Twenty years ago on page 6 of the January 1988 edition of Power Engineering magazine, a full-age ad introduced “POWER-GEN ‘88” to the world. The inaugural event, which grew to become POWER-GEN International, was held at the Orlando Convention Center from December 6-8. The event covered fossil and solid fuel power generation, including coal, oil, natural gas, municipal solid waste and other waste fuels. “Paper abstracts are invited,” the ad read. That opened the floodgates, which, over the next 20 years, would see thousands of papers researched, written and presented at the world’s largest and most prestigious exhibition and conference for the power generation industry.
Power Engineering magazine has been PGI’s flagship media sponsor since the beginning 20 years ago. This year to celebrate PGI’s 20th anniversary we’ll take a look back at some of the issues and events that were making news. A lot of the same issues continue to make news today.
The cover story for the May 1988 edition covered the growth of independent power, described as “a major force in the way electric power is now being produced and marketed.”
The independents, the article explained, were once considered a nuisance by utilities, many of which hoped they would go away if left alone. By 1988, however, IPPs were described as “major competitors threatening utility companies’ revenues.”
The article suggested that a combination of higher costs for adding new capacity, uncertain load growth, siting difficulties for new central power plants and independent power producer growth led utilities to change their approach to demand-side management. “As they look into ways to reduce their peak demands and manage their 24-hour load demands for efficiency, electric power from the independent producer looks more attractive.”
Southern California Edison and Northeast Utilities were singled out as two utilities that viewed cogeneration as a long-term resource option. Northeast Utilities was reported ago to be soliciting cogeneration projects, while SoCalEd had only just launched its Mission Energy unregulated subsidiary.
According to Edward A. Myers Jr., at the time president and CEO of Mission Energy, a shakeout within the electric power industry was almost certain to occur between the late 1980s and the mid 1990s. He saw the final outcome as being fewer utilities and independents. Once U.S. demand growth resumed, he said, increased “wheeling and dealing” for electric power would occur.
The magazine also noted that Virginia Power was departing from past utility practices by requesting bids for 1,750 MW of independent generating capacity. The utility said it would need an additional 2,782 MW of new capacity by 1994 to keep pace with demand growth. Of that amount, some 2,500 MW was earmarked as potentially coming from cogeneration and other non-company sources.
Jack H. Ferguson, then-VEPCO president and CEO, was quoted as saying, “Times have changed and the economies of scale have vanished and building new units has become expensive and risky.” Changing economic and regulatory conditions, he said, had pushed utilities to adopt smaller units with shorter lead-times.
In 1988, Virginia had already put in place policies allowing competitive bidding. As a result, VEPCO said it would propose its own capacity additions only when new capacity could be built at a lower cost than the competition. In 1980, VEPCO generated all of its own electricity with an installed capacity of around 10,700 MW. By 1995, the company projected an installed capacity of 12,770 MW while IPP cogeneration would reach 3,100 MW. In 2000, the company expected an installed capacity of almost 12,000 MW. It forecast an additional 5,800 MW to be provided by independent power producers.