IS TEMPERATURE THE SINGLE MOST IMPORTANT FACTOR IN how gas storage is used? Or are other variables involved? Can we answer these questions - and verify the results?
Since FERC Order 636, natural gas storage has grown into a high-profile asset in the industry. As a result, the industry has responded by changing the way it uses this storage. The exact nature of this adjustment is not apparent at a glance; one must first analyze industry data.
Hydroelectric power generation by U.S. electric utilities increased 12 percent between 1995 and 1996, according to the latest publication by the DOE's Energy Information Administration. Hydro generation contrasted with output at gas-fired units. That dropped 15 percent to 263 billion kilowatt-hours (em the lowest level since 1993 (em partly due to a substantial increase in gas prices.
According to Electric Power Annual 1996 Volume 1, the average cost of gas delivered to electric utilities on a dollars-per-million-Btu basis was $2.64 in 1996, the highest since 1985.
A new report from the Department of Energy may confirm what many in the electric industry have said all along: That while stranded costs could dissolve some short-term gains from competition, in the long term, consumers will still come out ahead.
"I'm surprised and delighted that the same EIA, which once wrongly predicted price hikes from natural gas deregulation, now confirms what we've been saying all along," said Rep. Tom Bliley (R-Va.).
In union circles, they call it "burial insurance." That apt phrase denotes the severance, early retirement and re-training packages negotiated for veteran utility workers sideswiped by a changing market.
So far, labor has won some insurance: through legislation in California and in Maine; through a commission order in Massachusetts; and a pending settlement agreement in New York City, prompted by a commission order.
Labor lost hard in Pennsylvania and in Rhode Island, however. Worker protections weren't built into restructuring decisions in those states.
Appearing as tree huggers, utilities draw skeptical reaction from environmentalists.
At first glance, it looks like the same old story: Environmentalists versus utilities. But this time, the utilities are the ones fighting for the forests (em with a twist.
Utilities, major producers of carbon dioxide, believe they've found a cost-effective way to offset emissions through carbon sequestration, or sinks, which means converting pastures to forests or maintaining old-growth groves.
But environmentalists call it an easy way out.
Subsidies? Maybe. But how about reciprocity? Should Congress let PMAs, munis and co-ops decline open access?
Until recently, most congressional debate on utility deregulation has focused on the future of investor-owned utilities and independent power producers and marketers. Lobbyists for government-owned or cooperative-owned power companies have tried to downplay their clients or to seek exemptions.
And why policy on
stranded costs defies
a traditional legal or
economic analysis.
There are sound economic reasons why policymakers should allow electric utilities to recover stranded costs through a competitively neutral network access charge, or some similar fee. First, differences in the quality of utility management appear to have contributed little to differences in electricity rates among states.
The U.S.
If Jane Austen were writing this column, she would begin something like this: "It is a truth university acknowledged, that a natural gas distributor in possession of a good franchise must be in want of an electric utility to merge with."
That's the rule of electric/gas convergence. But as an editor, my instinct when I uncover such a "rule" tell me to look for a reason why it ain't so. That's why I got such a kick from a recent conversation with Sheldon Silver, the speaker of the New York State Assembly.
Some in Congress would link customer choice with a portfolio standard. How would that play in a wholesale power market where gas turbines rule the roost?
By Michael C. Brower and Brian Parsons
WHAT KINDS OF POWER PLANTS WILL
get built in a deregulated electric industry? If recent history offers any guide, utilities and independent power companies will succumb to the traditional wisdom and invest in gas-fired combustion turbines and combined-cycle plants. Sound reasons may exist for doing so. The plants are less expensive than conventional steam plants. They put less capital at risk.