Utilities place billion-dollar bets on infrastructure, but the deck may be stacked against them.
Richard Stavros is Fortnightly's Executive Editor.
Something seems deeply disturbing about the utility industry these days. An almost palpable tension rises whenever the utility CEO is asked how he will build enough power plants to meet the skyrocketing demand for power. Some consultants predict that sometime after this decade the time will come when utilities won’t be able to build enough to meet demand, no matter what they try.
The companies, of course, won’t tell you directly they can’t build enough plants. Such an admission would not go over well with politicians, regulators, investors, and the general public.
But they will tell you indirectly what the odds are, in subtle fashion, by talking about the siting issues, financing difficulties, the technology challenges, personnel shortages, and the billions in needed capital that their balance sheets can’t manage.
Industry veterans may have heard this all before, but at this year’s EEI Finance conference—in Las Vegas, aptly—attendees discussed and debated newly proposed utility business plans.
“I give you 10-to-1 odds,” said one, “that TXU CEO John Wilder brings his coal plants in on time and under budget.” That comment referred to TXU’s Nov. 6 announcement that the utility could miss its target of completing the first of nine planned new coal-fired power plants in Texas by the summer of 2009, due to delays in securing permits required to start construction.