Who's Tripping?

It requires a truly acrobatic stretch of the imagination to reach the same conclusions as Pennsylvania Commissioner John Hanger in his article, "Electric Reliability: How PJM Tripped on Gas-Fired Power Plants" (May l, 1995). The truth is that the natural gas system performed efficiently and reliably in January 1994, exactly as planned. The operators of the power plants in question purchased interruptible gas-transportation contracts to keep their fuel costs low. Such capacity is seldom available during extremely cold weather, which is why interruptible capacity costs less. Had the plant operators purchased firm-service contracts, the gas would have been there.

Despite its title, the article's statistics clearly demonstrate that the rolling brownouts were caused by the unavailability of coal-fired power plants:

s 40 percent of the PJM grid's coal capacity (em nearly 12,000 MW (em was unavailable at the time of the winter peak.

s Only 1,150 MW of interruptible, gas-only capacity was unavailable (em less than 10 percent of the unavailable coal capacity.

Instead of raising questions about the wintertime reliability of gas-fired electric generation, Commissioner Hanger has actually, provided evidence of the pitfalls of an overreliance on coal.

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Michael Baly III

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President & CEO

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American Gas Association

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Arlington, VA

Make DSM Pay

Eric Hirst's and Stan Hadley's article, "Must DSM Programs Increase Rates?," (June 15, 1995) clearly points out the competitive conundrum our industry faces as it tries to meld energy engineering with social engineering. I believe it is the industry's genuine desire to make all customers more energy efficient. But the penalty for my neighbor's decision not to take advantage of energy-efficiency programs should not be an increase in rates. The decision not to participate is as valid in the utility business as it is in other facets of consumer life.

In a world of competition,

demand-side management (DSM) must be a profit center in its own right, with customers that benefit from an energy-efficiency measure paying the full cost of that measure. At the residential level, a host of products sold for profit allow participants to benefit without burdening nonparticipants. The profit motive is also at the heart of the energy service company (ESCo) industry that is now adapting to a world without rebates. ESCos are paid by customers who see real savings in a "total" sense not envisioned by the limited electric reduction programs of today.

The profit-center model would eliminate the huge portion of the DSM bill that involves monitoring and evaluation. In addition, profits earned on product (and service) sales would offset much of the cost.

Mark Gabriel

V.P./G.M.

SmartEnergy Services Inc.

Rutland, VT

Let's Get Real

I am writing to correct a misleading impression created by Stephen Puican's article, "DSM and the Transition to a

Competitive Industry" (June 15, 1995). His test will identify DSM options that defer the need for new capacity, but only if the deferring utility is vertically integrated, has an exclusive right to provide all generation services to customers, and knows its customers will remain captive for the next 30 years. Even if one believes that retail markets will not become competitive, no one paying any attention can fail to understand that wholesale markets are extremely competitive. Whose capacity is being deferred as a result of some RUC-passing DSM options? An IPP's, or part of a power marketer's portfolio? Why should retail customers pay for that in the form of higher prices?

Finally, any discussion of DSM selection criteria must recognize that programs that raise prices to "nonparticipants" (as would Mr. Puican's RUC test) are sustainable only as long as all customers are captive and the wires can't be bypassed. If the assumptions that underlie the cost-effectiveness tests drift away from reality, they become meaningless.

John H. Chamberlin

Executive Vice President

Barakat & Chamberlin, Inc.

Oakland, CACORRECTIONAn error on page 30 of Wayne Seden's article, "Utility R&D: The Cutting Edge of Competition," (August 1995) attributes a mere 13-percent reduction in radiation levels to the AP/Can-Derma demonstration at Consolidated Edison's Indian Point 2 nuclear plant. In fact, the demonstration reduced radiation levels 87 percent. The editors apologize to the author and the utility.

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