Here's something to think about:
>>.....a near-record
number of 20 nuclear facilities from the Midwest to Canada that have been
retired or are currently shut down for repairs or maintenance.<<
>>..... a Ford Motor Co. assembly plant was forced to close down
Thursday for a third time, after having its power curtailed for two
consecutive eight-hour days the previous month.<<
>>Employees at
American Electric Power, Columbus, Ohio, one of the country's largest
utilities serving seven states from Ohio to Virginia, took stairs instead of
some elevators in their 31-story building and worked with the lights off to
preserve energy.<<
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The Wall Street Journal Interactive Edition, June 26, 1998
Major Business News
Power Cuts Hit Midwest, May Spread
Due to Repairs and a Lack of Building
By KATHRYN KRANHOLD
Staff Reporter of THE WALL STREET JOURNAL
After years of utility-industry warnings about impending electricity
shortages, power interruptions have become a reality for some big customers
in the Midwest.
And many expect the problems to spread to New England.
The recent rash of temporary shutdowns, which have hit steelmaking
operations, auto-assembly plants and many other industrial sites throughout
the Midwest, stems from a combination of factors: Demand for electric power
has been climbing in many parts of the country for some time; there has been
a virtual freeze on construction of major new plants; and a near-record
number of 20 nuclear facilities from the Midwest to Canada that have been
retired or are currently shut down for repairs or maintenance.
On top of that, portions of the Midwest and the Atlantic region are reeling
under a nearly week-long heat wave that has further increased electricity
loads. Even when excess power has been available to prevent temporary
cutoffs, some utilities have refused to move it over their transmission
lines, citing contracts that don't allow such emergency shipments, according
to industrial users.
In Chicago, a Ford Motor Co. assembly plant was forced to close down
Thursday for a third time, after having its power curtailed for two
consecutive eight-hour days the previous month. "We had a heat wave in the
week of May 18," says Peter Mehra, vice president of energy services for the
Ford unit. "Almost the whole utility industry in the Midwest seemed to be
very ill-prepared for that. We had a whole barrage of plants down" at that
time.
Temporary Interruptions Permitted
Like many industrial customers throughout the nation, the Ford plant's
contract with its local utility, Commonwealth Edison Co., allows for
temporary interruptions of power in exchange for a price break. The Ford
plant's management opted to accept the risk for the first time when it
signed a new supply contract at the beginning of February.
A spokeswoman for Commonwealth, a unit of Unicom Corp., said the company has
tried to meet the demand by buying large amounts of electricity from other
wholesalers, and moving more power than normal across the transmission grid.
For LTV Corp., Cleveland, the escalating shortages also have resulted in
production shutdowns. The steel company said Wednesday that factories in
Cleveland, Pennsylvania and Illinois experienced interruptions of
electricity, prompting it to either purchase higher-priced power from new
sources or stop production altogether for short periods.
Utilities themselves aren't immune from power shortages. Employees at
American Electric Power, Columbus, Ohio, one of the country's largest
utilities serving seven states from Ohio to Virginia, took stairs instead of
some elevators in their 31-story building and worked with the lights off to
preserve energy.
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This Summer's Problem Spots
Capacity and reserves, in megawatts
ÿÿ Region Demand Supply Reserve
July ECAR-a 99,330 102,510 11.9%
ÿÿ MAIN-b 44,991 51,084 11.9
ÿÿ New England 22,100 25,168 12.2
AugustECAR-a 89,272 102,396 12.8
ÿÿ MAIN-b 44,724 51,576 13.3
ÿÿ New England 22,100 25,170 12.2
a-ECAR- East Central Area Reliability Coordination Agreement, which covers
parts of Michigan, Ohio, Pennsylvania, Kentucky, West Virginia, Virginia,
Indiana, and Maryland.
b- MAIN- Mid America Interconnected Network, which covers Illinois and parts
of Wisconsin and Missouri.
Source: Energy Information Administration; North American Electric
Reliability Council
----------------------------------------------------------------------------
Meanwhile, AEP sought voluntary reductions from its largest consumers and
prepared plans for more service interruptions, company officials said. AEP
believes this is the first time since five years ago, when a severe cold
spell hit the region, that it may have to temporarily shut off power to such
a widespread group of its customers.
In New England, where numerous power plants also are out, utilities and
customers are preparing in earnest for potential shortages. Thursday, the
regional reliability council issued calls for electricity conservation. The
council hasn't had any widespread interruptions but expects to have eight to
10 days in July and August in which they will have to interrupt service to
big industrial consumers.
Over a Decade of Warnings
Today's turmoil in energy markets comes after more than a decade of various
warnings by utility interests of the potential for seasonal brownouts and
related power problems.
But until the past few years, there were few if any power interruptions. For
the most part, industrial power users tended to dismiss such concerns as
self-serving, arguing that utilities were primarily looking to justify
passing on the costs of expensive new construction projects to ratepayers.
But this time, things are different. While utilities have "cried wolf"
before, this year "we're on new ground," says John Anderson, executive
director of Electricity Consumers Resource Council, a Washington lobbying
group that represents some of the largest industrial users.
According to the North American Electric Reliability Council, excess
capacity, which includes all power available to a region, is predicted to be
down to 11% or 12% during July and August in New England and the Midwest.
That is roughly half of the nationwide 22.4% average capacity cushion. Among
other things, critics fault utilities for failing to better coordinate
nuclear-plant maintenance that would have avoided simultaneous shutdowns of
so many sites in Illinois, Ohio, New England and Ontario, Canada.
The result has been to drive up prices to new highs for some electricity
available on the spot market, where utilities turn as a last resort.
Lack of transmission capacity is another weak point in the grid, with
utilities curtailing investments in high-voltage lines. Mr. Anderson and
other utility critics question whether plant operators are being too
conservative about the maximum load that can be shipped safely.
However, there are signs that the more entrepreneurial utilities are
starting to build. A total of 45 new generating plants are on the drawing
board for New England and California. "There is an answer" to the current
shortages," says Steve Kean, vice president of government relations for
Houston-based Enron Corp. and a member of the reliability council. "The
market needs to be opened" more fully "so companies can put their own
dollars at risk to meet demand."
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