To the average consumer, the jargon of electric power companies can seem arcane, a technical and complex language understood only by the industry and the public service commissions that regulate it. Terms such as peak load, megawatt, coal gasification and NUGS (nonutility generating sources), for example, aren't exactly household words.
Perhaps that's a major reason electric utilities such as Potomac Electric Power Co. have so much difficulty explaining their need for higher rates of return or new generating capacity. When Pepco says, for example, that it needs to add more generators to its system to handle peak demand in the 1990s, the announcement is immediately interpreted by some as a multibillion-dollar plan to build new power plants. Not only that, the decision to advise public service commissioners of ongoing changes in the energy planning process is regarded in some quarters as a serious error in forecasting.
To those who believe that conservation measures alone would negate growth in peak power demand, Pepco is interested only in making shareholders happy at the expense of its customers.
Such was the outcry recently when Pepco advised public service commissions in Maryland and the District that it expected to proceed with plans to add generating units at power plants in Northeast D.C and in Montgomery County.
Critics say Pepco continues to make serious errors in forecasting demand for power. Pepco proceeds "on the basis of engineering solutions and ignores market research," one critic recently complained. Growth in Pepco's service area (640 square miles, including D.C. and major portions of Montgomery and Prince George's counties) and demand for additional power seemed to come as a surprise to the company, although it shouldn't have, critics contend.
In the aftermath of Pepco's recent disclosure of revisions in energy forecasts and construction plans, detractors are wondering what company planners have been doing since 1980 while the area's growth continued to expand rapidly. For what it's worth, Pepco forecast in 1977 that peak power demand in 1986 would be 4,712 megawatts. Actual peak load in 1986 was 4,702 megawatts. The forecast for 1987 was 4,785 megawatts, but the peak load hit 5,153 megawatts in July 1987, as the area experienced the hottest July on record.
An electric utility official admitted not long ago that utilities "classically are plodders and planners." In the plodding and planning that began in the late 1970s, Pepco has said consistently that it has no plans to build any more big power plants. Further, the record shows that Pepco has been consistent in projecting that it will need to add generating capacity to handle peak loads expected in the 1990s.
Those forecasts were either misread, misunderstood or ignored. Whatever the case, there seems to have been a communications gap of incredible proportion.
Still, it isn't necessary to speak the jargon of the electric utility industry to comprehend what Pepco has been saying the past few years. Open Pepco's 1982 annual report and read the following in context: "Our five-year construction budget calls for expenditures of $825 million, including ... about $28 million in the latter part of the period for early design and licensing of a new generating plant for the 1990s."
Review the company's 1984 annual report and you'll find this: "Present planning reflects the expectation that no new capacity will be required before the mid-1990s. We have evaluated the development of a new technology that joins a coal-gasification process with a combined-cycle power generation system. We are now contemplating a 360-megawatt coal-gasification, combined-cycle power plant, with the first phase of 108 megawatts to be in service by 1995."
And there is this from the 1985 annual report: "In the mid-1990s, Pepco plans to add a coal-gasification, combined-cycle generating unit of 360 megawatts at the Dickerson site in northern Montgomery County, Md." A similar comment can be found in the 1986 annual report.
Having given notice of its plans for the next decade, Pepco now has begun the licensing process to build three power generating units at Dickerson. Three combustion turbines of about 120 megawatts each -- small generating units comparable to jet engines on an airplane -- will be built in phases, coinciding with peak demand. Peak is the highest level of power demand recorded in one hour, usually in the summer in Pepco's service area.
Meanwhile, Pepco's recent review of its 15-year energy plan indicated that small, independent power producers wouldn't be ready to deliver supplemental power Pepco had counted on receiving in the early 1990s. Anticipating a shortfall of 155 megawatts in 1991 and 1992 as a result, Pepco has decided to build three combustion turbine generators at the Benning Road plant.
Further examination of the record will show why added generating capacity to handle increased peak demand is a prudent decision. Pepco's system generation capability at the end of 1982 was 5,335 megawatts, which provided a 29 percent reserve over 1982 peak load. Despite the existence of conservation and energy-use management programs and measures to extend the life of older generating units, Pepco's reserve for peak load at the end of 1986 was down to 14 percent, even though its generation capability had increased to 5,375 megawatts.
Given the area's massive and extended growth in recent years, Pepco's options are fairly obvious. The utility not only has spelled out those options, but has consistently stated its plans for the next decade at least. One need not be familiar with the jargon of the electric power industry to understand what Pepco has been saying.