Area power supply adequate - for now

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The Washington area so far has weathered the worst of the heat this summer without any lapse in power service, but industry analysts are warning about regional shortages in the next few years as rising demand butts up against limited power resources.

Another energy crisis of the magnitude seen in California in 2001, with rolling blackouts and soaring power rates, could occur before the end of the decade because the use of power is growing rapidly, but planning is inadequate for building the new plants and facilities needed to provide future power, said Ed Muller, chairman of Mirant Corp. at a recent Edison Electric Institute symposium.

Worries about the adequacy of power were heightened this summer when the Maryland General Assembly forced Baltimore Gas & Electric Co. (BGE) to defer for several years recovery of its increased fuel costs, raising questions about where utilities will get the money they need to upgrade the power grid and add supply-generating capacity.

"Electric power is the lifeblood of our economy, and serious service interruptions that could cripple economic growth will occur" if the power industry, regulators, political leaders and consumers do not start working together to ensure enough funding is available, said Timothy F. Sutherland, chairman of Pace Global Energy Services, a Fairfax consulting firm.

Cambridge Energy Research Associates also concluded recently that although supply is adequate this summer, the Mid-Atlantic and some other areas with rising demand will experience supply deficiencies within two to five years unless investments in generation and transmission are made, or conservation measures are taken, "immediately."

"Neither the industry nor the consuming public can afford another boom-bust cycle," such as the one that led to the shortages in California and a power glut afterward, Mr. Sutherland said.

A boom in construction of power plants fired by natural gas between 1995 and 2001 led to power surpluses from 2002 to 2005, but that spare cushion is rapidly dwindling in the Washington-Baltimore area, California, New York, New England and Florida, the most congested urban regions.

One irony is that as utilities such as Potomac Electric Power Co. and BGE have depended increasingly on gas-fired power plants built in the 1990s, that dependency has driven up power prices and rates, because gas prices, having tripled since 2000, are the costliest fuel for supplying power.

Yet growing demand in coming years will keep pressure on gas prices and force even more reliance on these costly, though environmentally clean power plants, analysts say.

Because of the spike in gas prices, the industry is looking to nuclear and coal-fired power plants to satisfy the next generation of power needs. But the upfront costs for these massive power plants are considerable, estimated at $400 billion over the next 25 years, and the many hurdles to getting regulatory approval and financing for nuclear and coal projects means they can take six years to a decade to build.