A Metro section article Aug. 15 stated that a house that Howard University sold to the Rev. Jesse L. Jackson for $100,000 had been "appraised" at $140,502. That figure represents the D.C. government's assessment of the property for tax purposes, which is calculated to equal the property's market value. According to Howard University officials, the house was appraised at $90,000 to $100,000 by a local appraiser, C. Robert Boucher.
The Potomac Electric Power Co. is confronted with an increasingly urgent question: When should it start construction of a new electrical generating plant to meet the growing demand for more electricity in the District and Maryland? A growing number of commercial users and power planners are contending the answer is yesterday.
"They should have started a few years ago, it's almost too late at this point to build a plant before an energy-supply problem occurs ," contends Bruce Oliver, a Washington energy consultant with Resource Dynamics Corp. who is working for the 1,000-member Apartment and Office Building Association (AOBA).
Pepco is asking members of Oliver's group as well as other commercial customers to participate in a voluntary energy plan designed to postpone construction of a new plant for as long as possible. But, the plan -- which also includes devices to reduce electricity consumption by residential users during periods of heavy demand -- faces opposition from many commercial customers, the General Services Administration (one of the largest Pepco customers) and some regulatory officials.
And Pepco itself is seeing a growing need for a new plant, sooner rather than later.
Last week, Pepco asked regulators to approve the voluntary energy management plan, which will cost ratepayers in D.C. and Maryland $93 million, and eventually, $98 million. Previously, Pepco had estimated that a new plant would not be needed until 1995 if the energy plan were implemented.
But, in the hearings before the D.C. Public Service Commission, company president Edward F. Mitchell admitted that plans for a new $800 million coal gasification plant to be built in Dickerson, Md., may need to be moved up because of the increase in electricity demand.
"We're somewhat concerned over the deep growth that has occurred over the last couple of years," Mitchell told the PSC. "Even counting the effect of our energy-use management programs, there is a possibility that we are going to have to build that plant sooner than we had originally thought."
"The position in which Pepco may find itself is typical of the risks utilities around the country face," said Bruce Humphrey, director of economics for the Edison Electric Institute, an industry group based in Washington.
Utilities have learned through bitter experience to avoid construction whenever possible because of cost-overruns and excess capacity associated with nuclear and other generating plants built in the 1970s. Many state regulators have said excess capacity should be paid for by shareholders, not ratepayers.
"Because of the poor treatment that utilities got from regulatory commissions, there has been a big incentive for them not to build," said Mark D. Luftig, a utility analyst with Salomon Bros. Inc. "Now, companies are still facing a large financial risk if they go ahead and build, and we are having this conflict between the financial decision and service decision." Luftig predicts electricity supplies could become "tight" within the next several years in parts of the Southwest and Northeast. Peak Demand and Shortages
Just how close is Pepco to energy shortages?
The answer is largely dependent on Pepco's own figures of actual and projected electricity use. Their projections in recent years have failed to predict the rapid expansion in "peak demand" -- a concept crucial to understanding the vagaries of electrical sales.
At most times during the year, electrical utilities have an excess of generating capacity: Plants are idled or working at less than full capacity. But, on a hot summer day when everyone is cranking up their air conditioners and other appliances that are heavy energy users, the electric companies experience peak demand. Generally, utilities like to have enough capacity to meet that demand and still have a 15 or 16 percent reserve to handle unexpected demands or generation problems.
The area's growth in peak demand has surprised Pepco and alarmed others.
Earlier this year, Pepco predicted a 1.7 percent growth in 1985 peak demand over 1984. The utility projects that annual growth in peak demand will taper down to 1.4 percent in the year 2000.
But actual figures during the summer were startlingly different. On Aug. 14, the company's actual peak was 4,682 megawatts -- 4.3 percent greater than for the same day in 1984. Furthermore, the company's reserve capacity dipped for two hours to 14.8 percent, substantially below Pepco's avowed goal of a 16 percent reserve at all times. Last year, the peak demand increased 4.8 percent over 1983.
