U.S. Official Says Texas Power Supply Should Be Adequate This Summer Source: Knight Ridder/Tribune Business News Publication date: 2000-05-27

May 27--Texas should have plenty of electricity to keep cool this summer, but other parts of the country could face power interruptions as the mercury rises, U.S. Energy Secretary Bill Richardson said Friday. Speaking at the Electricity Reliability Summit at the George R. Brown Convention Center, Richardson said the Upper Midwest, Northeast, California and parts of the Southwest could face power shortages.

To address such concerns, Richardson announced he has established an Energy Emergency Office at the Department of Energy to address such issues as potential oil supply disruptions and power outages.

"Last summer, there were power outages and utilities were stretched thin," Richardson said. "This year, the hot stuff has started already."

Even though it is still early in the summer cooling season, some utilities are already asking customers to reduce their power usage. In this area, Entergy Corp., which serves Southeast Texas, including the Conroe area, asked its power customers earlier this week to voluntarily cut back.

That is not likely to be a problem in the service area of Reliant Energy HL&P, said Steve Schaeffer, senior vice president at the Houston utility. Because of the heavy air conditioning load the local utility faces every summer, the company has a greater capacity than many larger metropolitan areas.

The problems are very real in other parts of the nation not as well equipped to deal with heavy demand, including areas served by large power producers such as Enron Corp. and Dynegy.

Lobbyists for the power companies joined Richardson at the meeting, as did local politicians and a labor leader.

The panel members, including Richardson, repeatedly called for federal legislation that would facilitate the movement of power on an interstate basis to alleviate shortages when they occur.

"We can deal with interregional supply issues," said Steve Kean, executive vice president of Enron Corp. "The problem has been getting power to where it is needed."

The summit was one of a series of gatherings Richardson has been holding to look at problems with the nation's electricity grid -- the system of wires, poles and switches that move power as needed. The spread of power deregulation is putting increased stress on the already overburdened system.

Adding to that problem is the shrinking number of workers to maintain the system because of mergers among power producers that inevitably lead to downsizing, said Gregory Lucero, business manager for the IBEW Local 66.

"They are trying to do things now with a transmission system it is not designed to do," Lucero said.

As it stands now, while there are regional power pools in which power can be moved from one service area to another, there is a very limited ability to move power from one pool to another.

Texas is unique in that the majority of the state is served by a single power pool, the Electricity Reliability Council of Texas. Most states share a power pool with their neighboring states.

The fragmented market is the result of the irregular way the nation is opening its electricity markets, state by state.

In the past two summers, heat waves have caused power shortages in the Midwest and driven the price of electricity through the roof for short periods of time. Power that normally sells for under $100 per megawatt was selling for thousands on the spot market.

More power plants are being built to address increasing demand. In Texas, eight new power plants will be coming on line this summer, and another 15 by the end of 2002, PUC Commissioner Brett Perlman said.

"We are optimistic that we are ready for summer," Perlman said.

Those plants will be adding more power to a grid that has some weak spots, most notably in the Rio Grande Valley, which has been plagued by transmission problems. But building additional transmission systems is not as easy as simply erecting new poles and lines, said Reliant Energy's Schaefer.

"No one wants to be near transmission lines," he said. He added that knowing where to build new lines is also more difficult because Reliant can't predict where a new power plant might be built by an independent producer.

Reliant and the rest of the state's utilities will continue to own the transmission and distribution systems after Texas opens its markets to supplier competition and customer choice in January 2002.

The new law is supposed to aid consumers by pushing down rates. But in the Panhandle region, which has enjoyed some of the nation's lowest power rates, the situation has not worked out that way.

With power plants drawing top dollar these days, the dominant utility in the Panhandle, Southwestern Public Service Co., is selling two of its power plants at about 113 percent of their book value.

That means the new buyer will likely have to up its rates to make the same amount of profit on its power sales as the utility did, said Robert Bryant, president of Amarillo-based Golden Spread Electric Co-Op.

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-- Martin Thompson (mthom1927@aol.com), May 27, 2000