An Unacceptable Outcome

Deck: 

Mixed signals leave developers wary of building new infrastructure.

Fortnightly Magazine - November 2006
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In late October, the North American Electric Reliability Council (NERC) issued a grim report warning that demand for electricity in the United States is increasing three times as fast as resources can be added, threatening to make electric service unreliable in the coming decade.

NERC, which won official certification this past summer as the nation’s Electric Reliability Organization (ERO)—the lawful guardian and enforcer of good utility practice—said that U.S. demand will increase by about 20 percent from 2006 to 2015, outstripping investment in new power supplies.

Furthermore, the report predicts that available resources likely would fall below safe levels in many parts of the United States and Canada, such as New England, the Rocky Mountain region, and Texas, in the next two to three years.

This infrastructure shortfall should be old news to anyone who regularly reads Fortnightly and the fact that the outlook has gotten worse (as evidenced by the NERC report) should raise questions about the effectiveness of some current and past utility CEOs, regulators, and policymakers—or all of the above.

Evidence of such a shortfall in construction was highlighted four months ago in a report issued by Merrill Lynch. That report, which was published in July, said only 45 percent of planned post-2006 capacity additions were under construction.

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