After considering the matter in several proceedings since 1991, the Hawaii Public Utilities Commission (PUC) has decided to permit the state's utilities to include in rates the full cost of...
The Generation Glut: When Will It End?
on the need for new capacity would be to: (1) accelerate, modestly, the need for new capacity above what would be expected under current regulations; and (2) shift the mix of additions away from coal and single-cycle combustion turbines to combined-cycle plants. The impacts would be significantly more dramatic under Carper than under the CSA proposal, which is not surprising since the regulations under the Carper proposal would be more stringent.
Under the CSA proposal, 2.1 GW of new capacity would be required by 2008 over and above the needs under the Reference Case, which reflects current environmental regulations, and an additional 4.2 GW under the Carper proposal. Even though the provisions under the Carper proposal do not begin to take effect until 2009, the proposal would affect the timing of new additions before that date. The reason is that the added cost of bringing the 4.2 GW on-line earlier than 2009 is less than the the additional benefits achieved through operating the capacity prior to 2009.
Moreover, under the Carper proposal it would no longer be economic to build the 30 GW of coal capacity we project under the Reference Case. On the other hand, only 18 of the 30 GW of new coal capacity would be displaced under the CSA proposal. The coal capacity would be replaced by combined-cycle capacity because both proposals place a premium on new sources with low nitrogen oxides, sulfur dioxide, and mercury emissions rates. Gas-fired combined-cycle units, which have virtually no sulfur dioxide or mercury emissions and very low nitrogen oxides emission rates, become the plant type of choice among conventional alternatives. And, in the case of the Carper proposal, the relatively low carbon emissions rate of combined-cycle plants gives this technology an added advantage over other traditional resources.
Also, it should come as no surprise that under both proposals there would be more renewable resources than would occur under the Reference Case. The impacts on the timing and mix of new capacity additions is summarized in Tables 3A and 3B for the CSA proposal and in Tables 4A and 4B for the Carper proposal. In these four tables, the capacity numbers represent cumulative additional capacity over and above the capacity additions for the Reference Case shown in Tables 1A and 1B.
The driving force that creates the differences between the impacts of the CSA and Carper proposals is the cap on power plant carbon emissions under the Carper proposal. In the absence of a carbon cap, the two proposals would have very similar impacts on the timing and mix of new capacity additions. This can be seen by comparing the results for the Carper proposal without a carbon cap shown in Table 5 with the results in Table 3A.
Living With Higher Gas Prices
As we discussed at the outset, whenever natural gas prices spike or, as in the case over the past year, where there has been a sustained increase in prices, there seems to be an inevitable debate over whether the era of relatively low gas prices has ended. While we do