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Caterpillar boosting generator production Monday April 9, 3:46 PM EDT PEORIA, Illinois, April 9 (Reuters) - Caterpillar Inc. (CAT), the world's largest manufacturer of construction and mining equipment, on Monday said it expects to boost production of its power generation equipment by 30 percent this year due to electrical shortages in California and other western states.

The Peoria, Ill.-based company expects sales in its electrical power division to increase in year 2001 to $3.3 billion from $2.5 billion as a result, a Caterpillar spokesman said, confirming a report in Monday's Financial Times.

Caterpillar, which had 2000 revenues of $20.2 billion, has seen sales of its electrical power generation equipment grow at an annual compound rate of more than 20 percent in the past five years.

The company, which will hold its annual meeting on Wednesday in Chicago, makes engines that can be used to power vehicles or generate electricity using diesel or natural gas.

California residents and businesses have been hit with rotating blackouts, with more expected this summer, because of skyrocketing energy costs. Pacific Gas & Electric, a unit of PG&E Corp., filed for Chapter 11 bankruptcy reorganization on Friday because it wasn't able to pass along those higher costs to consumers under the state's 1996 deregulation law.

In early February, Caterpillar said it and its dealers had installed well over 200 megawatts of rental power throughout the U.S. West Coast, alleviating some of the power system strain within the past 60 days.

"Central power plants have worked well for decades. But skyrocketing demand has presented problems associated with the adequacy of the power grid and transmission bottlenecks," said Richard Thompson, Caterpillar's group president with responsibility for engine products, in a statement issued then.

Thompson said large users, such as industrial customers, can help by using distributed generation -- relatively small power plants located on their premises -- like those made by Caterpillar.

http://money.iwon.com/jsp/nw/nwdt_rt.jsp?section=news&news_id=reu-n09564833&feed=reu&date=20010409&cat=INDUSTRY

-- Martin Thompson (mthom1927@aol.com), April 09, 2001