Using most efficient power plants first, not a good idea: EEI

Washington (Platts)--18Oct2005

The US Senate Energy and Natural Resources Committee, concerned at
looking at forecasts for high heating fuel costs this winter, raised the idea
of "efficient dispatch" of power plants Tuesday, but the investor-owned
electric utility lobby told lawmakers a federal mandate to that effect was a
bad idea. 
     New Mexico Sen Jeff Bingaman, the panel's senior Democrat, asked why
electric utilities are not required to use the most efficient plants,
especially if such practice would cut natural gas consumption. Many new
efficient natural gas plants, many of them owned by merchant generators, are
not being used to meet demand while older inefficient plants, many of which
are utility owned, are, he said. 
     Senator Lamar Alexander (Republican-Tennessee) also asked why
utilities would be opposed to having states evaluate whether natural gas
plants could be better dispatched for electricity production. New plants use
half the amount of natural gas that older plants do, he said. 
     Outside the hearing where the US Energy Information Administration,
Edison Electric Institute, the American Gas Assn, among others, testified,
Chairman Pete Domenici (Republican-New Mexico) lauded the idea of "efficient
dispatch," but said prospects for legislation on that were dim this year. "I
don't think we could get dispatch through" the committee, he said.
     EEI President Tom Kuhn told the committee that federal requirements
for efficient dispatch would lead to greater energy costs for consumers
because the most efficient power plants are often not the most economic. Such
requirements that would spur greater use of non-utility gas-fired generation
could also threaten reliability and add to congestion on the electricity grid,
he said. 
     Kuhn pointed out that an amendment to promote "efficient dispatch"
died in the committee during its debate on the Energy Policy Act of 2005. The
bill, however, did call for two federal studies on "economic dispatch" of
power plants, under which utilities would be called to use the cheapest
electricity generation first. 
     "Congress should refrain from moving forward with more dispatch
legislation until it receives the results of these studies and any policy
recommendations they might propose," Kuhn told the committee.
                                          ---Cathy Cash, cathy_cash@platts.com

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