Competition affecting reliability, says DOE

A report by the US department of Energy (DOE) investigating power disruptions in parts of the USA during summer 1999 has concluded that rising electricity demand and deregulation are threatening the reliability of of the power system. The report comes less than a month after the Federal Energy Regulatory Commission (FERC) approved an order designed to create a more efficient and less fragmented transmission network.

The DOE said that while the industry is undergoing fundamental change, the necessary operating practices, policies and tools for supporting this change are not yet in place. Energy secretary Bill Richard-son said that the report should motivate Congress to pass the administration’s competition legislation.

FERC’s order lays out a number of incentives for utilities to surrender control of their transmission assets. It should help to stimulate a stand-alone transmission industry. Currently, some 100 utilities and five grid operators control the national transmission system. FERC believes that this structure makes the system vulnerable to manipulation.

Under the new order, utilities will not be able to own more than five per cent of the voting stock in electricity transmission companies. It also includes performance-based transmission rates.

R$17bn earmarked for new capacity build

The Brazilian energy and mines ministry has announced that up to 9400 MW of new thermal generating capacity will be added to the country’s grid by the end of 2003 in a R$17bn ($9.04bn) investment drive. The national economic development bank (BNDES) will finance up to 70 per cent of the investment, including R$3.3bn in 2000 for several gas fired power plants.

The first projects to begin construction will be the 480 MW, $300m Araucaria plant in Parana state, and Termo Rio, a 1046 MW project in Rio de Janiero state. According to the ministry, all of the projects earmarked for development over the next three years already have agreements with Eletrobras for the sale of power and supply of natural gas. Brazil is concerned that it faces a risk of power shortages over the next few years.

Honduras-El Salvador interconnection

Honduras and El Salvador have signed an agreement to build a transmission line that will connect their power distribution grids. The deal represents the last phase of a project to interconnect the grids of several central American countries.

Construction on the project will start in March 2000. The 150 km line will cost some $15.3m to install. Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama have been planning the integration of their electricity grids for ten years. The regional network has been backed by the Interamerican Development Bank.

AmerGen completes TMI

US-UK joint venture company AmerGen has completed the acquisition of Three Mile Island Unit 1, a 790 MW pressurized water reactor in Pennsylvania, from GPU Inc. The announcement in late December came just a week after the company announced that it had completed its first US deal, the acquisition of the Clinton boiling water reactor plant.

AmerGen will own and operate the Three Mile Island plant as agreed under the terms of the original purchase agreement, announced in October 1998. The company, a joint venture between British Energy and the USA’s Peco Energy, has paid $23m for the reactor and will make a further five $77m annual instalments.

AmerGen anticipates that Three Mile Island and Clinton will each contribute £10m ($16m) per year to its pre-tax profits. The two plants have a combined capacity of 1770 MW and have a staff of 1900.

AWEA threatens legal action over OPIC renewable support

The American Wind Energy Association (AWEA) has teamed up with the Solar Energy Industry Association, the Geothermal Energy Association and Friends of the Earth to threaten legal against the US Overseas Private Investment Corp. (OPIC) over its alleged lack of support for renewable energy projects.

The AWEA and its supporters claim that OPIC supports primarily fossil fuel projects and ignores renewable energy options. It wants to see more money shifted towards solar, wind and geothermal projects.

The environmental groups believe that under the National Environmental Policy Act, OPIC should take full account of greenhouse gas emissions from energy projects.

News digest

Argentina: ABB Alstom Power has won a turnkey contract for a combined cycle ‘add-on’ for a 115 MW plant in San Miguel de Tucuman. The company will supply a GE Frame 9E gas turbine, a heat recovery boiler and steam turbine to raise the output of the plant to 375 MW.

Argentina-Paraguay: The World Bank is opposing the findings of an independent panel that has recommended the raising of the water levels behind the Yacyreta dam on the Argentine-Paraguayan border. Raising the water level would increase earnings from electricity sales and allow more effective flood control, according to the panel of experts. The World bank is concerned about the social and environmental impacts.

Mexico: American Electric Power has acquired a 50 per cent interest in a power plant in Mexico from InterGen for around $200m. InterGen is currently constructing the 600 MW Bajio power project in Guanajuato which will run on natural gas.

Puerto Rico: AES has started construction on the AES Puerto Rico cogeneration facility in Guayama. The 454 MW facility will provide electricity under a 25 year power purchase agreement to the Puerto Rico Electric Power Authority, and steam to a petrochemical facility. The $800m plant is scheduled to start operation in 2002.

USA: The GRI has published its ‘Baseline Projection of US Energy Supply and Demand to 2015’, which shows very strong growth in natural gas demand for electricity generation. Demand for natural gas is forecast to grow by 2.6 per cent annually, resulting in the natural gas share of total US energy consumption increasing to 28 per cent in 2015 from 23 per cent in 1998. Increased demand for natural gas for power generation will account for 44 per cent of this growth.

USA: Calpine is to expand its presence in the Florida power market with an investment of $750m in new power generating facilities. It will develop two natural gas-fired plants: the 1080 MW Blue Heron Energy Center in Indian River County and the 540 MW Osprey Energy Center in the City of Auburndale. Both facilities will be combined cycle, equipped with Siemens-Westinghouse technology.

Venezuela: Venezuela’s state-owned electricity companies will need up to $600m in investment in 2000 to maintain their service to their customers, according to the ministry of energy and mines. The sector is slated for privatization, but political and legal uncertainties could delay this. The government wants to implement a new electricity law calling for the separation of generation, transmission and supply before privatizations go ahead.