Virtual DisCos? Utilities might be stepping out,
but outsourcers could be cutting in.Wholesale competition and the prospect of competitive retailing are leading many electric utilities to turn...
figures (em 10,319 Btu per pound in 1993, and 10,265 Btu per pound in 1994. Also, Krebs omits some losses that will likely occur in the extraction of natural gas.
The average efficiency at a coal-fired power plant in the U.S. in 1994, according to DOE/EIA, was 33.3 percent, not 30 percent. New technologies have efficiencies of 40 percent and higher. The overall power plant efficiency accounts for any "parasitic" adjustment. The Oak Ridge National Laboratories, in their studies of the U.S. transmission and distribution systems conducted for the DOE, have shown an overall average T&D efficiency of 92.5 percent rather than the 90 percent shown.
3. Choice of Resource. In his statements about environmental competition, Mr. Krebs forgot to mention that choice of supply in electricity will allow consumers to choose the energy resource (coal, hydro, solar, wind, etc.), as well as the end use. Unfortunately, gas competition allows no such choice among underlying resources.
4. Avoided Costs. In his novel discussion of avoided costs, Mr. Krebs refers to a 1995 ORNL report entitled Justification for Electric-Utility Energy-Efficiency Programs, and purports to show that natural gas offers a higher per-penny energy content than electricity. But the article fails to quote passages from the report showing avoided energy costs for electricity have fallen significantly in recent years, and projecting a figure of approximately 4 cents per kWh by year 2005 (em well below the range (7-14 cents per kWh) shown in the Krebs article.
Moreover, Krebs' Figures 2 and 3 lack any reference to year and fail to identify the inflation or discount rates used to project the values. When real numbers are used, there are no large disparities in the avoided cost of electric generation versus gas utility operations.
5. Thermal Energy Storage. In Figures 4 and 5, Mr. Krebs attempts to show the increase in electric usage from installation of thermal energy storage systems, but his graphs are flawed for many reasons. For instance, the graphs could be combining the "before-and-after" results of retrofits with those new construction systems, which will differ from retrofits because they start with usage and billing demand figures of zero. Similarly, any comparisons should use actual monthly on-peak demands rather than billing demands, which may be reflect ratchets established before the installation. Also, the graphs do not show whether the "before" data or "after" data was adjusted for climate conditions, or for functional or operational changes to existing facilities.
6. Program Dollars. If electric utilities have been "fooling" state utility commissions, then how does Mr. Krebs explain that according to the DOE/EIA U.S. Electric Utility Demand-Side Management 1994 report, electric utilities in the U.S. spent over $1.59 BILLION in 1994 on energy efficiency programs? For "other load management" programs, electric utilities spent $54.0 MILLION in 1994. In other words, electric utilities spending on energy efficiency programs was 29 times greater than on other load-management programs.
7. Gas-Electric Mergers. In terms of the Texas market, Mr. Krebs makes it appear that electric utilities are hurting competitive activities by merging with gas companies. He forgets that it