- The 1990s have ushered in an era of sweeping change in the electric utility industry in Louisiana and the nation, largely due to the Energy Policy Act of 1992 (EPACT). EPACT encourages competition among utilities and private power sources in power generation, wholesale markets, and transmission services. Louisiana utilities are responding to the challenge by initiating major changes in the way they do business to become more efficient. They are reducing their workforce, eliminating and consolidating functions, streamlining operations, introducing innovative load management programs, and actively pursuing new business opportunities.
- Citing the potential impact of EPACT on the financial condition of electric utilities and poor growth prospects, last October a leading bond rating agency downgraded the ratings of 40 electric utilities. Since then, electric utility stock prices have declined over 30%, on average, from their peaks. The stocks of Louisiana's two publicly-traded electric utilities, Central Louisiana Electric Company and Entergy Corporation, have also declined significantly.
- The Louisiana electric utility industry has its origins in the early 1880s when small, privately owned businesses began to sell surplus electricity generated to manufacture ice. The price of electricity was high and service was unreliable. The concept of a "utility" was nonexistent. Since then, the industry has evolved into mostly large, government regulated, private and public monopolies, some with multi-state operations. Unique organizational structures, such as cooperatives and government-owned utilities, were created to provide electric service to rural areas and to ensure reliability of service.
- For most of its existence Louisiana's electric utility industry expanded steadily. Growth was fueled by the unmet need for electricity in rural areas, the increasing consumption of an expanding population, and a growing, prosperous economy. As the industry consolidated and became more efficient, the price of electricity steadily fell, making it more affordable. Electricity went from a luxury to a necessity of life. Now that electric service is available in all parts of the state, and the economy is barely growing, the industry has experienced little growth for several years. Power plant projects completed in the 1980s in anticipation of the continuation of the robust growth of the 1960s created a large capacity surplus that still persists. Utility demand forecasts indicate that no new generating facilities will be needed until the end of the decade.
- Louisiana's utilities are the sole source of electricity for the general public, but many industrial companies generate their own electricity through the process of cogeneration, which provides both electricity and steam from the same fuel source. The electricity generated by cogeneration constituted nearly 25% of all power generated in the state from all sources in 1992. A tiny portion of this power was sold to the utilities.
- The five investor-owned utilities (IOUs) accounted for more than 80% of the power generated by all of the state's utilities in 1992. Total system peak demand of the IOUs in 1993 was 8% higher than 1992. The fuel most used to generate electricity was natural gas, followed by coal, nuclear, lignite, and fuel oil. Only a small amount of oil was used, mainly to keep the fuel delivery and combustion systems in working order.
- Electricity consumption by utility customers in Louisiana in 1993 was 3.7% higher than 1992. Industrial customers consumed the most, followed by residential and commercial. More electricity was sold to Louisiana consumers than was generated by the state's utilities. The difference was imported from utilities located outside the state's borders and distributed by Louisiana utilities.
- The rest of the 1990s promises to be a volatile period for the electric power industry as competition sorts out the winners and losers. How Louisiana utilities fare in the struggle to survive will be more evident when substantial new capacity is needed in the late 1990s Then the marketplace will decide if Louisiana utilities, or the private power newcomers, will prevail.
- Scope and Purpose
- This report profiles Louisiana's electric utility industry. The evolution of the industry is traced from its inception, and the role and history of each of the state's major utilities is presented. Information is provided on each utility's organizational structure, business strategy or mission, physical resources, regulatory jurisdiction, and recent developments. Maps show the location of each utility generating plant and service area, where applicable. Additional sources of electricity from outside the state are identified. Regional organizations formed to ensure the reliability and efficiency of the electricity supply system are discussed. A statistical overview of capacity and generation of all identified Louisiana generating sources is provided in the form of tables and graphs. The impact of the Energy Policy Act of 1992 (EPACT) on the state's utilities is also explored.
- The purpose of this report is to provide a consolidated source of information on Louisiana electric utilities for use by the utilities, private power generators and developers, industry, government officials, researchers, historians, libraries, the media, and consumers.
- Electricity is a necessity of modem life. Since the 1930s until recently, the production and delivery of electricity to the public has been provided almost entirely by regulated monopolies- the electric utilities. But now the electric power industry in the United States is in the throes of drastic change as federal legislative actions and regulatory policies have taken the initiative to promote competition in energy markets. The ultimate goal of these policies appears to be extensive deregulation of the electric power industry on the order of what has already occurred in the railroad, trucking, airline, natural gas, and telecommunications industries. Passage of (EPACT) in October of 1992 is accelerating the process that began with the Public Utility Regulatory Policies Act of 1978 (PURPA), which spawned the development of the independent power market.
- The national media has given wide coverage to the events that have transpired since the electric utilities and their competitors began to vie for energy markets. However, except for the Gulf States Utilities/Entergy merger and the ongoing legal dispute between GSU and Cajun Electric Cooperative regarding the River Bend nuclear plant, little has been reported about Louisiana electric utilities. Given the role of the utilities in the energy supply of the state and their importance to the economic well-being of its citizens, the Technology Assessment Division of the Louisiana Department of Natural Resources prepared this report specifically on Louisiana electric utilities.
- Sources of Information
- Utility generating capacities, net generation, and fuel sources were obtained from DOE/EIA publications and utility annual reports, SEC Form 10-Ks, ten-year statistical reviews, and written correspondence. Power plant locations and service areas were obtained from the utilities. The profiles and history of each utility were taken from in-house publications, annual reports, and brochures supplied by them. Cogeneration and other non-utility power sales to the electric utilities were obtained from the Louisiana Public Service Commission (LPSC) and the utilities that purchased the power. The aggregate generating capacities , production, and fuel sources of congenerators was obtained from the Edison Electric Institute Statistics Department.
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