Monday, June 19, 2000

Michigan power supply in trouble Too much demand, not enough plants may mean brownouts

Reasons behind the summer's potential power shortage * The combined efforts of Consumer's Energy and Detroit Edison will produce 19,139 megawatts of power, barely above the projected demand of 19,129 megawatts. * The two utilities plan to import 2,802 megawatts of power from other states. But Michigan's isolated position, surrounded by the Great Lakes, makes it a challenge to move the reserve power through limited national grid connections. * National average temperatures were at record levels this spring. The U.S. Weather Service is forecasting more heat ahead, placing strain on the power system. * Deregulation has slowed construction of power plants in Michigan and nationally, leading to likely spot shortages across the nation. The U.S. Department of Energy estimates that U.S. plants will be able to produce 780,000 megawatts this summer. But typical demand will be 700,000, leaving a narrow margin. By Steve Schmadeke / News Washington Bureau

WASHINGTON -- If you thought last week's blackout in Detroit was bad, you'd best take a deep breath: Michigan is in danger of running short of electricity this summer.

Rising temperatures threaten to create further shortages over the next couple of months, as the state and nation's underdeveloped power grid struggles to keep up with near-record demand created by millions of power-hungry air conditioners and home computers.

Outages in Chicago and New York last summer and last week's blackouts on the West Coast have Energy Secretary Bill Richardson so concerned that he has traversed the nation several times warning that regions such as the upper Midwest could struggle under what he called the nation's Third World power grid. "We have some real fears that part of the country could experience blackouts this summer," he said last week. The Department of Energy estimates that more than 1,000 power plants will need to be built to meet national demand over the next 20 years. Richardson created the Office of Energy Emergencies last month to help deal with any supply trouble. But the truth is that power reserves are so tight that Michigan and many other states will be hostage this summer to weather patterns that promise record heat and power consumption. The power problem didn't sprout up overnight. Over the last decade, electricity demand grew 35 percent in Michigan without a single power plant being built in the state. This failure to build happened in a state that is one of the most heavily industrialized in the nation and one that spends more money than any other except California on developing new technologies. Nationally, there is only about a 10 percent power reserve for peak demand days, less than the standard 15 percent, according to the Department of Energy.

The margin is even slimmer in Michigan. A recent report found that the total wattage generated by the state's largest utilities is only 10 megawatts above projected summer demand. The remaining 3,000 megawatts will have to be transmitted from other states, a once-routine occurence that has become increasingly difficult across conduits never intended for massive interstate transfers of electricity. "The lines never were designed that way," Consumers Energy chief executive Bill McCormick said. "The system isn't capable of doing it." "It's like having all the highway traffic go to surface streets," added East Central Area Region staff engineer Paul Kure. "They're not designed to handle all the traffic." One possible bright spot, a Bridgman nuclear power plant unit expected to come online in time for peak demand this summer, may actually impede the ability of Detroit Edison and Consumers Energy to import power because of the convoluted manner in which the grid is set up.

The nearest transformer that can convert the plant's high voltage is in Indiana, so the power will be rerouted and then imported back into the state, tying up transmission lines that could be used to import out-of-state power. And then there are the geographic difficulties to transmission that arise from the fact that Michigan is surrounded by the Great Lakes. "I can't think of another state that faces the same challenges that we do," said Jeff Holyfield, a Consumers Energy spokesman. Deregulation creates dilemma Part of the problem is confusion as about half the states, including Michigan, finally embark on a process of deregulating the last great subsidized, monopolized industry: electric utilities. As the industry transitions, uncertainty over how it will recover costs in a truly competitive market has kept established utilities from investing in increased capacity.

In fact, most plants were constructed during the 1950s and 1960s. Utilities such as Consumers Energy argue that the $1-billion price tag for a new facility is the reason why no new major power plants have been built in 20 years. Local government and land owners are usually adamant about preventing any new transmission lines built near their property. Adding to the other pressures, the Environmental Protection Agency has moved to impose tougher emissions standards on the industry. Meanwhile, the independent producers have avoided making their own investments until they can determine where it would pay off.

Gov. Engler signed a utility restructuring bill into law this month requiring the two major Michigan utilities, Detroit Edison and Consumers Energy, to increase the capacity of their transmission systems by 50 percent, cut rates by 5 percent and give consumers the ability to choose their own energy supplier by 2002. Engler has said the state has only a 5 percent electricity reserve and the bill was intended to spur greater development. Within days, Panda Energy International said it would build a 1,000-megawatt plant near Grand Rapids. But it won't be online until at least the end of 2004. But other independent producers complained the bill didn't allow them access to the existing utilities' transmission lines, setting the stage for a confrontation akin to the telephone industry deregulation debate several decades ago.

Several bills aimed at facilitating deregulation have circulated in a congressional committee where Rep. John Dingell, D-Dearborn, is the ranking minority member. But the indications are very slim that a substantial restructuring bill will pass this year.

There are discussions about getting through a narrower bill aimed at improving power-system reliability that supporters say may find broader support after Detroit's blackout last week. Gas turbines pick up slack Until then, the move in the utilities industry seems to be toward smaller gas-powered units that produce less power, but are also cheaper with less catastrophic effects when they break down. "Gas is the fair-haired child right now," said Mike Brian, a spokesman for American Electric Power, which has customers in southwest Michigan. Detroit Edison and Consumers Energy have added several thousand megawatts to their capacity with gas turbines over the last year.

"We're not just standing here and shaking our heads and saying this is fine," said Holyfield, of Consumers Energy. But the situation would take time to improve, he said. "There's nothing simple in the electricity business," Holyfield said

http://www.detnews.com/2000/metro/0006/19/a01-77660.htm

-- Martin Thompson (mthom1927@aol.com), June 19, 2000