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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)

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To: david sosiak who wrote (19366)6/26/1998 3:33:00 PM
From: John Mansfield   of 31646
 
TAVA/BECK's Rick Cowles on power shortages.... in Dick Mills' column...

'...Rick Cowles, my predecessor in this column, also pointed out that utilities are also consumers in the supply chain. Significant disruptions in transportation, finance, or personal lives in 2000 will eventually hurt the utilities too. If this happens, the effect will be to see one plant, transmission line, or transformer at a time being removed from service because of supply difficulties.

Normally, we have 20 to 30% more capacity to generate power than needed to satisfy the demand. The excess is called the reserve margin. The actual numbers vary, and there are many complicated measures to express how much time it takes to put the reserves into use. Forget all that for now. The only important point is that if the margin is zero or positive, everyone who wants power gets it.

If more than 20-30% of the power generating capacity fails, the margins become negative, and we must take action to forestall blackouts. In simple terms that means curtailing service to some customers, so that the actual demand matches actual capacity. Obviously, the more negative the margin, the more severe the consequences. Even power rationing is a possibility. Transmission system failures can also have an effect but the effects are less direct.

There are many differences between power shortages and blackouts. Blackouts are an act of God, (so we say), while curtailments during power shortages are acts of man. Blackouts should be over in a day or two, but shortages can last for weeks or months. Shortages are most likely in times of peak power demand, like hot summer afternoons. Shortages tend to repeat on daily and weekly schedules, and are thus very predictable. Blackouts bring heath and safety risks, but shortages can have more serious financial consequences.

Figure 2 expresses the same idea as Figure 1, but applied to shortages. The curve is of reserve margin versus percent of Y2K problems fixed. However, in this case it refers to problems of those who supply utilities with needed materials, manpower and money. If the suppliers fail, the utility is the direct victim. The utility's customers become victims once removed. Again, the general shape of Figure 2 must be an S, but the curve shown is just an estimate.

By the way, I heard that they took an informal poll at the recent Electric Power Research Institute Y2K conference in Dallas. None of those present expected power shortages to occur, but a majority thought that 50% or more of the utility customers would be unable to pay their bills in 2000.

Next week I'll present some ideas for actually measuring these curves before 2000, and for trying to modify their shape.
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y2ktimebomb.com
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