Too Many Power Plants, Environmentalists Say

Posted: December 03, 1986

Electric companies have wasted billions building unneeded power plants, producing a "terribly expensive glut" of generating capacity, an environmental group said yesterday.

The Environmental Action Foundation, in a study of the 1985 activities of the country's 110 largest privately owned utilities, accused the companies of wasting more than $124 billion to build plants the group said were unneccessary.

The costs were passed on to consumers at an average rate of about $70 per customer, the study, released yesterday, added.

"These are investments that could have been used more productively somewhere else," said foundation energy analyst Alan Nogee, who wrote the study. For example, he said, the $18 billion cost of the clean-water bill that President Reagan vetoed last month as too expensive is "one-seventh the amount utilities invested in unproductive power plants," Nogee said.

Nogee, a former Philadelphia energy activist, said utilities generally need to maintain 20 percent more generating capacity than their customers use on peak days. His study, however, contended that the average cushion across the country was 49 percent.

That means utilities are maintaining, and paying for, the equivalent of 135 1,000-megawatt power plants, Nogee said.

The mid-Atlantic region generally has less excess power than the rest of the country, Nogee said, with a capacity reserve margin of 29 percent. But Philadelphia Electric Co.'s margin at the end of 1985 was 43 percent, he said, adding that that was before the company added its 1,055-megawatt Limerick 1 nuclear plant to the system.

"This is all before Limerick," Nogee said.

A PE planner disputed the contention, however. John Spare, supervising engineer for research and planning, said the utility's total capacity was only 26 percent over the peak demand of 1985.

This year PE not only added Limerick 1, but also retired several smaller power plants totaling about 750 megawatts, he added, leaving the company with a current capacity reserve of 28 percent.

"I can't come up with any connection that would explain" the Environmental Action numbers, Spare said.

An official of the Edison Electric Institute also disputed the study's conclusions. "To me, the numbers sound way off," said Bruce Humphrey, the institute's director of economics.

Nogee said the study was designed "to counter the public-relations offensive launched last year by the utilities crying wolf that we're going to have brown-outs and blackouts in the next five to 10 years, unless we have more plants."

His group wants state regulators to discourage excess building by utilities by barring them from passing costs on to ratepayers, as the Pennsylvania Public Utility Commission did when Pennsylvania Power & Light attempted to recoup its construction costs for the Susquehanna 2 nuclear plant.

"We would like more commissions to follow the example of the Pennsylvania

commission in the Susquehanna case," Nogee said. He also pointed to legislation passed earlier this year in Harrisburg regarding "excess capacity" as a model for the rest of the nation.

The study said the utilities had overbuilt because of projections developed in the 1970s that erroneously forecast heavier demand for electricity. Though utility forecasts on growth have improved over the last 10 years, "they haven't improved enough to be on target," Nogee said.

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