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Increased Exports to Northeast Prove a Dubious Proposition

Fortnightly Magazine - July 15 1997

New England states, feeling threatened by increased pollution from Midwest coal-fired generation, recently began lobbying for tougher national environmental standards tied to electric deregulation legislation. The perceived threat is based on the belief that coal-fired plants in the Midwest with excess capacity will increase exports to higher-cost New England states. This increased generation and exportation could lead to more pollution in the New England states. However, several recent analyses by Resource Data International suggest that such an argument ignores both the physical and economic realities of the U.S. electricity system.

The first reality is that the Midwest has less

excess coal-fired capacity than many analysts have indicated. Barge-served plants are often cited as most likely to increase exports. Typically, these plants have competitive coal costs. In 1995, the average capacity factor of these plants was a relatively low 65 percent. However, in analyzing whether or not excess coal-fired capacity exists, the capacity factors during different hours of the day must be examined. After accounting for plants out of service for major planned overhauls, RDI estimates that almost 70 percent of barge-served plants operated at full capacity during daytime, weekday hours. The remaining plants operated at slightly less than full capacity during daytime hours. In reality, therefore, it appears that excess capacity is available only during the nighttime and weekend hours. Due to operational constraints that require utilities to maintain a minimum level of generation running during off-peak hours, it will be difficult to export additional power into New England from these plants during the night.

The second reality is the difficulty of transporting power long distances given today's transmission infrastructure. Transmission systems largely have been built on a utility and state basis. While additional high-voltage transmission lines have added support to power transfers between regions, this capacity remains limited. In 1995, no single region in the North American Electric Reliability Council exported more than 6 percent of its total generation. One region often cited as a future exporter of pollution to New England is the East Central Area Reliability Council, comprising the states of Ohio, Indiana, Michigan, and parts of Pennsylvania, West Virginia, and Kentucky. In 1995, the ECAR region exported approximately 4 percent of its power to the Mid-Atlantic Area Council. Even at this small export rate, the transmission lines between the two regions were heavily loaded, particularly during daytime hours when economics justify power transfers. The current transmission system will not be able to handle additional power transfers.

The coal industry would either have to build additional transmission lines or increase the capacity of existing systems to transport more power. American Electric Power's thwarted attempt to build a new 115-mile, 765-kV transmission line provides a good example of how difficult it is to add new transmission lines. Over time, it may be possible to upgrade the transmission capacity of the existing system. However, it is not clear whether the economics of transporting power would justify such additions. Besides, even if new transmission capacity is added, a significant volume of excess coal-fired power for export does not exist.

The final reality