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=09 Utilities Biweekly Report =09 A news service for energy professionals =09 November 20, 2001 =09 To Remove, Substitute or Add an email address to our list, please send bri= ef message to msid@ieee.org=20 =20 =20 Electricity Restructuring Gets Push From Republicans Republican members of the Energy and Air Quality Subcommittee of the House= Energy and Commerce Committee have agreed with Subcommittee Chairman Joe = Barton, R-Texas, that restructuring legislation should move forward now th= at Congress has a few more weeks in session. In an 8-2 vote last week, Rep= ublican Committee members decided to continue drafting electricity restruc= turing legislation. Electricity restructuring provisions were excluded fro= m the energy bill approved by the House earlier this year. The issue was to= be readdressed in the fall but was delayed due to the events on September= 11th. No action has been taken to date in the Senate. Green Mountain Energy Expands Into Ohio's Restructured Market Green Mountain Energy Company has entered into an agreement with the North= east Ohio Public Energy Council (NOPEC) to service northeastern Ohio with = solar and wind-generated electricity. NOPEC was formed last year under Ohi= o's utility deregulation statute Senate Bill 3, which allows local governm= ents to serve as aggregators for electricity customers. NOPEC consists of = 100 local communities with approximately 500,000 energy customers. Under t= he agreement, Green Mountain Energy will construct a 25-kilowatt solar arr= ay at Lake Farmpark in Kirtland, Ohio, and will conduct a study to determi= ne the feasibility of siting a wind generating facility in Ohio. The Green= Mountain Energy solar array will be the largest in the state and the firs= t commercial solar array in Ohio built for the competitive market. The pro= posed wind study will be the first commercial wind analysis executed solely= for the competitive market. Debate Over Deregulation Impacts in Oklahoma Oak Ridge National Laboratory (ORNL) has reported, in a first-of-its kind = study, that restructuring Oklahoma's electric industry can benefit consume= rs, but problems and potential pitfalls do exist. The report has been met = with some opposition however. Pete Churchwell, president of Oklahoma's sec= ond largest electric utility AEP/PSO, stated on November 16th that he does = not support the study's findings, one of which indicates that Oklahoma's e= nergy costs could rise between 5 and 25 percent if the retail electricity = market is opened to competition. The study results indicate that lower ele= ctric prices may be available in the short term, but restructuring will ul= timately bring higher prices. Under the state's restructuring plan, existi= ng generating plants will have a competitive advantage over new plants. Th= is advantage will result in higher prices in the long term because newer, = higher-cost plants may be forced out of the marketplace. Churchwell contes= ts that it is too early to know for certain how consumer rates will react = in a deregulated market. While admitting that the nation's grid was not de= signed for retail competition, Churchwell said that improvements in state = transmission systems would allow a successful retail competitive market. Utility still looks to be freed of generators Clark Public Utilities has been trying in vain for two months to unload so= me of the 50 portable generators that have become a multimillion-dollar wh= ite elephant. The units, wired in rows near the River Road Generating Pla= nt, were leased for a year for $19.5 million. The deal was signed with Gen= eral Electric early this year, at a time when there were dire predictions = about this summer's power supply. In addition to the equipment lease, the= re is a $15 million natural gas contract to power the generators and a rou= ghly $12 million expense to transport the gas. While Clark has been able to= resell some of the gas at a loss, the transportation costs can't be reco= uped. For weeks, electricity on the open market has been much cheaper tha= n that produced by the generators. In place since July, the generators, e= ach producing 1 megawatt of power, have run for just 39 days. Electricity = prices have plunged, from a high of $325 per megawatt-hour this summer to = less than $30 today. The price has to be about $95 to make operating the g= enerators feasible. So utility officials have had no choice but to let the= m sit idle. In September, the net expense for the generator farm gas, gen= erator lease and so on was $3.5 million. For no electricity. Utility offi= cials have tried to get GE to find customers for at least some of the gen= erators. Tuesday morning, Andy Huck, Clark's operations director, said he= had heard from GE about a "pretty serious inquiry" for two generators for = two months. And that, he said, "is the best inquiry they've had so far." = Now, utility officials are trying to decide whether to keep spending $62,0= 00 a month for three GE employees and other expenses associated with maint= aining the generators. The theory is that the equipment should be tested,= a few at a time, to ensure they will be ready if needed. "They told me t= he generators need to be 'exercised,'" said Huck. "I told them they spent = two months on a ship without being started." The units were built in Austr= ia. GE, with a signed one-year lease in hand, has little incentive to fin= d customers for the equipment, particularly when the company could presuma= bly lease other generators from its inventory. "They say it's because we'= re such good client" that an effort has been made to find other users for = the generators, said Huck. Clark's $120 million River Road generating plan= t features a giant GE turbine. Clark officials don't hold out much hope o= f getting out from under the generator lease expense, which runs about $1.