Barriers to Entry:
successfully sited another substation, but only after a time-consuming process of consultation with neighbors ordered by the California Public Utilities Commission. Meanwhile, plans for a PG&E transmission line into the heart of energy-hungry Silicon Valley face a lawsuit from the mayor of San Jose, who wants to force undergrounding.
But PG&E is a regulated utility, so such scrutiny is to be expected. Certainly the unregulated energy companies don't face these problems? Fat chance.
In March, the Indiana Utility Regulatory Commission ordered a halt to a $68 million peak power plant under construction in Henry County by a joint venture between unregulated affiliates of Cinergy Corp. and Duke Energy Corp. The commission said it wanted to discuss the project further with local policymakers. That decision followed a seven-hour public hearing in which citizens offered complaints not just about the project, but also the alleged failure of the companies to talk about it with local officials and neighbors. In the face of such opposition, other would-be builders of merchant generation have abandoned plans in Indiana. LSP-Columbus Energy and Duke Energy each have withdrawn petitions to build, respectively, a peak power plant in Bartholomew County, Ind., and a 640-megawatt plant in Delaware County, Ind.
What is ironic is that both Cinergy and PG&E once were leaders in engaging public participation. Cinergy has experienced public participation practitioners sitting on the regulated side of the business, while PG&E lost many of its public participation experts through downsizing and staff reassignment.
These may seem like isolated examples. But as other companies return to siting new facilities, they are reporting similar experiences. The political climate that once required public participation hasn't gone away. It just went underground while the utility industry was off coping with deregulation.
In fact, I would argue that the need for public participation in virtually all utility operations is increasing, and may be even greater than it was during the 1980s.
Power Plants: Fish Wars and Price Signals
On the generation side, issues as diverse as plant siting, hydropower, and plant closures draw passionate interest from public groups.
For instance, new gas-turbine generating plants pose a significant challenge to the much larger centralized generating plant of the past. The new gas-turbine generating facilities are modest in size, and aesthetically are not markedly different from a small industrial facility. Many probably will be below the size threshold for facilities requiring approval by a state regulatory agency, and that will mean fewer public hearings before state regulators. However, utilities may no longer have the option of appealing to a state public utility commission to overrule local authorities if a project becomes so controversial that local permits are not granted. Companies that are good at working with local communities may have a competitive edge in getting their permits.
Hydropower faces two significant challenges: (1) costs to restore fisheries harmed by prior dam construction, and (2) a new generation of permits due for renewal at the Federal Energy Regulatory Commission.
Several major U.S. river systems have seen a dramatic drop in the number of fish returning to breed and