yes



	Mark Palmer@ENRON
	09/26/2000 08:51 AM
		 
		 To: Steven J Kean@EES, James D Steffes/NA/Enron@Enron
		 cc: 
		 Subject: Dereg Articles

Should we ask the guy that did the deal with Champion Paper to write a 
response?
----- Forwarded by Mark Palmer/Corp/Enron on 09/26/2000 08:49 AM -----

	Ann M Schmidt
	09/26/2000 08:14 AM
		 
		 To: Mark Palmer/Corp/Enron@ENRON, Karen Denne/Corp/Enron@ENRON, Meredith 
Philipp/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron
		 cc: 
		 Subject: Dereg Articles

F.Y.I.
                              
  Metropolitan Desk; Section B 
  Debate on Need for New Power Plants Ignores Conservation 
  By KIRK JOHNSON 
    
  09/26/2000 
  The New York Times 
  Page 1, Column 2 
  c. 2000 New York Times Company 

  New Yorkers heard a lot this summer about why their electricity bills were 
going up and
  why a new generation of power plants was needed, and the message centered 
on one
  word: demand.

  Millions of new air-conditioners, computers and other gadgets are humming, 
blinking and
  draining electricity from the power pool, utility executives and state 
energy officials said
  over and over again. The 40 percent jump in electricity rates that many in 
the region were
  assessed in August was only a hint of what could lie ahead, those officials 
suggested, if
  residents did not accept more power plants in their neighborhoods.

  What the public was not told was that the people framing the argument for 
building power
  plants have an abiding interest in selling more electricity. Nor was the 
public told that the
  means already existed to dampen demand and reduce the amount of new power 
needed, if
  the political will could be exerted.

  Before New York's energy markets were deregulated, beginning in 1998, the 
state required
  companies like Consolidated Edison to reduce demand in the system -- 
through energy
  efficiency measures, for example -- if that choice was cheaper than 
building a new plant.

  Under deregulation , that requirement has been lost. In an open market, 
every participant
  wants to sell more energy, and the government agencies in New York and other
  deregulated states that once compelled companies to think of alternatives 
have become
  silent or powerless.

  ''The reliability problems and price spikes in the last two years have led 
to a simplistic set
  of solutions: build more power plants,'' said Richard Cowart, director of 
the Regulatory
  Assistance Project, a nonprofit energy policy institute in Montpelier, Vt., 
that works with
  state regulators and utilities.

  On the new playing field, Mr. Cowart and other experts said, the incentives 
are all
  one-sided.

  Power generating companies have no motive to encourage people to use less 
energy or to
  use it more efficiently because the most money is to be made when demand is 
at its peak.
  And electricity delivery companies make more money by sending more 
electricity through
  their wires. ''The incentive to sell more electricity is overwhelming,'' 
Mr. Cowart said.

  Certainly, demand for electricity is rising in New York and across the 
country, and most
  experts agree that some added generating capacity is needed. And New York 
State's top
  electricity official, Maureen O. Helmer, chairwoman of the Public Service 
Commission, has
  emphasized in her recent speeches that conservation and efficiency measures 
must be
  part of the solution to rising demand.

  The problem, environmental groups and energy analysts say, is that in an 
arena in which
  government has taken a step back through deregulation , it is harder for 
regulators to
  make those opinions count.

  Given the tone of the debate in New York and the sharp jump in prices this 
summer, it
  would be easy for the public to think that the region's energy situation is 
worse than it
  actually is. Most long-term projections for the region say that demand will 
increase less in
  New York State and New York City than in the nation as a whole during the 
next 10 to 15
  years. New York, it turns out, is not an energy hog.

  The most recent official long-term projection for New York, called the 
State Energy Plan,
  issued in late 1998, said the state could get by with only a very modest 
expansion in
  generating capacity for the next 10 years, or no expansion at all if the 
levels of electricity
  that utilities are required to hold in reserve could be modified.

  The rate of growth in demand is also slowing down, not accelerating. Within 
the territory
  served by Consolidated Edison, which includes all of New York City and its 
northern
  suburbs, peak demand, the highest single moment of energy use on the 
heaviest day of the
  year, rose by 1.7 percent a year from the mid-1990's to the end of the 
decade. In the new
  century, that growth rate is expected to be 1.2 percent a year.

  ''It will be more modest,'' one senior Con Ed official said.

  The main implication of those projections, economists and energy analysts 
say, is that
  most of the increased capacity proposed for New York City may not be needed 
at all, at
  least to meet new demand. In the Con Ed service area, meeting a 1.2 percent 
growth in
  demand through new supply alone would require an increased capacity of 500 
to 750
  megawatts over the next five years. Developers and power plant builders 
have proposed a
  total increase six to eight times greater than that in the next three years 
alone.

  ''No one plant can make the argument that it's really needed,'' said Ashok 
Gupta, an energy
  economist at the Natural Resources Defense Council, a private conservation 
group. ''Like
  malls, power plants are now being built for market share.''