= 3 million per month. "Where would they go?" asked Jim Sanders, Clark's dir= ector of energy resources. Meanwhile, the natural gas supply for the equi= pment is being resold at about half what it cost the utility. Gas prices a= lso have fallen since the supply deal was inked. At their regular Tuesday= meeting, utility commissioners decided to proceed with a $100 million bon= d sale that includes money to pay for the generator lease. In March, Rick= Dyer, Clark's finance director, recommended that the utility cut a deal f= or a one-year, $100 million "bond anticipation note." The arrangement was = made on the assumption that interest rates would fall in a few months, whi= ch they have to 1961 levels. The move Tuesday gave Dyer and utility Gener= al Manager Wayne Nelson the OK to approve a bond sale of up to 15 years at= 6 percent interest although 5 percent or less is more likely, and the goa= l is a 10-year term, officials said. The bond sale likely will occur in t= he first week of December. The bulk of the $100 million borrowing is to cov= er a $63 million power purchase from Kaiser Aluminum. The deal, like the g= enerator lease, was for power to cover an August-September gap in Clark's = power supply, before the start of a Bonneville Power Administration contra= ct. That Kaiser purchase was at $325 a megawatt-hour. The utility lost a = bid to have a federal judge declare the price exorbitant and order a parti= al refund. =20 AEP, Reliant Named as Last Resort Providers in Texas The Texas Public Utility Commission (PUC) has named American Electric Powe= r (AEP) and Reliant Resources affiliates "providers of last resort" (POLR)= for residential and small-commercial customers in all or part of 96 count= ies within TXU Electric's service area. The POLR becomes the electricity p= rovider for customers who have been dropped by their past provider due to = payment problems or if their provider has discontinued service in their s = area. AEP and Reliant will offer a retail price that is expected to be 30-3= 4 percent higher than base rates in the area taking effect January 1, 2002= . By becoming the POLR, AEP and Reliant will acquire an additional 2 milli= on Dallas-area customers and an expected 1-20 percent load increase. Due t= o the higher costs associated with such an increased load the PUC was agre= eable to the higher rate. Consumer groups are opposing the higher rates, s= aying that low-income consumers will be unfairly hurt. Although many low-i= ncome consumers will qualify for a 10 percent discount advocates are argui= ng that POLR rates should equal the regular rates. Studies Show Changing Consumer Views Towards Deregulation A recent study by Deloitte and Touche Energy Resources Group finds that co= nsumers are less aware of deregulation in the electric industry and more w= ary of its potential benefits. The survey considered the opinions of 657 c= onsumers nationwide and found that the number of consumers who are aware o= f changes in retail electric markets has dropped to 39.7 percent, compared= with 50.5 percent in 2000. This is a reversal in a five-year trend of inc= reasing consumer awareness on deregulation. Analysts cited the terrorist a= ttacks and the lack of federal legislation or debate on deregulation as re= asons for the change. The survey also found that more consumers expect ele= ctric rates to increase with deregulation. Deloitte and Touche's Brank Ter= zi reports that a third of consumers expect no benefit from competition, w= hile 26 percent expect prices to go down, 9 percent expect improved servic= e, and 15 percent simply "don't know." Another study completed by RKS Rese= arch and Consulting similarly found that many consumers feel that "deregul= ation has been a colossal failure." Their study found that many consumers = who have switched to new service providers have been disappointed because = their service expectations were not met. RKS Senior Vice President Carmine= Grastataro said, "customers of public power are more satisfied with the j= ob their utility is doing than are customers of the IOUs. Although this fin= ding has historically remained true, the difference in performance scores = between public power and IOUs is exacerbated in states where competition i= s under way." The study also found that consumers are more interested in p= urchasing power through buying groups, voluntary energy curtailment progra= ms, and on-site generation. FERC Postpones December 15 RTO Deadline The Federal Energy Regulatory Commission (FERC) has officially decided to = postpone the December 15, 2001, deadline for utilities to create four regi= onal transmission organizations (RTO). FERC Chairman Pat Wood said of the = decision, "RTO development is in very different stages in various parts of= the country, and it is not possible for all RTOs to be in operation by th= e December 15, 2001, deadline established in Order 