Future Energy Needs Demand Our Actions Today
Greenville (S.C.) News
Bill Hall
Senior Vice President, Energy Policy and Strategy
Duke Energy
According to Fortune magazine, two of the top five business stories last year involved the energy industry: the California energy crisis and the bankruptcy of Enron Corp.
In the Carolinas, these events probably had little impact on your daily life. While a lack of electricity rocked customers in California with high prices, Duke Power customers enjoyed rates comparable to those paid back in 1987. In that 15-year period, overall inflation shot up 55 percent.
But one lesson I’ve learned in my years in business is that you should never rest on your past accomplishments. The energy industry in the Carolinas is healthy today. But work needs to be done to make sure it stays that way. We need to ensure that residents and businesses of the Carolinas continue to enjoy reliable and affordable electricity in the years ahead.
One year ago, talk in this country swirled around a pending “energy crisis.” But now, those words are rarely spoken. What changed?
Mild weather and an economic slowdown limited national energy demand last year, but the need for new energy infrastructure is still with us. Even in today’s sluggish economy, as people rely more on electricity in their daily lives, electricity demand continues to grow at 1 percent to 2 percent per year. President Bush’s energy plan predicts that the United States will need 1,300 new power plants and 38,000 miles of new natural gas pipeline by 2020 to meet future energy needs.
Duke Energy is doing its part to fulfill energy demand. In 2001, the company brought into service seven new power plants around the country. In 2002, we will bring more generation on line than any other company.
Our plants outside of the Carolinas—sometimes called “merchant power plants"—compete in the wholesale power market. Duke Energy has been one of the innovators of merchant power plants—taking our building expertise from the Carolinas to other parts of the nation. These plants survive, as other businesses do, by producing competitively priced electricity. They are successful only if they can sell their power at prices below the competition.
I know there are other companies trying to build merchant power plants in the Carolinas. That’s OK. Duke Power buys power from these plants when it’s the lowest-cost producer. This open market for electricity will put the Carolinas way ahead of states like California—where a lack of building energy infrastructure last year led to shortages, outages and high prices. We surely don’t want that to happen here.
If there is a concern about merchant power plants it’s that we must have fair and equitable rules that enable merchant companies to compete equally with traditional power companies. As in all competitive markets, we must make sure the playing field is level for all companies—whether they are newcomers, or have been here for almost 100 years.
For residents of the Carolinas, the important issue to remember is that traditional and merchant power companies are involved with keeping the lights on in this region. Power plants are being planned in the Carolinas—some may be built, others will not. Some companies will be successful; others may fail. That’s the business model this country was founded upon.
A vibrant wholesale market, including merchant plant development, will keep Carolina businesses and residents from being tomorrow’s negative energy headlines. At Duke Energy, we’ve kept the lights on for almost 100 years. Despite the changes and challenges in the energy industry, we don’t intend to stop delivering the lowest-cost power possible to our customers.
— Bill Hall is the senior vice president of Duke Energy’s national energy strategy and policy activities. From 1998 until October 2001, he was responsible for Duke Energy North America’s western U.S. assets.