Meanwhile, the utility predicted total sales of electricity during the year to increase by 3 percent in 1985, 3.4 percent in 1986 and down to 1.7 percent in the year 2000.
Again, actual figures in 1985 were different. So far, sales of electricity are up 4.5 percent in the first six months of this year over the same period last year.
Pepco says the figures do not mean there is an urgent need for a new plant.
"It would be crazy to react to short-term trends because of the expenditure levels," said Paul Dragoumis, Pepco senior vice president for strategic services, "and there have been utilities all over the country that have been criticized for reacting too quickly."
But, at least one state regulatory official has some concerns.
"You've got those saying don't build, and others saying it's already too late and we're going to freeze in the dark," said Michael Hirshfield, program director of the State of Maryland power plant siting program, an arm of the Maryland Department of Natural Resources. "The people in the middle are saying maybe we will have some capacity problems after the next five years as a region. I am definitely of that opinion . . . . If Pepco is going to err, it will err on the side of being too cautious" about building a plant.
"We have been concerned for a couple of years now that of all the utilities in Maryland that might be in a situation where they would need to be building a plant rapidly, it would be Pepco," he said. Pepco last added capacity in 1981, with a new unit at Chalk Point. The problem could extend beyond Pepco's own service area.
Pepco is a member of the Pennsylvania-New Jersey-Maryland Interconnection, a pool of eight utilities that often exchange electricity when it is needed or when cheaper sources of power are available. That pool could be used to make up a shortfall in Pepco's generating capacity if the other utilities had excess power.
But, said PJM spokesman Emil Kasum, "Our reserve margin is shrinking. In the early 1990s, the problem is really going to become acute, the problem of building generators is going to rear its ugly head.
"It takes anywhere from six to 12 years to build a generator, and a great deal of money needs to be committed -- and therein lies the problem," he said.
While PJM currently has a reserve capacity of 29.7 percent, it has only three to four new generating plants coming on line in the next four to five years. Those plants would add a relatively small amount of power to the pool's total capacity, Kasum said.
Even if the power is available from other utilities, one energy expert who asked not to be identified said that a utility that banks on using all its own excess generating capacity, together with purchases of ever-tighter energy supplies from other utilities, may cost consumers more than the price of building a plant.
"Electricity use continues to grow and decisions have to be made now to meet the need in the mid-1990's," said Edison's Humphrey.
Humphrey said national electric capacity margins are starting to shrink and are now at 25 percent, versus 30 percent in 1982. If no new plants are built, and sales of electricity grow at a forecasted average of 2.4 percent, "there would be a danger of a power shortage equivalent to 36 large baseload units, enough to power all of New England and New York at peak usage, by 1993," he said. One of Many Strategies
Despite the dire predictions, Pepco says it has the electrical situation well in hand. Company officials agree that a new plant will be needed eventually, and they say their "energy management plan" will postpone need for the plant until the 1990s. The plan basically reduces peak demand by offering lower rates for commercial companies who use less energy during periods of heavy use, and by using mechanical devices that reduce electrical use in homes during similar periods.
"I think there are 16 or 17 strategies on how you do it," said Pepco's Dragoumis. "One of the strategies that is the least costly is one that involves all three things, energy-use management programs, building and purchasing energy from other utilities ," he said.
Pepco wants to expand existing, experimental energy conservation programs to a wider number of commercial and residential customers with the goal of shaving 440 megawatts off peak demand during the next 10 years. (The planned coal-gasification plant would generate 360 megawatts of power.)
Components of the $93 million plan include:
*$44.2 million to equip homes with a remote-control system that would turn off air conditioners and water heaters for short periods during peak-use periods.
*$29.5 million to equip commercial and governmental users with similar devices.
*$19.3 million to purchase and install equipment so commercial customers could be billed at a lower rate if they conserve electricity during peak-use periods.