2000." The commission ha= s approved a rulemaking order, RM01-12, that addresses the development of = RTOs in several steps. First, the Commission will develop a broader defini= tion of the expected functions of an RTO and how they can be achieved. Sec= ond, FERC will seek improved input and communication from both state and f= ederal agencies on RTO development. Third, FERC will conduct a formal cost= benefit analysis of RTO systems. This comes in response to two conflictin= g studies: NY ISO reports that a large Northeast RTO could cause power rat= es to increase by $90 million, while Mirant contends that a Northeast RTO = could save consumers $440 million. The rulemaking also calls for FERC to d= etermine areas in which standardization can be improved. Lastly, a new "pr= ogressive" timeline will be developed that addresses RTO development in a = region-by-region approach. While Chairman Wood said that the commission is= holding to its original concept of four RTOs, he also noted that the new = order suggests that three smaller RTOs may be developed within the Western= region. These transmission groups would include RTO West, Desert Star RTO= , and one based on the California ISO. The rulemaking also makes a call fo= r comments in what Commissioner Nora Brownell noted as possibly the last o= pportunity for market participants and state regulators to make suggestion= s and raise concerns before final orders are issued. Ontario deregulation in doubt=20 The planned deregulation of the $35-billion Ontario electricity sector has= been thrown in doubt by a radical proposal that would shackle the provinc= e's electricity transmission company, preventing it from becoming a signif= icant player in an open North American power market. The plan, known only = to Ontario Premier Mike Harris and a few government and Bay Street insider= s, would turn Hydro One into a not-for-profit entity instead of a fully co= mmercial, privatized company. If this happens, Hydro One would lack the fl= exibility to raise equity capital, make acquisitions and form partnerships= in an effort to become one of continent's premier transmission companies = -- a goal plainly set out by chief executive officer Eleanor Clitheroe. Da= vid Lindsay, the president and chief executive officer of Ontario SuperBui= ld Corp., the government's privatization adviser, confirmed that turning H= ydro One into a not-for-profit organization, similar to Nav Canada, the ci= vil air navigation service, is under serious consideration. "We've been as= ked to evaluate all options for Hydro One's future, including this one," h= e said yesterday. He would not provide details, though it is thought that = the government wants to make a decision on Hydro One's future ownership st= ructure by the conclusion of the year. A senior official in the Ontario go= vernment, who did not want to be identified, said the proposal "is a step = backward to the old days of Ontario Hydro." He was referring to the debt-la= den utility that was split into Ontario Power Generation, the electricity = generating arm, and Hydro One, whose network of high-voltage transmission = lines spans 30,000 kilometres. The Premier's office would not comment. A s= pokeswoman for Energy Minister Jim Wilson would say only that "there are a= number of options on the table." Sources on Bay Street and at Queen's Par= k said the idea of turning Hydro One into a not-for-profit entity is being= propelled by Anthony Fell, the chairman of Royal Bank-owned RBC Dominion = Securities, Bay Street's largest dealer. If the new Hydro One took this sh= ape, it would raise about $10-billion through the sale of bonds to investo= rs. The dealers' commission on the sale of the bonds, which would rank amo= ng the biggest debt issues in history, would range from $25-million to $40= -million, one Bay Street executive said. Mr. Harris is said to be keen on = the concept partly because all the money would go back to the government t= o help pay down the $21-billion in "stranded debt" racked up by the old On= tario Hydro. The generating and transmission giant's decades-long spending= spree on nuclear plants and other assets tore a huge hole in the province= 's balance sheet. Hydro One's cash flow, derived from sales to electricity= users, would be used to pay the interest on the $10-billion of bonds. Pre= sumably, consumers would face higher electricity charges if Hydro One lack= ed sufficient cash to pay the interest. If Hydro One were a private company= instead, its financial risk would be borne by shareholders, not ratepayer= s. The United States has embraced deregulation partly because it shifts th= e financial risk of the electricity market from taxpayers to shareholders.