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NEWS & TRENDS
 DAVEY JONES' OUTLET
Electricity from the deep? The $3-billion Neptune Regional Electrical Transmission System (RTS), as recently proposed to the Federal Energy Regulatory Commission, promises to provide it. The RTS would be a sub-briny, 48,000-megawatt, high-voltage direct current (HVDC) network linking customers in high-demand but power-short urban centers in the northeastern United States to Down East power.
When complete, the marine network (whose lines would be buried 10 to 14 feet beneath the ocean floor) would have three 1,200 megawatt transmission lines from New Brunswick, Nova Scotia, and Maine connected to the markets in Boston, New York City, Long Island, and the Connecticut shore. Another segment, most likely to be constructed first, will link New Jersey with New York City and Long Island with two 600-megawatt lines, possibly as early as 2003.
The first Canadian link is scheduled for late 2004 with a transmission line connecting New Brunswick with New York: this would be New York's first direct interconnection with Atlantic Canada. Other links are contemplated for 2005 and 2006 that would connect Nova Scotia and Maine with the Boston area and Connecticut, and, through the original New Brunswick link, to New York.
Subsea HVDC electric transmission has been in use in other parts of the world for more than 30 years. (See related story about Edison Award winner Kansai Electric Power Company.) These systems achieve high reliability ratings with little power loss over long distances. Unplanned outages occur less than 1 percent of the time. Neptune will work with the fisheries community and others to ensure the cable is routed around sensitive fishery and environmental areas.
But the issue of the impact on the marine environment is a hurdle for the system. TransEnergie's bid to build an HVDC line across Long Island Sound was rejected because the proposed route went through shellfish beds. (TransEnergie is working on an alternate route.) States (Massachusetts, for one) have marine protection laws, which mean another regulatory hurdle. Still, the undersea cable would effectively erase the "not-in-my-backyard" issues involved in transmission siting, particularly in populous northeastern states.
Atlantic Energy Partners, the RTS development company, is made up of energy, engineering, construction, and marketing companies: Cianbro Corporation (ME), Tompkins Research and Management Consulting (CT), ESAI Energy Ventures (MA), Standard Energy Development (NS), and CTSBM Investments (ME).
| A BOARD BY ANY OTHER NAME
Many utility company boards have become virtually indistinguishable from the boards of S&P 500 companies, according to the recent Spencer Stuart "Utility Board Index." (See Table 1.) The report suggests that utility boards are retooling to meet the demands of a deregulated environment and to attract investors.
Yet while utility boards tend to work harder (meeting 10 times per year versus 8 times for S&P 500 boards), those board members received less compensation than S&P 500 boards ($23,882 versus $34,451); and only a quarter of utility boards offered stock options, while two-thirds of S&P 500 boards did.
TABLE 1
COMPARISON OF UTILITY COMPANY BOARDS AND S&P 500 BOARDS
|
Utility |
S&P 500 |
|
New board members tended to hail from
outside the company. |
82 percent |
73 percent |
New board members were more likely to be
active senior managers (CEOs, presidents, and
chief operating officers) than other professionals
(lawyers, investment bankers, military officers,
and government officials). |
67 percent |
53 percent |
New board members increasingly came from the
financial services sector. |
40 percent (up from 31 percent in 1998) |
23 percent (up from 19 percent in 1998) |
| Most board members were over age 60. |
79 percent |
60 percent |
The percentage of boards offering retirement
plans declined. |
12.5 percent (down from28 percent in 1998) |
9 percent (down from 10 percent in 1998) |
Most boards in both groups offered members
deferred compensation plans. |
92 percent |
83 percent | |
EDISON AWARD WINNERS AND MORE
During Edison Electric Institute's (EEI's) annual convention last June in New Orleans, EEI named Constellation Energy Group, Puget Sound Energy, and Kansai Electric as winners of the 42nd annual Edison Award.
The Edison Award goes to the U.S. shareholder-owned utilities and international affiliates of EEI that make the most outstanding contributions to the advancement of the industry. A committee of national trade journal editors reviews the nominees, and a panel of judges consisting of current and past EEI chairmen and academicians select the winners.
Constellation Energy Group was honored for the successful relicensing of its Calvert Cliffs nuclear powerplant, the first commercial nuclear plant in the United States to renew its operating licenses. Constellation's leadership will help other companies seeking to relicense their plants to do so in less time and for less money.
Puget Sound Energy received the award for being the first electric distribution utility in the nation to provide information on time-of-day price and comparative time-of-day consumption to all classes of customers. The program increases customer awareness of the cost savings and efficiency benefits of shifting electricity demand to off-peak periods, giving customers a real stake in energy markets.
