Emissions

US competitive generating capacity up four-fold since 1997

By the OGJ Online Staff

HOUSTON, Nov. 1, 2001 — US competitive generating capacity is likely to reach 319.5 GW by the end of 2001, a more than four-fold increase from 1997, the Electric Power Supply Association said Thursday.

In 1997, competitive power suppliers accounted for only about 8.5% of the nation’s installed generating capacity, said the Washington, DC,-based organization. But as of the end of 2001, their share is likely to be about 36%, according to an EPSA review of the power supply industry.

“The US power supply industry is continuing to change, and change dramatically,” said EPSA Pres. Lynne H. Church. “Just a little over a year ago, it seemed 25% was an optimistic target for 2001, but industry restructuring is happening very fast,” Church said.

In addition to capacity additions totaling 68 GW, 90% of it competitive, there also have been significant asset divestitures and reclassifications by regulated investor-owned utilities. Of the additions, 61 GW is gas-fired.

As for wholesale power marketing and trading, total sales increased to 4.5 billion MW-hr in 2000, up from 2.6 billion MW-hr during 1999. For the 6 six months of 2001, wholesale transactions were 2.9 billion MW-hr, a 47% increase from the corresponding period in 2000.

Since the third quarter is traditionally the highest sales quarter, that means total wholesale transactions for the year could easily exceed 6 billion MW-hr, and perhaps approach 7 billion MW-hr, Church said.

“Such trading growth provides additional market liquidity, price transparency, risk-management and other customized products and services, which all serve to place downward pressure on end-user prices,” she said.

But success of the wholesale power market can’t be taken for granted, the organization warned earlier. California’s problems resurrected interest in cost-plus regulation, but EPSA said between 1970 and 1985, inflation-adjusted electricity prices actually increased 25% for residential customers and 86% for industrial/commercial customers.

The price increases under cost-plus regulation helped drive the start of electricity competition in the early and mid-1980s, Church observed. During the 1985-1999 period, according an EPSA-sponsored analysis, inflation-adjusted electricity prices decreased an average 30% for residential customers and 36% for industrial/commercial customers.