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USAGE DECLINE FIRST TIME IN 40 YEARS
By Bob Weaver
The Wall Street Journal says an unexpected drop in U.S. electricity consumption has utility companies
worried that the trend isn't a byproduct of the economic downturn.
The usage downturn and the recession could affect the proposed construction of behemoth power lines across several West Virginia counties, and construction of more coal-driven power generators in the Mountain State.
It could reflect a permanent shift in consumption that will require
sweeping changes in their industry, says the Journal.
There is a looming issue over building large fossil fuel generating plants hundreds of miles form urban areas that require the greatest amount of electricity, in addition to increased pollution created by coal.
Numbers show shrinking power use by households and businesses in pockets across the
country.
Utilities have long counted on sales growth of 1% to 2%
annually in the U.S.
"We're in a period where growth is going to be challenged," says Jim
Rogers, chief executive of Duke Energy Corp. in Charlotte.
If electricity demand is flat or even declining,
utilities must either make significant adjustments to their investment
plans or run the risk of building too much capacity.
The Journal says that could end up
burdening customers and shareholders with needless expenses.
To be sure, electricity use fluctuates with the economy and population
trends.
What has executives stumped is that recent shifts appear
larger than others seen previously, and they can't easily be explained.
Dick Kelly, chief executive of Xcel Energy
Inc., in Minneapolis, says his company, which has utilities in Colorado and
Minnesota, saw home-energy use drop 3% in the period from August through
September.
"The first time in 40 years I've seen a decline in sales" to
homes, he said. He doesn't think foreclosures are responsible for the trend.
Duke Energy
Corp.'s third-quarter electricity sales were down 5.9% in the Midwest
from the year earlier, including a 9% drop among residential customers.
American Electric Power, the company that is investing billions in developing coal generated electric in WV and building giant transmission lines to the eastern market which owns utilities operating in 11 states, saw total electricity
consumption drop 3.3% in the same period from the previous year. Among
residential customers, the drop was 7.2%.
Michael Morris, the chief executive of AEP, one of the country's
largest utilities, says he thinks the industry should be wary about
breaking ground on expensive new projects. "The message is: be cautious
about what you build because you may not have the demand" to justify the
expense, he says.
Utilities are taking steps to get a better understanding of the cause.
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