CINERGY MERGER CONDITIONS. FERC allows two-year deferral of prior requirement (a condition of the 1993 Cinergy merger) for Cincinnati Gas & Electric Co. and PSI Energy Co. to build a 345-kV...
The Salmon Strategy: Power Swims Upstream to Canada.
Probably the quickest way to get punched out in Toronto is to call Canada the 51st state. But let's face it,
the border is getting murky, like power markets.
Aren't we supposed to be importing power from Canada? Didn't the NIMBY syndrome kill off baseload generation construction, making our provincial neighbors the source of our power and raw materials? Then why are companies like Northeast Utilities suddenly seeking permission to export power to the provinces?
After its nukes restart, Northeast says it will have more generating resources than it needs. It wants to sell that surplus power to Hydro-Québec. Specifically, 665 megawatts (em about one nuclear power plant's worth, or 33 percent of the capacity of the licensed Vermont interconnection. It must be the season; the salmon are swimming upstream again.
Odd, the "experts" said we would import Canadian hydropower through the millennium. In 1991, for example, the North American Electric Reliability Council (NERC) predicted 10,000 million kilowatt-hours (Kwh) of NEPOOL imports each year. NERC said New York would import another 11,500 million Kwh annually, more than 13,000 million Kwh by decade's end. (That's three to four nukes.) The only Québec imports NERC detected came from Labrador (admittedly, another country to the Québecois). Things changed in 1994 when the New York Power Authority harpooned the Great "White" Whale hydro project by canceling its $5-billion purchased-power contract.
Five years isn't long for capital with a 30-year life. Yet NERC blew that simple forecast. Pitch a brick like that in the semiconductor industry, and you're toast for Motorola.
I don't mean to single out NERC. Besides, the regional councils generate the numbers. And even at point-blank range in 1993, NEPOOL's "experts" still missed.
If NERC and NEPOOL can't see more than two years out, the power market must be changing rapidly. And if you can't model contemporary demand when you have 90-percent share, what does that say about the quality of revenue forecasts as the market becomes increasingly competitive?
Northeast Utilities is NEPOOL's marquee player. But in 1995, Northeast saw earnings go flat due to Connecticut's continuing economic problems. Retail sales were off about 3 percent for the first half of 1995. Only New Hampshire saw growth, vindicating Northeast's acquisition of Public Service Co. of New Hampshire. Now Northeast expects 5-year demand to lag the already weak gross domestic product regional growth. The culprit? Natural gas (em soaking up demand in end-use markets.
Canada produces about 5 trillion cubic feet of natural gas annually, enough to supply almost 100 percent of its domestic demand, as well as 12 percent of the U.S. market. In fact, U.S. gas demand set records in 1994 (em up 16 percent from 1992. Gas is cheap, especially compared to the electricity produced and transmitted those last few miles from gas-fired power plants. Canada offers relatively cheap gas to our premium customers, displacing our baseload electricity. Not very sporting of our 51st state.
So, what do you do with your new, excess power? For pure chutzpa, ship it upstream to Québec.
Can Northeast make a go of it? The signs