Utilities Brace for Power Shortages, High Prices

James Laughlin, Editor

For the last few years I have been involved with the Energy Efficiency Forum for the Water and Wastewater Industry. Although the forum has been a small event, attendees have been very passionate about energy efficiency and the savings it could bring their utilities.

Energy efficiency is an important topic for the industry and can lead to major dollar savings, but I have encountered more than a few utilities that weren't particularly interested because there wasn't a strong enough economic incentive to justify the time, effort and expense required to improve the efficiency of their systems.

That's changing in a dramatic way. The cost of gasoline, natural gas and electric power are all rising, and I think we're just seeing the beginning of a long and ugly trend upward.

Although California's power problems this past winter are not representative of the rest of the country, the state's blackouts, brownouts and soaring power prices should serve as a warning for what could happen around the country in the years ahead.

California water/wastewater utilities are bracing for a long, hot summer of rolling blackouts. The Association of California Water Agencies (ACWA) recently warned the California Public Utilities Commission (CPUC) that drinking water quality could be jeopardized and fire safety compromised if water utilities are not exempted from planned power outages.

ACWA officials were angered in March when the CPUC issued a report that did not classify water utilities as "essential facilities" exempt from rotating power outages. The commission voted to allow individual water utilities to apply for exemptions on a case-by-case basis but declined to provide a blanket exemption.

California's current problems are the result of a flawed market structure, inadequate power generation resources, over-reliance on natural gas and escalating emissions costs, according to ACWA energy consultant Lon House. It is not a California-only problem. The entire western United States is seeing capacity shortages and increasing prices. However, the state's flawed marginal-cost based market is making the price impacts greater in California than in surrounding areas, House said in a report on the ACWA Internet site (www.acwanet.com).

After peaking in December, natural gas prices eased a bit in March. Gasoline prices are expected to continue rising, however, as the nation enters the peak summer driving season. Supply also is expected to shrink, given production cuts by oil-producing nations.

A Federal Energy Regulatory Commission meeting was held recently amid growing concern over a predicted shortage of electricity in 11 western states this summer. The expected shortage is caused partly by growing demand linked to the region's economic and population growth in recent years. There have also been few power plants built during the last decade, partly due to uncertainty surrounding the deregulation of the industry.

The summer shortage will be exacerbated by a drought in the Pacific Northwest which could curtail output from its massive system of hydropower dams, which in good years provide about 70% of the Pacific Northwest's electricity.

It is clear that energy efficiency is a topic whose importance can only grow. It's no secret that electric power is major expense for water and wastewater utilities. Many with older systems can lower their power usage by 10-30% through carefully planned energy management programs.

In its fourth year, the Energy Efficiency Forum has evolved into an expanded and improved new World of Water conference, which has the theme "System Optimization and Energy Efficiency in the Water/Wastewater Industry". The conference will be held Dec. 10-12 in Las Vegas. For more information on the conference, contact Conference Chairman Kathy Pursley, at [email protected], or visit the WaterWorld website at www.waterworld.com.