It's sometimes strange that while you're looking for something else you come across other information you weren't aware of. We all know Rick has been concerned about the status of Independent Power Producers (IPPs) and Co-gens. These types of generating entities are put into a category by DOE called "Nonutility generators". They comprise, as of 1998, 12% of the total U.S. generation. We also know the least about the Y2K status of this group. They are the black sheep or poor relations of utilities because they are smaller and sometimes outside the normal purview of the attention paid to large utilities.

In the NERC "Electric Industry Year 2000 Management Forum" of August 6, 1998, "A Q&A period was held during which the following answers were provided:" One of these answers is listed as:

"Yes, the IPPs are a messy area. The desire is to have the generation reported in the area where it is used. There are contractual problems with some of the IPPs which means there is no leverage to get them to respond to the survey."

What I didn't consider was the breakdown by state of this type of generation. For instance, most of us are aware that nuclear power provides about 20% of the U.S. total, but in some states that percentage is much greater. (Like New Jersey, which depends on nuclear power for about 50% of its generation.) Well, guess what?

"A noteworthy fact regarding New Jersey's electricity generation is the rapid growth in nonutility generation. In 1986, nonutility generation accounted for 2.4 percent of the State's total but, by 1996, this figure had climbed to 47.5 percent. Only Rhode Island (58.6 percent) and Maine (48.5 percent) had larger shares of electricity generated by nonutilities."

There's nothing like a visual aid such as a shaded map of "U.S. Nonutility Share of Total Capability by State, 1998", for both January and December of 1998. Go to the following and scroll down to the two maps:

http://www.eia.doe.gov/cneaf/test/elec/1998epav1/epa98v1.html

The states with the highest share of nonutility generation out of the total capability appear to be:

Rhode Island, Maine, New Jersey, California, Virginia, Massachusetts, New York and Louisiana.

Many states do not have a significant percentage of non-utility generation, but certainly those residents of the states which do should factor this into any individual risk assessment. Also, be sure to notice the differences between the January, 1998 map and the December, 1998 map.

For those interested in your state's power makeup, this is the URL for the DOE Energy Information Agency's State Profiles Index:

http://www.eia.doe.gov/cneaf/electricity/state_profiles/

You can locate info for your respective state there.

I also called the National Energy Information Center to ask if they could tell me the total number of Independent Power Producers in the U.S. The gentleman I spoke with said, "No," but he could give me the total of nonutility generators over 1 MW in the U.S. for 1997. That was 1,983.

There's also an interesting "Key Finding" at:

http://www.eia.doe.gov/cneaf/electricity/chg_str/focus/nonutils.html

It's a paper about the changing structure of the electric industry (IPPs and other nonutils are growing because of deregulation) but one "Finding" might be related to the Y2K issue. "Nonutilities Want to Use but Not Supply Data -- Nonutilities were interested in receiving confidential data relative to competition under deregulation, but were unwilling to relinquish information about their own companies." Would you say it's likely that trend continued with Y2K data?

I do think it's fair to say that nonutility generation is a gray area and I now understand better why Rick has had concerns about it for a long time.

-- Anonymous, August 31, 1999

Answers

I made an error in the State Profiles URL. It should be:

http://www.eia.doe.gov/cneaf/electricity/st_profiles/

-- Anonymous, August 31, 1999

Thanks Bonnie, now I can brag about living in the nuclear capital of the United States. Perhaps you have heard of the recent meltdowns we have had in our electrical infrastructure here in Chicago? If this is the situation with the second largest electrical utility in the U.S.(Com Ed), I don't really want to think about the nonutility type suppliers. Mae

-- Anonymous, August 31, 1999

Bonnie, as usual, you have outdone yourself. I'm a Boston Edison customer. Until a few moments ago, I was somewhat mollified by BECo's announcement of 100% readiness. However, I see from the DOE report that between January and December, 1998, Massachusetts' share of total capability increased from 18% to 73%, second only to Rhode Island. The chart of electric utility plants sold and reclassified as nonutility plants, with respect to Massachusetts info, heavily features sales by Boston Edison, New England Power Company, and a few others. Can't help but wonder now what value BECo's pronouncement means to me.

-- Anonymous, September 01, 1999

Good job Bonnie, again!! Maybe I"m mistaken, or just TOO synical... but aren't many of these SELL OFFS just the path-of-least-resistance to avoid the FALL-OUT-OF-FAILURE because they know they cannot get TRULY READY for the rollover due to technical and/or financial constraintes?

-- Anonymous, September 01, 1999

**Georgia (Grit), I've certainly got nothing against skepticism, but in this case the time lines would indicate that deregulation issues and financial positioning were the likely reasons for the "massive sell offs" to nonutility generators which the DOE mentions in the Massachusetts report. This began in the early 1990s and has accelerated steadily through 1998. Deregulation set the stage for the financial viability of IPPs, and from the information I've seen, nonutlity generators have been the fastest growing segment of the electric industry in this decade. Of note is that the states with rapidly growing non-utility generators are for the most part also states with some of the highest average prices of electricity in the nation. They are also usually listed as "net importers" of electricity, meaning they do not generate enough to meet total state demands and thus also buy power (import) from other areas. That the repositioning to nonutility generation had the side effect of placing these entities somewhat outside industry oversight I think was more of a coincidence than a deliberately intended side effect. But of course I'm guessing here, based on the pattern over the last decade.

**Brooks, you might want to call Boston Edison and ask them if they have contracts with Independent Power Producers from which they buy electricity wholesale. If so, you could ask what they know about the status of these providers. This would fall under a critical external supplier aspect.

**Mae, yes, I'm aware of recent ComEd problems. I don't really know what their longer term reliability level has been, but if you've lived in the area for several years perhaps you do. I mention this because of some comments made by an engineer in Lane Core's most recent article at Westergaard (the subject of another thread here). These comments were:

"My experience with electric companies provided some interesting insights into another type of systemic problem associated with individual utilities. Simply, if the corporations were run shoddy prior to deregulation and Y2K remediation, the performance results during and after the rollover will reflect this. Incident reports from the NRC, EPA, FERC and DOT in the federal register over the past decade may have some interesting predictive value."

-- Anonymous, September 01, 1999