Technology Assessment Division

Summer Heat Wave Challenges Louisiana Electric Utilities

by Alan A. Troy, P.E.

The prolonged summer heat wave has resulted in numerous successive peak load records and curtailments to industry by some utilities. This has prompted the Louisiana Public Service Commission (LPSC) to question the adequacy of the utilities reserve capacity. LPSC Chairman John Schwegmann has asked for reports from all Louisiana electric utilities on their capacity, reserves, and plans for additional plant construction.

Through mid-August the utilities combined systems reserve margin shrank to 6.57% from the most recent historical low of 12.71% set in 1993. The non-coincidental combined systems peak load of 27,230 Megawatts (MW) was 6.2% higher than the 1993 record of 25,633 MW. Meanwhile, the generating capability of the state's utilities has stayed at about 16,800 MW since the last new generating plant became operational in 1986. If the utilities' system generating plants located in adjacent states are included, since 1990 the total non-coincidental combined capability at the time individual utilities annual peak load occurred has remained at about 29,000 MW. Meanwhile, the non-coincidental peak load for the combined systems has grown from 24,217 MW to 27,230 MW, reducing the reserve margin from 4,410 MW to 1,788 MW. Total utility peak demand vs. generating capability for the period 1982-1995 is shown on the accompanying chart.

Despite the challenges of the summer of 1995, the utilities continue to maintain that no new generating plants will be needed before the year 2000. If new capacity is needed sooner, they say they have more than 1,300 MW of mothballed plants they can bring into service at a fraction of the cost of a new unit.

Total 1994 generation of a record 60,170 Gigawatthours (GWH) by the states utility generating plants continued a long-term upward trend. Total retail sales to ultimate consumers in 1994 also continued an upward trend that began in 1987. Since then sales have increased from 58,808 GWH to 70,012 GWH, or about 19%. Every customer sector experienced a gain over 1993 except residential, which declined about 1.5% after a strong 11% gain in 1993. The percent share of sales to each customer sector was 32.5% residential, 21.3% commercial, 42.7% industrial, and 3.5% other. These percent shares have varied little for over 30 years. While there have been some down years, the long-term upward trend of number of customers served, electricity sales, and revenues continues. This is true of all customer classes. The accompanying chart vividly depicts the trend and stability of customer sector shares of electricity sales for the period 1960-1995.

The long-term trend of increasing electricity prices for all customer classes except industrial continues, although average prices in 1994 were lower than in 1993 for all customer classes. The average price paid for electricity by industrial customers peaked in 1985 at 5.18¢/KWH, then sharply declined the following year to 4.37¢/KWH and has been fairly stable ever since. The 4.26¢/KWH paid in 1994 was the same level as 1982. During the mid-1980s many industrial plants built on-site cogeneration facilities because utility rates were high enough to economically justify them, and even higher rates were expected. The utilities did not want to lose their largest customers so the utilities, with the blessing of the PSC, responded with special industrial incentive rates to industrial plants. This resulted in fewer cogeneration projects. The last one went on-line in 1990 (Tables 8, 9, 10, 11, 12, & 13; Figure 10).

In 1994 natural gas fueled the generation of 44.2% of all electricity generated by Louisiana utility generating plants, up from 40% in 1993. The percent share of other fuels used for generation in 1994 were 26.2% coal, 21.2% nuclear, 7.3% Louisiana lignite, and 1.1% oil. Before the gas and oil shortages of the 1970s nearly all of Louisiana's generating plants were designed to use natural gas as the primary fuel with oil as a backup. As long as gas remains easily available and the price low, gas is likely to be the fuel of choice (Tables 4, 5, 6, & 14; Figures 7 &12).

The above information was obtained from DNR's August 1995 report Louisiana Electric Utilities - Volume 2. The report is the second of a two-volume report on Louisiana's electric power industry that primarily focuses on the utilities operating within the state. Volume 1, published in July 1994, examined the early history and development of the industry as a whole and each utility in particular. Volume 2 focuses on statistics and trends for the period 1960-1995. Both volumes may be obtained by writing to:

Alan A. Troy, P.E., Senior Energy Engineer
Technology Assessment Division
Louisiana Department of Natural Resources
P.O. Box 94396
Baton Rouge, Louisiana 70804-9396