= Executives at RBC Dominion declined to comment on the plan, citing client= confidentiality concerns. Mr. Fell first proposed it to the government in= the spring. The government wants to open up the Ontario electricity marke= t, in which buyers and sellers can negotiate prices, by next spring. The m= arket overhaul contemplated turning Ontario Power Generation and Hydro One= , both of which are 100 per cent owned by the government, into commercial = companies. In Hydro One's case, the leading options were thought to be an = outright sale, in which the utility would be bought by another company (pr= esumably a rival utility), or an initial public offering, where the shares= would be owned by private investors and traded on the stock exchange. The= third option -- converting Hydro One into a not-for-profit organization -= - has come as a surprise. There has been no debate on this option, though = rumours of its existence have jolted Bay Street and Hydro One, both of whi= ch were working on the assumption that the transmission business would eve= ntually become a commercial enterprise. Sources said that Hydro One manage= ment opposes the not-for-profit structure because it would deny Hydro One = the flexibility and discipline of a typical commercial business. The not-f= or-profit structure would mean it would not have to pay taxes, which raises= potential trade issues with the United States. American transmission comp= anies might argue that Hydro One's non-taxable status gives it an unfair c= ompetitive advantage. It would also deny Hydro One management the benefit = of potentially lucrative share options. Rod Taylor, Hydro One's executive= vice-president, would not comment on the not-for-profitoption being conte= mplated by the government. He said, however, that the company's strategy h= inges on its ability to become a major player in the deregulated North Ame= rican electricity market. "Our vision of the company is to become a fully = commercial entity, and become in the transmission sector what Canadian Nat= ional is to the rail sector," he said in a phone interview. Stanley Hartt,= the chairman of the Canadian office of Wall Street's Salomon Smith Barney= , is among the Bay Street executives who opposes a not-for-profit structur= e for Hydro One (Salomon has a small role as an adviser to Hydro One's str= ategic business plan). In a three-page letter sent this week to the top ex= ecutives of several large power-using Ontario companies, he said that "thi= s idea is short-sighted and bad for Ontario." He argued that "the absence = of an equity component in the capital structure of the not-for-profit corp= oration essentially transfers the equity risk to the ratepayers." He also = said that, without financial flexibility, Hydro One would lack the resource= s to invest in "new bottleneck-eliminating connections" that would allow t= he company to become a significant electricity exporter. "Ontario would lo= se the prospect of becoming a true hub for North American Energy transmiss= ion," he said. In a recent report on the power industry, TD Newcrest analy= st David McCracken wrote, "With its operating expertise and strong balance= sheet, Hydro One is well positioned to act as a consolidator of transmiss= ion grids in the northern United States, where ownership tends to be fragm= ented." He noted that Hydro One is expected to be privatized in the next f= ew years, and he said the utility has "the opportunity to lever strengths = from traditional wires businesses into competitive high-growth initiatives= ." According to sources familiar with the not-for-profit proposal, Hydro O= ne would be governed in the best interests of all electricity users by sto= cking the board of directors with appointees from corporations that are he= avy power users, such as auto and steel makers and paper companies. Such a= structure exists at Nav Canada, with airline executives on the board, and= the company has been able to cut the fees it charges customers. Restructu= ring Hydro One with debt, rather than equity, is also presented as the mos= t efficient way to capitalize the company. "The problem with a Canadian Na= tional Rail-style IPO is that equity is much more expensive than debt," sai= d one financier familiar with the proposal. "With a debt-based structure, = every dollar earned is available to pay interest, while an equity-based st= ructure means you pay federal taxes, provide a return to shareholders and = make debt payments." Dofasco Inc., the big Ontario steel producer that con= sumes about $100-million of electricity a year, supports the not-for-profi= t proposal. Gord Forstner, head of communications, said a bond sale would = reduce Ontario Hydro's stranded debt by $10-billion immediately, paving th= e way for lower electricity charges. Currently, a special levy on all elec= tricity bills is being used to whittle down the debt. The charge costs Dof= asco alone about $15-million a year. "We want to see the stranded debt pai= d down first," Mr. Forstner said. "Until that happens, we don't favour Hyd= ro One going to the expense of expanding outside of Ontario's boundaries." Retail Access Requested in California The Alliance for Retail Energy Markets (AReM) has asked the California Sup= reme Court to overturn the state Public Utilities Commission's September 2= 0th decision that suspended direct retail access across the state. The con= sumer group, comprised of American Utility Network, the Alliance for Retai= l Energy Markets, California League of Food Processors, Western Power Trad= ing Forum, Strategic Energy, AB&I Foundry, Tricon Global Restaurants and S= chool Project for Utility Rate Reduction, has argued that the ruling was m= ade without due process and that the Court had no right to abrogate contra= cts retroactively. "It is our hope that the Supreme Court recognizes the P= UC has acted in complete disregard of our constitutional rights and has rus= hed to judgment on this issue, without hearings and without creating a pro= per evidentiary record," said AReM Attorney Dan Douglass. PUC Commissioner= Carl