Kansai Electric Power Company of Osaka, Japan, was cited for, among other things, installing a high-voltage, direct-current electric transmission line under the Kii Channel in west central Japan, linking the company's Tachibana Bay power station on Shikoku Island to the Kansai area. Kansai used advanced engineering to increase reliability and lower costs, while also using environmentally friendly construction techniques.
EEI also honored AES-Electricidad de Caracas with the 2001 Emergency Response Award in recognition of the utility's efforts to restore power and assist in recovery efforts following torrential rains and devastating floods and mudslides that hit Caracas and the Venezuelan coast in December 1999, the country's worst natural disaster in 100 years.
Also at the June meeting, the EEI board of directors elected Erle Nye, chairman and CEO of TXU Corporation, as the Institute's new chairman.
Erroll B. Davis, Jr., Chairman, President, and CEO of Alliant Energy Corporation, became EEI's first Vice Chairman, and Allen Franklin, Chairman, President, and CEO of Southern Company, was elected second Vice Chairman.
IF IT CAN MAKE IT THERE
A "whole-buildings" approach could dramatically reshape the performance of commercial buildings in the coming decades, according to the U.S. Department of Energy's (DOE's) "High-Performance Commercial Buildings: A Technology Roadmap."
In a whole-building approach, the building's performance is optimized by achieving synergies among all building components and subsystems. Take the building at 4 Times Square, at the intersection of Broadway and 42nd Street, in New York City. It is the first Manhattan office tower to incorporate "green" standards—energy-efficient design, indoor ecology standards (including a ventilation system that provides tenants with 50 percent more fresh air than required by code), and sustainable materials. The 1.6 million-square-foot, 48-story building also has onsite power generation—a fuel cell plant and integrated photovoltaic panels on some areas of the facade. DOE-2 software runs the operation by analyzing the building's energy uses and comparing potential energy savings from a variety of technical options.
According to the report, these features have reduced the building's energy costs by an estimated $500,000 annually (compared to expected costs in a traditionally constructed building), resulting in a payback period of five years.
The recently released report, developed by representatives from the commercial building industry in conjunction with DOE's Office of Building Technology, outlines the challenges facing the buildings industry in shaping commercial environments that are energy-efficient and enhance creativity, productivity, and quality of life. For more information, visit www.eren.doe.gov/buildings/commercial_roadmap. |
NUCLEAR GENERATION 2000
In 2000, the U.S. nuclear power industry generated a record 753.9 billion kilowatt-hours of power, which was 3.5 percent above its previous record set in 1999. According to the Energy Information Administration, the increase in nuclear generation over the past two years would have been enough to meet the power needs of all residential consumers in California in 1999.
The nuclear industry achieved this record output even though it had only 103 reactors in operation, fewer than it had as recently as 1990, when there were 111. The industry accomplished this feat by increasing capacity to 89.1 percent during 2000, from 85.5 percent in 1999, and from 70.2 percent in 1990.
As a result of recent years of reliable service and declining production costs, many nuclear plants are applying to renew their licenses. In 2000, the Nuclear Regulatory Commission approved renewal applications for five nuclear power plants. The commission received five additional applications and expects to receive twenty-eight more by 2004. The Nuclear Energy Institute (NEI) suggests that virtually all nuclear plants will seek license renewal in the future.
The last license for a new reactor in the United States was issued in 1973. Recently, however, the Nuclear Energy Institute (NEI) stated that it expects to have 50,000 new megawatts of nuclear capacity online in the next 20 years. The industry must meet six challenges to achieve this goal, according to NEI:
- gain the public's confidence that nuclear energy is a necessary component of good energy and environmental strategy;
- maintain high safety and reliability standards;
- foster a reliable and competitive fuel cycle;
- maximize the value of existing assets;
- improve public relations; and
- invest in physical infrastructure and human capital.
INTEGRATING PLANT, WETLANDS, COMMUNITY
Dominion and Florida Power & Light Company (FPL) received Edison Electric Institute's (EEI's) 2001 National Land Management Awards last May for their exemplary integration of environmental leadership and powerplant operations. A peer-review committee of impartial utility land managers, with input from environmental professionals in government and academia, selected the winners.
