Technology Assessment Division

Louisiana Electric Utilities Facing New Challenges

by Alan A. Troy, P.E.

The 1990s have ushered in an era of sweeping change in the electric power industry in Louisiana and the nation, largely due to the Energy Policy Act of 1992. The Act encourages competition in power generation, wholesale markets, and transmission services. Louisiana's utilities are responding to the challenge by streamlining operations, eliminating and consolidating functions, instituting workforce reductions, introducing innovative load management programs, and actively pursuing new business.

From selling surplus electricity used to make ice in the 1880s, the industry has evolved from small private businesses into mostly large, government regulated, private and public monopolies, some with multi-state operations. For most of its existence the industry grew vigorously, fueled by the need for electricity in rural areas, the increasing consumption of an expanding population, and a growing, prosperous economy. As the industry consolidated and became more efficient, the price of electricity steadily fell, making it more affordable. Electricity went from a luxury to a necessity of life.

Now that electric service is available in all parts of the state and the economy is stagnant, the industry is barely growing. Power plants completed in the 1980s in anticipation of the continuation of the robust growth of the 1960s have created a large capacity surplus that still persists. Demand forecasts by the utilities indicate that no new generating facilities will be needed for the rest of the decade.

At the close of 1992 Louisiana's electric utilities owned 85.2% of the state's total generating capability of 19,192 megawatts (MW). Of the balance, cogenerators and other non-utility generators owned 13.6% and out-of-state utilities owned 1.2%. Net generation of 55,188 million kilowatt-hours (KWH) by the utilities was 74.6% of the 73,938 million KWH generated by all sources. The rest was generated primarily by industrial cogenerators, which used nearly all of their output internally. The fuel mix of utility generation was 44.4% gas, 28.3% coal, 18.8% nuclear, 7.6% lignite, and 0.9% oil.

In 1992 Louisiana's total net generation available to the statewide power grid was 56,244 million KWH consisting of 55,188 million KWH generated by the utilities, 454 million KWH sold to the utilities by cogenerators, and 602 million KWH sold to a utility by the Murray hydroelectric station near Vidalia. The state's five investor-owned utilities (IOUs) generated 81.8% of total utility generation. Total system peak demand of the IOUs in 1993 was 23,467 MW, an increase of nearly 8% from 1992. Total system generating capability was 26,903 MW, for a reserve capacity margin of 12.8%. Total IOU peak demand vs. generating capability for the period 1987-1993 is shown on the accompanying chart.

In 1993 the utilities sold 67,599 million KWH to the state's consumers. Electricity sales as a percent of total sales by customer sector were 33.1% residential, 21.1% commercial, 42.1% industrial, and 3.7% other. Sales by customer sector for the period 1983-1993 are shown on the accompanying chart.

The above information was obtained from DNR's June 1994 report Louisiana Electric Utilities. The report traces the evolution of the industry and profiles each of the state's major utilities. Tables and charts provide generating statistics and historical trends. Maps show service areas and the location of each generating station.

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