Wood has maintained that the PUC issued the order because it believe= d that consumers have hastily signed contracts with competitive suppliers,= leaving fewer customers to pay for the state's wholesale power costs. ARe= M is disputing the claim, saying that only a limited number of customers s= witched suppliers during the summer of 2001. Plant Construction Influences Florida's Wholesale Market California based Calpine Corporation announced that it has begun construct= ion of a 530 megawatt power plant in Auburndale, Florida. The construction= brings Florida closer to deregulation, as Calpine is one of the few out-o= f-state generating companies to successfully penetrate Florida's wholesale= electricity market. Other companies, such as Enron, have attempted to con= struct new power plants in the state, but have been unsuccessful due to co= mmunity and regulatory resistance. Florida's stringent Power Plant Siting = Act makes it very difficult for out-of-state companies to enter the market= . Calpine has succeeded by agreeing to sell the output from the Auburndale= plant under a long-term contract to one of Florida's existing utilities, = Seminole Electric Cooperative. In addition, Calpine has been working with = the Florida Partnership for Affordable Competitive Electricity to persuade = lawmakers and Governor Bush to deregulate Florida's wholesale market. Flor= ida's Energy 2020 Study Commission, which is responsible for the state's c= ompetition plan, has endorsed a proposal to allow out-of-state companies t= o enter Florida's wholesale market by building new plants and selling powe= r to the state's incumbent utilities. The Commission has also suggested el= iminating the power of state government to approve power plant development= and limiting the ability of local governments to block projects. The Comm= ission is expected to issue a final report on December 1, 2001. Florida PSC Approves Independent Power Line Operations The Florida Public Service Commission (PSC) has approved the transfer of t= he state's power lines from utility jurisdiction to an independent company= . The PSC has asked Florida's three main utilities, Florida Power and Ligh= t (FPL), Florida and Power Corporation, and Tampa Electric, to devise a pr= oposal within 90 days that will turn over operation of the power lines to = an independent system operator. Commissioner Michael A. Palecki said that = the decision was made in the best interest for ratepayers, utility compani= es and independent power companies seeking a competitive market. Under an = earlier proposal submitted to the PSC, the utilities proposed a statewide = regional transmission organization, GridFlorida, that would have owned and= managed the power lines. The PSC did not approve the plan, as it would ha= ve moved jurisdiction of retail rates to the Federal Energy Regulatory Com= mission. New England Congressmen Seek Equal Representation on RTO Board Twenty-three U.S. congressmen from New England requested that their states= be given adequate representation on the governance of the Northeast Regio= nal Transmission Organization (RTO.) In an effort organized by Representat= ive Edward Markey (D-Mass), the bipartisan delegation of congressmen wrote= a letter to the Federal Energy Regulatory Commission (FERC) asking the re= gulators to create a governing board comprised of equal numbers of represe= ntatives from New England, New York, and the Mid-Atlantic. "We view an equ= ally balanced governance structure as the only way in which a single marke= t design can be implemented which would truly benefit the consumers of all= the regions," Markey said. FERC has been considering several options for = structuring the board that will oversee the unified Northeast wholesale po= wer market. One proposal gives five seats for representatives from the Mid= -Atlantic, three seats to New York, and two to New England. ISO New Englan= d and New York Independent System Operator joined the congressman in oppos= ing that plan and requesting equal representation. California Wants Consumers to See Real Power Costs In a move that may prevent a repeat meltdown of the wholesale electricity = market in California, the California Consumer Power and Financing Authorit= y wants to install electricity meters that charge consumers the real cost = of power. Currently consumers pay the same price for electricity throughou= t the day even though the wholesale price varies every hour. Therefore, co= nsumers have no incentive to conserve during peak times. The meters will c= harge residential consumers more for power used during peak hours, when de= mand is highest and less during off peak times. The authority issued reque= sts for proposals, due by November 15, for a minimum of 10,000 real-time m= eters, the cost of which varies between $200 and $1,000. The power authorit= y plans to finance the purchase of the meters and will market them to cust= omers of Pacific Gas & Electric, Southern California Edison, San Diego Gas= & Electric and dozens of municipal utilities. As consumers have shown to = be responsive to price signals in a pilot program in Washington, Californi= ans too can expect to reduce their energy consumption. Project manger, Kev= in Wood of Southern California Edison hopes his company will install meter= s for 11,000 customers by next summer. He said that if these customers, wh= o represent 20 to 30 percent