According to its citation, Dominion incorporated successful land management and environmental stewardship into planning and construction of its 930-megawatt Clover Power Station, located on the Staunton River in Halifax County, VA—it is one of the nation's cleanest coal-fired power stations. The utility helped cultivate and revegetate the area surrounding the plant to enhance critical wildlife habitat. It also created a 36-acre tiered wetland adjacent to the Roanoke River and built a nature trail in partnership with Ducks Unlimited, state agencies, local companies, and schools to showcase and emphasize the value of the wetlands. In addition, via a partnership with the Virginia Department of Conservation and Recreation, Dominion developed a visitor center highlighting the historical significance of an important Civil War battlefield encompassed by the Clover Station site.
FPL was honored for its management of 25,000 acres surrounding the Turkey Point nuclear powerplant, which, for the last five years, the Nuclear Regulatory Commission has given "superior" ratings. The site contains fresh and estuarine wetlands and subtropical hardwood forests; it is also home to 29 state and 17 federally protected animal species, including the Florida panther, the American crocodile, and the woodstork. According to the citation, FPL has developed innovative land management practices to integrate the powerplant site within the delicate Everglades ecosystem. The company is the first in the nation to create a wetland mitigation bank—in this case, a 14,000-acre buffer around the site that provides habitat for herbaceous freshwater, mangrove, and saltwater marsh wetlands. Also, FPL initiated a crocodile research and monitoring program in the 1970s, which has helped foster the growth of the surrounding crocodile population.
And EEI itself won a land award. In recognition of its effort to help educate federal land managers about electric utility facility siting issues, the institute received the Bureau of Land Management (BLM) Director's Partnership Award. Since 1976, EEI and its Western members have teamed up with BLM and other federal agencies to offer the Bureau's Electric System Short Course, a week-long program that provides field personnel and government land-use managers with an understanding of the requirements to site, construct, and operate electric transmission and distribution systems. The Institute and its members helped design and have provided instructors for the course, which has been offered to more than 425 personnel from BLM, the U.S. Forest Service, and the U.S. Fish and Wildlife Service.
Ray Brady, BLM's group manager of lands and realty, highlighted the positive working relationships that have developed over the years between utility course instructors and participants. "The Electric Systems Short Course is seen as the model for positive cooperative efforts between BLM and industry," he said. For more information on the course, visit www.eei.org/resources/meetings/010129.pdf
PUMPED (AIR) STORAGE
Sandia National Laboratories, working with Haddington Ventures and its subsidiary Norton Energy Storage, has been studying the feasibility of using a 2,200-foot-deep, inactive limestone mine near Norton, OH, for storing compressed air that will later be used to produce electricity.
In a sense, it is the air equivalent of pumped hydro storage, where water is pumped into a reservoir during off-peak times and then released through hydro turbines during peak times. Here, the intent is to use air compressors during off-peak times to increase pressure in the mine, according to Steve Bauer, the leader of the Sandia team (whose main job was to measure the mine's suitability). During peak needs for electricity, air pressure will be bled off through modified combustion turbines to generate electricity.
The Pittsburgh Plate Glass Company operated the 643-acre mine between 1943 and 1976, producing synthetic soda ash used in manufacturing glass. Despite being well below the water table, the mine is virtually dry.
The main challenge, according to Bauer, is to create an airtight space—working pressures in the mine will range between about 1,600 and 8,000 pounds per square inch. The Sandia team found that the mine consisted of a very dense rock with low permeability. It was stiff and strong and had few, if any, natural fractures.
In October 1999, Norton Energy purchased the site and the limestone mine and signed an agreement with the city of Norton in July 2000 to build the plant. While it is still seeking permits through the state's regulatory agencies, Norton Energy plans to bring the plant online in increments of 300 megawatts until about 2,700 megawatts built—in about two years. The company plans to sell the power to utilities and marketing companies.
According to Sandia, the plant will be environmentally friendly, producing the same amount of emissions as a 600-megawatt gas-fired combustion turbine plant.
Only two other compressed air energy storage plants exist—a 10-year-old 290-megawatt facility near Mobile, AL, and a 23-year-old plant (110 megawatt) in Germany, both in caverns created in salt deposits.
Another company, Ridge Energy Storage, has acquired exclusive rights to six sites (also in salt caverns) in Texas and Louisiana, and is negotiating for several more sites in the Midwest and West and one site in England.
MINIMUM DAILY REQUIREMENT?
