Utility bills up, but power shortage isn’t spreading
Des Moines day-care provider Jolie Boyum doesn’t think of herself as poor. That is, until the postman delivers her monthly utility bill.
Balancing a fussy baby on her hip, clouds of frigid breath billow around her head as she curses the Mid-American Energy logo peeking from the pile of envelopes in the mailbox. It’s a futuristic red arrowhead pointing where else? up, up, up.
December’s damage: $191. That’s $82 more than November and nearly double Boyum’s average bill during a typical Iowa winter.
Californians aren’t the only Americans suffering from utility shock. Bills are soaring nationwide. The Energy Department is forecasting a 40 percent rise in natural gas prices and a 29 percent hike in fuel oil.
The difference is that while California is flickering through rolling blackouts, the rest of the country appears to have sufficient energy provided that customers can pay for it.
Boyum, a single mother who cares for eight children in addition to her daughter and two nieces, doesn’t believe she can safely turn down the thermostat in her leaky frame house from a toasty 74 degrees when the temperature outside hovers in the teens.
She’s already falling behind on her payments and the cold weather might persist for another four months. Iowa has approved her request for energy assistance, but that one-time check for about $300 might cover six weeks of service. It’s her portion of $855 million in low-income heating aid to the states that President Clinton has distributed since September.
”I told my daughter that we’ll have to cut out the snacks and the movies,” Boyum said. ”As the winter goes on, we’ll have to cut into the grocery money. I’m pretty much on a fixed income.”
A survey of Iowa’s 62,000 households receiving energy assistance showed that 20 percent of recipients postpone medical care to pay their utility bills. Another 12 percent cut back on food. Nearly 2,000 respondents said they shut off their hot water heaters to save money.
”We had an existing crisis that has been turned into a disaster by these current prices and colder weather,” said Iowa energy assistance director Jerry McKim. ”If you’re living on $9,000, you won’t have your current heating bill retired before the next winter season.”
Winter always exacerbates energy woes, especially around the holidays. In Boston, at least six people have died in house fires sparked by faulty electric space heaters.
National energy experts say several factors have converged this year to make circumstances even worse for people living on the margins.
The first is colder weather. Colorado and Wyoming shivered through their coldest Novembers since the 1880s after three consecutive mild winters. Iowa received near-record snowfall in December. Even Jackson, Miss., was dusted with snow before Christmas.
The second is price. Natural gas prices soared to record highs $10.10 per 1,000 cubic feet in December as bitter cold stimulated demand. Prices should drop come spring, but April and May futures prices $5.70 and $5.20, respectively are still nearly double historic levels.
That’s because natural gas has become a year-round fuel used to generate cleaner electricity.
Demand for power has soared in recent years because of the surge in the use of computers, air conditioners and appliances. That rise has not been accompanied by adequate construction of new power plants nationwide. California has not built a new generating station in more than a decade, in part because of its tough air quality rules. But Iowa, Michigan and many other states haven’t added significant generating capacity, either.
California’s problem has been compounded by the 1996 deregulation of the state’s electricity market. By itself, the state has the fifth-largest electrical system in the world. Its utilities now purchase power daily on the open market at prevailing rates rather than locking in rates with long-term contracts.
Deregulation was supposed to lower bills for consumers. But the neighboring states where California has been buying surplus electricity are growing too, and they need to keep more of their own energy than ever before.
U.S. Energy Secretary Bill Richardson temporarily rescued California by ordering energy wholesalers in Western states to continue selling power to California despite fears they would not be paid.
A 1998 ballot initiative to restore utility regulation was defeated, but consumer activists might try another ratepayer rebellion in 2002. Twenty-six states and the District of Columbia have deregulation plans pending, and they are watching California’s experience warily.
”If demand continues to grow and you don’t build new generators, you can only draw on your neighbors so many times,” said Tim Gallagher, manager of transmission services for the North American Electric Reliability Council, which enforces power grid standards nationwide. ”Deregulation has made the situation very difficult.”
California’s problems have not spread to other states, Gallagher said, because of the structure of the power grid and the nature of electricity itself.
Nationally, the grid is comprised of 3,000 power plants that generate more than 800,000 megawatts. The generators are linked by more than 200,000 miles of high voltage transmission lines. Transformers amplify or reduce voltages for customers ranging from commuter railroads to households.
The grid is divided into three regions. The Western and Eastern grids are split by transmission lines on the High Plains between Colorado and Kansas. Texas has its own power grid.
Power flows easily within each region, but it is difficult to force electricity across the regional boundaries. And because electricity dissipates over long distances, it would be inefficient, too.
Considering California’s woes, other grid officials say they appreciate the grid’s limitations.
In New England, officials at the independent operating system that coordinates power distribution in six states are anticipating higher demand in the next few weeks.
Supply and demand
Last Jan. 18, New England set a regional record for winter electricity demand at 21,195 megawatts.
New England system spokeswoman Ellen Foley said the region has ”adequate electricity supply.”
”We’ve had 1,500 megawatts come on line in the past year, and we expect an additional 2,100 megawatts in 2001,” Foley said. ”Our marketplace is different from California’s and we’re not interconnected with them.”
One place where customers aren’t complaining yet is Texas. The Lone Star State is building 24 new generating stations that will boost total capacity by nearly 14,000 megawatts.
That’s enough extra juice to light up a new city the size of Houston and Austin combined.
Cost: $10 billion. Another 17,000 megawatts are on the drawing boards.
The new plants are being built by independent, for-profit companies in anticipation of electricity deregulation. They’re coming on line just as prices are soaring.
Power grid experts say Texas is establishing a better operating blueprint for deregulation. Dallas, Houston and other cities sweltered through a summer of 100-degree temperatures without significant power problems.
”They faced extreme weather conditions and they met their demand,” Gallagher said. ”They brought on 6,000 additional megawatts just last summer.”
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