of the load, respond to price signals during = peak hours, this may in turn drive down wholesale prices for all users. Wh= ile consumers may benefit, the decrease in consumption may cost power gene= rators millions of dollars in revenue. Environmentalists and Union Coalition Oppose Deregulation in Indiana A coalition of union members from several groups showed their opposition t= o electric utility deregulation in Indiana during a peaceful demonstration= on November 7. The coalition, know as People's Energy Campaign, includes = members from UNITE Local 399, formerly the Ladies Garment Workers Union, t= he Central Labor Council, Valley Watch environmental group, and the Citize= ns Action Coalition. Denny Owen, an executive board member of UNITE Local = 399, expressed the general concern of the coalition that deregulation shou= ld be discouraged. "We don't think it'll make prices lower, it'll make the= m go higher," Owen said. Indiana is considered to have low utility rates c= ompared to other states. Indiana lawmakers are considering deregulation as= newly introduced legislation proposes to create an Energy Policy Commissi= on that would craft a comprehensive energy plan for the state. Senator Gar= d and other General Assembly members created the bill to address the state'= s need for a true energy policy and as a means to address future electric = load growth. "Merchant power plants have been a divisive issue in the past= year and a half," Gard said. "There are many people who feel if the state= has a comprehensive energy policy, it might be better able to deal with t= his issue. And we also have to pay attention to what's happened in Califor= nia." The bill would set up a temporary commission with appointed members = representing various stakeholder groups including state government, indust= ry, labor, and environmental groups. The commission is scheduled to presen= t a final report to the governor in December 2002. While electric deregula= tion would not be a prime focus of the commission, the "specter of deregul= ation" would have to be examined in some fashion, Senator Gard said. SB 23= 3 has been sent to the Senate Rules and Legislative Procedures Committee. = Senator Gard predicts it will pass the Senate, although chances in the Hou= se of Representatives are less favorable. Debate Over Oklahoma Transmission System's Readiness to Serve Future Load The Electric Restructuring Advisory Committee met with industry officials = on November 7 to discuss the future capabilities of Oklahoma's transmissio= n system. The committee is responsible for researching the capabilities of= the system, determining whether upgrades are necessary, and delegating th= e responsibility for paying for such upgrades. With new power plants being= developed and proposals to open the state to a competitive electric marke= t in progress, concern has risen as to whether the transmission system can= handle the increased load. Stanton Hadley of Oak Ridge National Laborator= y reported that electricity demand in Oklahoma is expected to grow 26 perc= ent, to 14,350 megawatts by 2010. The transmission system currently is abl= e to handle only 13,300 megawatts. Nevertheless, power companies are plann= ing 13,500 megawatts of new power generation. Calpine Corporation is spend= ing about $20 million on transmission improvements between its power plant= near Coweta, Oklahoma, and the outlying region. Also, Public Service Comp= any of Oklahoma plans to spend $40 million on transmission upgrades over t= he next few years. With the new power plants and a supply surplus expected= , Hadley also said that consumers could expect lower costs. John Wright, o= ne of the committee members questioning this assumption, said that in a de= regulated market, the utilities are likely to sell their power out of state= . If this were to occur, lower power prices would be unlikely. The Electri= c Restructuring Advisory Committee will deliver a report to the Legislatur= e at the end of the year. Thirty New Power Plants Proposed for Virginia The latest news out of the deregulation of Virginia's electric power indus= try centers around thirty proposals for new power plants in the state. Whi= le the surge in supply is expected to prevent a California-like energy cri= sis, health and environmentalists argue that the air pollution and smog fr= om the plants could damage the state's parks and forests. Since 1998, when= the state announced its plans to open its energy markets to competition, 3= 0 companies and utilities have asked for state approval to build new plant= s. Activists complain that the new power would not even benefit Virginia's= customers, as the energy is intended for delivery in northeastern states.= By building plants in Virginia, utilities avoid the Northeast's stringent= environmental regulations. An advisory group composed of utility and indu= stry representatives argues that new plants pose no significant risk. They= stated that 28 of the new plants would run on cleaner-burning natural gas= and that other federal regulations would require older plants to reduce h= armful emissions by 65 percent by 2004. The representatives also expect th= at only a few of the plants will actually be built due to market condition= s and cooling-water shortages. Copyright ? 2001 Egnatia Research & Management. All rights reserved
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