In addition, Pepco plans to expand time-of-use rates to residential customers within two years, costing another $5 million for meters. The total bill: $98 million.
While consumer advocates have supported the energy-management programs in principle, they have attacked the programs as unjustified if Pepco plans to build a plant or purchase electricity sooner despite them.
Some advocates feel sure Pepco does not need a plant at all. Moreover, they contend, the utility should not be asking for millions in new equipment when it could encourage customers to install more energy-efficient air conditioners, refrigerators and other appliances -- for example, through low-interest loans.
"Their energy-use management program is supposed to defer the time the plant may need to be built, but now their own data suggests that it won't do that," said D.C People's Counsel Frederick Dorsey, who represents consumers before the PSC. "Then why exactly are we spending the $98 million?
"Doesn't it make more sense to take the $98 million and take end-use technologies to hold down the rate of growth on peak demand?" Pepco has not even begun to explore the financing of energy-efficient technologies, pricing incentives to induce the use of the technologies, or working with developers to build more energy-efficient buildings, Dorsey said.
Pepco insists the energy-use management program will gain wide acceptance, and will contribute to the deferral of a plant for as long as possible, giving the uility more flexibility to make choices in the meantime.
"The idea that we would sit here and play games with the reliability of electrical service is silly," Dragoumis said. "We have a responsibility and are trying to address that responsibility."
But, the Maryland Public Service Commission, which regulates utilities in that state, does not have complete confidence in the energy management plan.
In March, the PSC told the Maryland legislature that "Pepco should more seriously pursue its plan for new generation, recognizing that the energy-use management plan may not develop to the extent anticipated and that long lead times are required" to build new plants.
Hirshfield of the Maryland Department of Natural Resources worries that Pepco's energy program, which counts on a 60 percent voluntary participation rate, may not work.
"If the reduction in peak demand hoped for by Pepco does not materialize, then we could be left in a situation where construction would have to be initiated more rapidly than is consistent with the best kinds of planning," said Hirshfield of the Maryland Department of Natural Resources. In that situation, something "important" in environmental testing or design and construction could be overlooked, he said, stopping the project and delaying it further.
Some consumers voice their doubts as well.
"Energy management programs are highly speculative," the Apartment and Office Building Association's Oliver said. "To get the levels of load reductions the company projects, 60 percent or more of their commercial customers have to voluntarily make significant reductions in their loads at time of peak demand.
"Both the GSA and commercial customers have said the goals the company is setting out are unrealistic," he said.
The GSA, which manages utility services for the federal government, also does not support the program. "We've done virtually everything we can to conserve energy ," said John Stanberry, assistant commissioner for the office of public utilities. "At the present time we cannot cut back any more. If we did, we would impact service to our client agencies."
Earle Hall, director of mechanical operations for Oliver T. Carr Co., the Washington-based developer, said two out of 23 buildings in its group now voluntarily cut electrical use when Pepco signals them to do so. The company gets financial credits for cutting use and penalties for ignoring the signals.
"We have not been convinced we want to expand on a companywide basis," Hall said. "It impacts on our business, they ask you to shut off ventilation, turn off lights and numerous other requests. The credits we get do not compensate for the amount of expense involved for labor or the effect on our business." Coal-Gasification Plans
Though plans have not been submitted to regulators, Pepco does intend to build a coal-gasification plant at some point in the 1990s. Pepco says it could take seven years after plans are submitted before the plant could be producing electricity. The delay would be caused by regulatory approval and by the new technology planned for a coal-gasification plant, which transforms coal into gas that is burned to power electrical generators. The technology, long used by chemical and petrochemical plants, is new to the utility industry and still being tested in California.
Only one such plant is now in existence, the Cool Water Project, and it is only one-third the size of the facility Pepco plans to build. If necessary, the electrical generators could be installed first, using traditional power sources of coal or oil, to meet immediate needs, and the gasification process could be added later.