  Predicting energy demand is notoriously difficult. In the early 1970's, for 
example, the
  accepted wisdom was that energy use would continue to grow at the rapid 
pace that it had
  in the 1960's. Academics and utility industry officials said the country 
might need 1,000
  nuclear plants by the turn of the century.

  But the oil shocks of the mid-1970's and early 1980's forced the 
introduction of
  energy-efficiency measures that made those forecasts worthless. Energy use 
as a
  percentage of the nation's economy, called energy intensity, began 
declining and has done
  so ever since.

  Some energy officials have said the problem of rising prices and the 
overwhelming focus on
  supply is the result of a still-new electricity market that is not yet 
functioning as intended.

  Theorists who had envisioned competition as the door to a golden age of 
consumer choice
  had predicted that companies specializing in demand reduction -- they sell 
ways to cut
  energy use through technology or better management -- would compete with 
companies
  selling supply. But that has not happened yet. Part of Con Ed's prediction 
of more modest
  growth in demand in coming years is based on the expectation that 
demand-management
  companies will emerge within the next few years, company officials said.

  But state regulatory officials also made the political decision in the late 
1990's to reduce
  spending for conservation and efficiency measures. The state, which once 
led the region in
  financing for alternatives to new supply -- an effort that included 
television commercials
  urging people to think about saving energy -- now spends about a third as 
much per capita
  as most states in the Northeast, including Connecticut and New Jersey, 
according to
  figures from the New York State Energy Research and Development Authority.

  Last month, a report filed with the State Public Service Commission 
recommended an
  increase in financing for the efficiency program. The report was produced 
by representatives
  of the electricity industry, working alongside consumer and environmental 
groups. But the
  state's utilities, including New York State Electric and Gas, Niagara 
Mohawk and Con Ed,
  refused to support the final report because they were unhappy with its 
conclusions.

  '' Deregulation undermined the role of utilities in promoting energy 
efficiency,'' said Edward
  A. Smeloff, the executive director of the Pace Law School Energy Project, a 
research and
  advocacy group that helped write the report. As electricity companies have 
become more
  conscious of the bottom line under deregulation , Mr. Smeloff said, 
demand-reduction
  programs have become a threat to profits.

  For utilities that buy most of their power from other companies, moving 
more electricity
  through the wires has become the primary way to increase profits, Mr. 
Smeloff said. ''That's
  the business,'' he added.

  Utility officials say that much of their demand problems come down to one 
hour each year,
  that moment of peak demand when consumers are using the most electricity. 
To a great
  degree, planning revolves around the need to have adequate supply for that 
crucial moment
  so as to avoid blackouts. But experts like Mr. Smeloff say the tools 
already exist to
  dampen those peaks, and reduce prices to consumers as well, if only a 
constituency
  existed to push for the changes.

  Many business and residential energy uses are routine and could be 
postponed for a few
  hours to dampen load on peak days, a plan that efficiency experts say would 
be particularly
  easy in New York City commercial buildings where energy use is centrally 
controlled and
  monitored. In England, one electricity provider created lower rates for 
consumers who ran
  appliances like washing machines and dishwashers in off-peak hours. The 
program became
  so popular that power use in the middle of the night went up significantly 
during the
  discount-pricing window.

  Environmentalists also worry that increasing power capacity beyond the real 
demand in
  New York could create a kind of self-fueling spiral. If too many new plants 
are built, they
  say, prices will probably fall, encouraging people to use more electricity, 
while at the same
  time reducing incentives to save energy or use more efficient products.

  In New York and elsewhere in the country, much of the growth in demand is 
being driven by
  the spread of air-conditioning, especially from people buying extra units 
to cool more parts
  of their homes. Last year, Con Ed began a kind of visual history project in 
which employees
  began regularly photographing 90 apartment buildings in New York City and 
counting the
  number of window air-conditioners. In one year, the total went up by 5 
percent.

  Some energy experts say more air-conditioning could further increase the 
spurts in demand
  that could in turn lead to more power plants, which many scientists say are 
prime sources
  of the greenhouse gases blamed for global warming.

  ''We have hotter summers because of greenhouse gases and more greenhouse 
gases
  because of more air-conditioning,'' said Joseph Romm, the executive 
director of the Center
  for Energy and Climate Solutions, a nonprofit consulting institute based in 
Virginia. ''It would
  certainly be ironic if people decided that the solution was more power 
plants.'' 

  Chart: ''LEDGER: Efficiency Plans'' While New York State makes plans to 
increase its
  electric power supply, it is doing less to promote the efficient use of 
existing power. Graph
  tracks spending for efficiency programs since 1992. SPENDING PER CAPITA
  CONNECTICUT: $33.33 MASSACHUSETTS: $32.69 NEW JERSEY: $29.18 RHODE
  ISLAND: $17.00 NEW YORK: $9.67 (Sources: Natural Resources Defense Council; 
New
  York State Energy Research and Development Authority)(pg. B6) 


                                                  

  Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.