energy industry, power industry, energy power industry
David J. Phillip/AP

Financial Crisis Weighs on Power Industry

November 18, 2008 01:53 PM
by Lindsey Chapman
Struggling amid the economic crisis, the power industry says energy will become more expensive in the future.

Power Plants Stymied

As the nation’s financial woes continue to spread, the power industry says it, too, is feeling the credit crunch. In fact, the financial trouble could “stretch the nation’s power supplies to the brink,” according to Matthew Brown of the Associated Press.

The financial pressure on the industry comes about five years after North America experienced rolling power outages that affected 50 million people. Power providers reported that the problem could get worse. However, many attempts to build new plants and string new power lines have been hampered.

“I’m really not a Chicken Little player, but I worry that no one seems to be focusing in on this,” Michael Morris, chairman, president and chief executive of American Electric Power Co. Inc., which runs the nation's largest electricity transmission system, said in an AP article.

Some people have claimed that stopping construction of proposed plants could either increase the frequency of power outages, or force power providers to use alternative fuels that might “end up soaking customers,” Brown wrote.

In Montana, a regulatory deadline forced developers to start constructing an $800 million coal-fired power plant with only enough funds to pour the foundation. Customers will have to pay for the rest of the plant if the electric cooperatives that supported it can’t obtain the financing they need.

 “It’s not without risk and a lot of anxiety,” John Prinkki, a Southern Montana Electric cooperative board member told the AP as he explained the decision to break ground for the plant. “But we’re between a rock and a hard place. We don’t have any choice—people are using more power than they ever have before.”

Richard McMahon of the Edison Electric Institute said investor-owned utilities planned to spend around $1 trillion during the next two decades on new plants, transmission lines and other expenses. Obtaining that money now primarily depends on the economy, Brown explained.

Coal in particular is a contentious issue because of its historically “dirty” reputation. Opponents worry that coal development could harm the environment. However, Montana’s Crow Nation says it has enough coal on its reservation alone to meet U.S. energy needs for nearly a decade.

Opinion: Thoughts on power plants

An Environmental Agency Appeals Board recently denied a permit for a proposed coal-fired power plant in Utah, saying effects of global warming were not considered, according to an editorial in the Las Vegas Sun. The Sierra Club, a group that opposed the plant's construction, said the decision could delay other plants as well, including three in eastern Nevada.

The Las Vegas Sun stated that the rejection “may not be good news to the utilities, which will be forced to install better technology to control carbon dioxide, but they have an option—invest in alternative energy sources.”

In Wisconsin, state regulators ended a plan to build a coal-fired power plant in the southwest portion of the state. But that still leaves issues for officials to consider, according to the Wisconsin State Journal, which suggested another alternative. “Wisconsin can no longer ignore the fact that the need to combat pollution and the demand for cost-effective power are making it imperative that nuclear energy be among the state’s options for generating the electricity to meet a growing demand.”

The paper continued, “Conservation and alternative energy sources, such as wind power, have important roles to play in Wisconsin’s energy future. But the state also needs reliable base line power sources like cleaner coal and nuclear power.”

The future of coal is in the hands of President-elect Obama and the Democratic majority in Congress, yet the resource “cannot be dismissed quite yet,” according to the Christian Science Monitor. Coal supplies half of the electricity used in the United States, while accounting for approximately one-third of CO2 emissions. “Other energy sources don’t yet have the broad shoulders to carry the load of making steady, year-round electricity,” the paper asserted.

Congress and the Obama administration may decide to address the environmental issue by capping allowable CO2 emissions from power plants and forcing them to either implement technical solutions or purchase pollution permits.

Reference: Coal resources


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