September 3, 2008
Source: IndyStar.com
Electric co-ops conference focuses on stemming nation's looming shortage, surge in prices
A gathering in Indianapolis this week of rural electric companies will raise the issue of a looming power shortage and higher costs for consumers.
To sidestep the problem, the rural utilities are calling for government to help clear the way for new power plant construction, alternative energy facilities like wind farms and new transmission lines to feed energy to cities where most of it is used.
The U.S. electric industry needs to create four times the current generating capacity found in California to meet the annual demand for power in the next 20 years, said Glenn English, chief executive of the National Rural Electric Cooperative Association.
To meet that coming demand, the industry needs a building spurt similar to the one it undertook in the 1970s and early 1980s, he said.
"For the past 25 years, we've been living off that surplus. It's enabled the electric industry to be able to keep electric bills moderate . . . and in some cases to lower our rates. But that surplus capital is gone."
English said he and others will highlight that point today through Friday during the Indianapolis conference of electric cooperatives from 14 states, including Indiana.
"The real issue is how quickly we can build electric generation and transmission facilities," said Bruce Graham, chief executive of the Indiana Statewide Association of Rural Electric Cooperatives.
Graham said industry predictions show that if U.S. electric producers don't build new plants or encourage significant conservation, they will be unable to handle peak demand periods from electrical users by 2012.
"I don't want that to sound like a crisis, where there are going to be brownouts or blackouts in four or five years. But we sure as heck better have a solution" to cope with the coming supply-demand imbalance, he said.
In Indiana, Duke Energy started construction this year of the first major power plant to be built in the state in 20 years. The $2 billion, 630-megawatt coal-fired plant near Edwardsport in Knox County also would use new technology that aims to reduce air pollutants significantly over a conventional coal plant.
"That's a great step the state of Indiana is taking," Graham said of the Duke plant, which is set to open in 2012.
The Citizens Action Coalition and other groups are fighting the permits given to the plant, saying it still would emit large amounts of pollutants and could see a rising price tag if federal regulations are tightened on coal plants.
The consumer watchdog calls for heavy investments in energy-efficiency measures to reduce demand for power and keep it from outrunning power supplies.
The State Utility Forecasting Group, run by Purdue University, predicts electricity use in the state will grow at the rate of 2.46 percent a year over the next 20 years. That's similar to the growth rate seen in the state during the late 1990s. The Purdue forecasters see electricity prices rising "significantly" in the next two years, then slowly falling over the next 18 years.
Douglas Gotham, director of the Purdue forecasting group, said Indiana will need a combination of new plants, purchase of existing plants and conservation to meet rising energy demands.
"There certainly is an issue with the need for capacity," he said.
Duke, the state's largest electric utility, says its new plant will require a 16 percent increase in rates over the next four years.
Another utility, Indiana Michigan Power Co., which serves Fort Wayne and South Bend, has a 20 percent rate increase request before the Indiana Utility Regulatory Commission. Meanwhile, Northern Indiana Public Service Co. is seeking two rate increases that could boost residential utility bills nearly 15 percent by 2010.
Call Star reporter Jeff Swiatek at (317) 444-6483.
