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To: Alex who wrote (50080)	3/6/2000 9:18:00 AM
From: Rarebird	Read Replies (2) \| Respond to of 116825

Don't Alarm The Public About Power Shortages: Power Points: Dynegy Questions EEI Load Growth Stats Friday, March 3, 2000 12:24 PM NEW YORK (Dow Jones)--Forecasts for this coming summer just seem to be getting longer, hotter...and maybe darker. The president of Dynegy Inc. (DYN, news, msgs), which owns or co-owns 22 merchant power plants as well as Illinois Power, claimed in an interview this week that U.S. investor-owned utilities are understating electricity load growth. Utilities don't want to alarm the public about power shortages - and potential heatwave blackouts - expected in July and August because that could derail deregulation of the industry in many states, Dynegy's Stephen Bergstrom said. Electricity loads grew at least 4% last year, Bergstrom figures, while all agree the nation's capacity for generating power grew very little. The 4% load growth estimate is based on growth of U.S. gross domestic product. Electricity has grown right along with the economy for decades. Last year was no exception to that rule, Bergstrom says, despite data from Edison Electric Institute showing that U.S. electric output grew just 1.9% for the past 52 weeks compared with output in the prior year. "The problem with the EEI numbers is that they're politically motivated. The utilities don't want to show load growth, and expose the shortages they have, with stranded cost and deregulation in front of the state utility commissions. You don't want to scare people right now," Bergstrom said. "They've been understating the growth for two to three years. That's what's causing the problems we're seeing," he said in reference to numerous blackouts and brownouts last summer. If anything, electricity demands have outstripped GDP growth due to what Bergstrom calls "the wealth and technology effect." People are putting more computers and air conditioners in ever bigger homes, and electricity bills are a smaller part of most household budgets than they were 10 years ago, so people are less concerned about using power. The result is a startling discrepancy between expected power peaks this summer and U.S. utilities' ability to meet that demand, Dynegy figures. Last month, Bergstrom presented figures at an industry conference that showed a shortfall of 32,138 MW of capacity this summer in the eastern U.S. outside of New England. That is nearly 10% of the region's capacity, and Dynegy projects the shortfall will grow to 60,427 MW by 2003. EEI, the primary association of for-profit utilities, declined to respond to Bergstrom's claim directly, but its spokesman said that "1999 saw relatively mild weather, especially in the winter, although last summer was pretty warm." And there is the possibility that rising productivity in the U.S. - the economy produced a stunning 3% more goods for every hour of labor last year - is accompanied by better energy efficiency. "We are seeing results of making the electrical system more efficient. There's a view that productivity is using power more efficiently," the EEI's James Owen said. The EEI doesn't audit the figures it gets from utilities for accuracy, Owen said. Productivity gains may be raising electricity use, rather than lowering it. Since productivity growth means less manpower to produce more goods, non-labor inputs, including possibly electricity, should be relatively higher, not lower. Energy companies have announced plans to build many new electric generators, but they take years to come online due to waiting lists for new turbines and difficulties getting licenses for the plants and transmission systems. For the past five years, almost no new plants were built because energy companies wanted to see how deregulation would play out. No utility could be expected reasonably to commit the hundreds of millions of dollars it takes to build even one good-sized power station until it saw the new rules under which it would work. Even though Dynegy stands to make a lot of money from its ability to deliver merchant-plant power into short markets, Bergstrom is reluctant to publicize its shortage figures. "We don't want to be too factual and scare the public," he said. If Dynegy is correct that load grew 4% last year, the country should be adding about 28,000 MW of capacity a year to keep pace. Instead, only about 3,500 MW of capacity was build last year, according to the most recent U.S. Dept. of Energy statistics. The difference of 24,500 MW is enough to power a city with 12 million people. That's scary.