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Gas-Fired Generation

Fortnightly Magazine - September 15 1995

2010.

Dean T. Casaday

President & CEO

Pennsylvania Gas and Water Co.

The 1990 Clean Air Act, along with the deregulation of the electric industry, will provide natural gas with numerous opportunities for growth in the area of power generation. For example, small-scale gas cogeneration projects can be strategically placed in an electric utility's service territory, providing added capacity and generation diversity, and using waste heat on site. In addition, natural gas power plants can be sited and on line in a fraction of the time it takes to place coal- or nuclear-fired plants in service. Because natural gas is environmentally benign, it can help coal-fired power plants meet the Clean Air Act standards more economically.

Deregulation of electric markets, and the removal of barriers hindering market entrance (i.e., repeal of PURPA), will definitely help the gas industry. Deregulation at the national level must be accompanied by deregulation at the state level. If players are not hindered by particular state regulations, the most efficient source of power generation will evolve, and in many cases this will be natural gas. This must be also be followed by a repeal of any state requirement that favors a native fuel, such as coal.

As to whether gas pipelines should become power generators, we must look at how these entities have been eliminated from the gas merchant function. For the most part, they have developed marketing subsidiaries to sell natural gas. Many of these same parties are presently filing to be marketers of electricity (em as are many independent brokers. With the deregulation of the gas and electric industries, pipelines, utilities, or independent companies should all have the opportunity to become power generators.

Robert B. Catell

President & CEO, Brooklyn Union

Chairman, American Gas Association

The gas-fired power generation market will be an important source of natural gas demand growth, even as the restructuring of the electric industry continues. Success may be more difficult than many people believe due to the competitive nature of the wholesale electric market. There is a lot of potential, but our ability to compete successfully may depend upon the form of electric deregulation and the repeal of PURPA. We need to continue our strong efforts on other direct-fired natural gas end-use applications. Combined residential and commercial demand in 1994 exceeded the previously reported all-time high achieved in 1972, and growing demand in the direct-fired end-use market must remain a high priority. Growing gas demand in all markets helps maintain a healthy exploration and production industry segment and offers the opportunity to more fully utilize the existing pipeline infrastructure, thereby keeping transmission costs as low as possible, making natural gas more competitive in the marketplace.

Jerald V. Halvorsen

President

Interstate Natural Gas

Association of America

Natural gas has been and continues to be an important fuel supply for electric generation, both for traditional electric utilities and the newer NUG market. Natural gas has much to offer electric generation, and we expect the market for gas-fired generation to continue to grow.

With a couple dozen utilities already embracing open access, and more preparing