Just finished reading my handy-dandy 1999 summer assessment. Whilst reading it, I happened to notice that the Generating Units additions section was quite long. I copied the data to Excel and summed up the additions. To summarize: ECAR is adding approx. 1,828 MW NPCC is adding approx. 600 MW and MAIN is adding approx. 1,197 MW

All of this generation is scheduled to be online by Aug-Sept. Any thoughts on whether this is normal. Is the capacity being added a signifigant or unusual amount. C'mon you power dudes, engineer factfinder etc. Let me know what the deal is. I await your wisdom.

-- Anonymous, June 08, 1999

Answers

Jim, Sorry I can't help you here, industry generation load capacity changes/projections are outside of my area of expertise.

I can say that although I have read some speculation that "perhaps" the reason additional generating units/capacity is being added "may" be due to y2k contingency planning, I have not seen evidence of this and do not believe this is generally the case - its certainly not in our contingency plans or others I have seen.

From an outsiders and "non-expert" consumerist point of view, I would say factors to consider as possible causes of capacity additions are the rapidly changing and increasingly competitive markets...

Regards,

-- Anonymous, June 09, 1999

Jim,

From an outsiders and non-expert consumerist point of view, FactFinder appears to be very intuitive.

The addition of any generating capacity to any electric utility represents a substantial investment risk in the future of that company and, typically, will have been backed up by years of strategic planning, growth studies, system modeling and market logistics. However, things have changed over the last few years. While strategic planning and economic analysis does still apply, de- regulation has and will continue to fundamentally alter the basic motivation for investing in additional capacity. Almost overnight, electric companies have been loosed from their confined service territories and allowed to merge, invest, build and compete nationwide. Nationwide, How silly of me! Worldwide is more accurate! If power could be generated on the moon and transmitted to earth profitably, I suspect that someone at Enron would gladly fund the next Apollo mission. But isnt that what free enterprise is all about collecting your just reward after prudent analysis and investment? They do this in the oil industry, dont they?

All of this generation is scheduled to be online by Aug-Sept. Any thoughts on whether this is normal. Is the capacity being added a significant or unusual amount.

While I am sure some of this capacity is being scheduled to come on line to meet demand and/or increase reserve margins in some areas, I cannot speak with certainty. Clearly, only those in the specific regions you mentioned could answer this definitively. Normal or unusual amount? Honestly, I have no historical reference on which to base a reasonable judgement or formulate an opinion. But.. if your question is whether this capacity is being added for Y2K reasons, I would have to say no, it is not. If your question refers to unusual in the context of different from the past well perhaps. But, I do not think it is unusual at all, given the competitive environment today and the market seen for the future.

While I am not privy to the analysis and justification for these additions, I can offer this. In most regions and many utilities, there are those generating units that are, simply, no longer cost effective to operate. That is to say that for one reason or another a units performance, efficiency and/or operational effectiveness has been judged to be non-marketable. There are numerous components that make up this determination that include unit operational heat rates, labor costs, fuel costs, maintenance costs, environmental costs and regulatory costs. With competition driven by deregulation, it does not surprise me that the addition of technologically superior, cheaper, cleaner, more responsive generation would be added in order to retire older units or allow those units to be refitted to improve their economics.

In your post you did not indicate whether the megawatt values were net numbers (additions minus retirements) and I seriously doubt that the information was available to you. I can assure you that, most probably, the additions had more, much more, to do with the competitive market place than with the Year 2000 issue. But then again, Im an insider and we all know about those types, dont we Jim? Kind of makes me feel like those oil analyst of the old embargo days back in the 70s when America was told the world was running out of oil. Just kidding just kidding! :)

-- Anonymous, June 13, 1999

An excellent response. Thanks. I'm not buying it.

See my recent posting on this issue: http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000wxo

Then tell me that the "competitive deregulated environment" has really spawned 10X the normal capacity?

The numbers on this post are net except for the 1997 numbers which are soley added generation.

A lot of oil analysts were dead wrong in the 70's, I wasn't one of them.

-- Anonymous, June 13, 1999

Is there any correlation between regions highly dependent on nuclear generation and the regions reporting expansion of capacity?

-- Anonymous, June 22, 1999

These plants are not going on-line becouse of Y2K problems on 01-01-00. I think many people are taking Dick Mill's projections of a power shortage during the summer of 2000 very seriously.

Richard.

-- Anonymous, June 23, 1999