Does the label tell you everything you need to know? When it comes to electricity, definitions, fuel mix, and emissions can be sliced many ways. (See "The Labeling Dilemma," May/June 1998 Electric Perspectives.) Still, many states, in order to communicate basic energy information to consumers and give them a way to compare providers, are looking for standard ways to do it. Come January, for example, when Texas will have fully implemented its electric choice program, every provider will have to give consumers who request it an "Electricity Facts Label," and all providers will use the same label format. |
ENVIRONMENTAL SERVICES ON THE WANE
In the late 1980s and early 1990s, the environmental services sector in the United States experienced double-digit growth as many new environmental regulations were implemented. But from 1993 to 2000, according to a survey by Environmental Information Ltd. (a business research company), the number of such firms declined by 54 percent nationwide.
According to Environmental Information, this was due to the facts that no significant new regulations were passed and that many requirements changed as a result of regulatory reform efforts—both reducing demand for environmental services in general.
At least 3,000 (and perhaps as many as 5,000) environmental service firms closed their operations between 1993 and 2000. Most full closures happened among firms that had been in business for fewer than 15 years and among those with fewer than 25 employees. The highest percentage of closures—26 percent—occurred from 1994 to 1996. From 1996 to 1998, the closure rate was 15 percent; from 1998 to 2000, 13 percent.
"The environmental services marketplace is clearly in a state of decline," said Cary Perket, a senior analyst at Environmental Information. "We expect to see companies in this sector continue to diversify out of the environmental field for growth and to consolidate to improve operating efficiency."
The research firm found that the percentage of closures was relatively consistent throughout all states. The companies surveyed covered such areas as asbestos removal, consulting, engineering, laboratory services, remediation, spill response, and underground storage tank services. (The survey did not include hazardous waste facilities or municipal solid waste facilities.)
E-VASION
Far fewer utilities are doing business with trading partners via the internet than expected a year ago, according to a new book from Chartwell.
As explained in E-Procurement in the Energy Industry 2001, the biggest issue holding utilities back from e-procurement in 2000 was concern for security. Other issues were the sizeable investment required for e-procurement systems (as well as the cost of integrating such systems with legacy systems) and a company's internal readiness for such a drastic change. Having to re-engineer business processes can be daunting, especially in today's atmosphere of regulatory uncertainty, the book points out. In addition, when stocks tumbled and dot-coms closed shop in late 2000, energy company executives began shying away from e-anything.
Still, in 2000, over 70 percent of large utilities used e-procurement for the purchase of small items like office supplies, and 24 percent used e-procurement for large industry-related items. Some examples:
- Entergy reported a 12- to 18-month payback period for costs involved in setting up its e-procurement consortium.
- Public Service Electric and Gas Company predicted its savings from using an online marketplace will be 10-15 percent.
- At Idaho Power Company, the return on investment in an e-procurement solution is expected to take about 34 months. Still, the utility also reported a 5-percent reduction in annual maintenance, repair, and operating materials spending budget.
- NUI Corporation saw a 10-percent savings by using a reverse-auction process to buy a meter contract.
- First Energy reported savings of up to 4 percent by buying coal using an online bidding process.
- Northeast Utilities saved $23,400 per year simply by letting vendors access the status of invoices online.
- Wisconsin Electric expects payback within three months on an investment in web applications that allows employees to order supplies online. The online process has resulted in a 5-percent savings—or about $30,000-$50,000 per year—on office supplies.
And despite the dot.com shakeout—or maybe even because of it—the use of e-procurement will continue to grow, Chartwell predicts. As energy companies see others saving money through online processes, they, too, will enter the world of online purchasing and supply chain management. By 2004, Chartwell estimates that 10 percent of all business-to-business transactions will go through the internet.
IT IS ROCKET SCIENCE
Clean Energy Systems (CES), a California energy firm, has developed a high-energy gas generation system that uses fossil fuels to produce electricity with no emissions.
People who come up with that kind of solution have to be rocket scientists. And in fact, CES was founded by retired rocket scientists.
The fuel used in the CES system is methane, which is fired in a "steam generator" with pure oxygen and water. The use of oxygen rather than air eliminates the formation of nitrogen oxides and the large volume of exhaust gas. The steam generator produces a gas mixture of steam and carbon dioxide (CO2), which in turn powers a multistage turbine. Exhaust gases from the turbine go to a condenser where CO2 is separated from the water. Most of the water is reheated and returned to the steam generator. According to CES, most of the CO2 can be sold for commercial use or otherwise sequestered.
Before the technology can operate at optimal efficiency, turbines will have to be developed that can operate at much higher temperatures than the turbines now commercially available. Higher temperatures increase the efficiency of the system, producing more electricity per pound of fuel.
Still, Lawrence Livermore National Laboratory considers that the company's 75-kilowatt prototype powerplant works so well that the laboratory wants to build a 10-megawatt demonstration plant.
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