitality are inextricably linked. Years of lack of investment
in exploration and production, pipelines, power plants and electric transmission have
caught up with us. I'd caution against a false sense of complacency.
Richard B. Priory
Chairman, President and CEO
Duke Energy
Charlotte, North Carolina |
