U.S. utilities, regulator disagree on generation

HOUSTON Tue May 5, 2009 7:59pm EDT

The sun rises over a windmill farm in Palm Springs, California, November 27, 2005. REUTERS/Lucy Nicholson

The sun rises over a windmill farm in Palm Springs, California, November 27, 2005.

Credit: Reuters/Lucy Nicholson

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HOUSTON (Reuters) - The nation's top power industry regulator on Tuesday suggested that U.S. utilities don't need to build big nuclear or coal-fired power plants to fill the nation's future power supply needs.

Instead, Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, said future electricity demand growth can be met with a low-emission supply from wind, solar and other renewable sources, combined with more efficient use of all sources of electricity.

"We have the potential in the country, we just have to go out and get it," Wellinghoff said at a briefing with reporters at the American Wind Energy Association's conference in Chicago, monitored by telephone.

Wellinghoff's vision of a U.S. future based on renewables and smarter electric use has been challenged by big U.S. electric utilities, who insist that they need to build nuclear and coal plants to provide "baseload" power to keep the grid supplied.

Currently, coal plants supply about half the electricity consumed in the United States, followed by natural gas and nuclear plants that account for about 20 percent each. Renewables account for a small, but growing portion.

According to the Edison Electric Institute, which lobbies on behalf of big utilities like Southern Co and American Electric Power Co, a new generation of nuclear reactors and cleaner-burning coal plants are needed to meet growing demand and to replace aging plants that are being retired.

Energy efficiency programs, along with renewable sources, will "play a bigger role" in the future, said David Owens, an executive vice president with the lobbying group.

"It will not eliminate the need to build other kinds of facilities," said Owens in a separate telephone interview. "This is where he and I might disagree," Owens said, referring to Wellinghoff.

"Just to respond to climate-change issues, we are going to need new energy supply technologies, such as nuclear and advanced coal plants with carbon capture and storage," Owens said, citing studies from the Energy Department and the Environmental Protection Agency.

Wellinghoff said other research shows that energy efficiency efforts - including demand-side management and use of distributed generation such as solar and wind - could reduce electric consumption by "15 percent at a minimum," or as much as 30 percent to 40 percent.

"We have a tremendous mix of renewables in this country and we have a tremendous opportunity on the demand side to reduce our loads," Wellinghoff told reporters.

While U.S. power consumption has been growing for 25 years, efficiency efforts could reduce the amount of megawatts needed from utilities' centralized plants, Wellinghoff said.

"There is a tremendous amount of waste on the demand-side - the consumer side of the meter - and on the utility side of the meter," Wellinghoff said.

While FERC has limited ability to alter consumers' electric use, Wellinghoff said as savings from efficiency and renewables become more apparent "consumers will fight the fight."

EEI's Owens said the industry supports Wellinghoff and is "strongly behind" efficiency efforts, but sees a need for more regulatory incentives from state utility commissions.

"If you are asking customers to use less of your product, you want to cover the costs of the program and make a return on your investment," Owens said.

(Additional reporting by Scott DiSavino in New York and Bernie Woodall in Los Angeles; Editing by Christian Wiessner)

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