Industry Trends
- Utility Reserve Margins are Narrowing
- Through mid-August the utilities combined systems reserve margin shrank to 6.64% from the most recent historical low of 12.71% set in 1993. The scorching 1995 summer caused demand to soar while generating capability remained at about the same level as 1987. The non-coincidental combined systems peak load of 27,230 MW was 6.2% higher than the 1993 record of 25,633 MW. Since 1986, when the last new utility generating plant went on-line in Louisiana, the total operable summer generating capability of the state's electric utilities has stayed near 16,800 Megawatts (MW). If the utilities' system generating plants located in Arkansas, Mssissippi, and Texas are included, the total non-coincidental combined capability at the time individual utilities annual peak load occurred has stayed about the same at 29,000 MW since 1990. Meanwhile, the non coincidental peak load for the combined systems has grown from 24,217 MW to 27,230 MW, reducing the reserve margin from 4,410 MW to 1, 808 MW.
- Despite the record 1995 demand and some curtailments, the utilities maintain that no new generating plants will be needed before the year 2000. If new capacity is needed before then, they say they have more than 1,300 MW of mothballed plants they can bring into service at a fraction of the cost of a new unit (Table 7 and Figure 8).
- Generation and Retail Sales Continue Upward Trend
- The overall long-term trend of increased generation by the state's utility
generating plants continued when a record 60,170 Gigawatthours (GWH) was generated
in 1994. Total retail sales to ultimate consumers in 1994 continued an upward
trend that began in 1987. Since then sales have increased from 58,808 GWH
to 70,012 GWH, or about 19%. Every customer sector experienced a gain over
1993 except residential, which declined about 1.5% after a strong 11% gain
in 1993. While there have been some down years, the long-term upward trend
of the number of customers served, electricity sales, and revenues continues.
This is true of all customer sectors. The sharp rise in the usage of computers
and other electronic equipment by individuals and businesses bodes well for
this trend to continue (Tables 6, 8,
9, 10, 11,
12, & 13; Figures
9 & 11).
- Retail Electricity Prices Trend Higher for all Customer Sectors Except Industrial
- The long-term trend of increasing electricity prices for all customer sectors
except industrial continues, although average prices in 1994 were lower than
in 1993 for all customer sectors. The average price paid for electricity by
industrial customers peaked in 1985 at 5.18*cents*/KWH, then sharply declined
the following year to 4.37*cents/KWH, and has been fairly stable ever since.
The 4.26*cents*/KWH paid in 1994 was the same as 1982. In constant dollars,
the 1994 rate is considerably lower than 1982. During the mid-1980s many industrial
plants built on-site cogeneration facilities because utility rates were high
enough to economically justify them, and even higher rates were expected.
The utilities did not want to lose their largest customers so the utilities,
with the blessing of the LPSC, responded with special industrial incentive
rates to industrial plants. This resulted in fewer cogeneration projects.
The last one went on-line in 1990 (Tables 8, 9,
10, 11, 12,
& 13; Figure 10).
- Natural Gas Continues to Fuel Largest Share of Electricity Generation
- In 1994 natural gas fueled the generation of 44.2% of all electricity generated
by Louisiana utility generating plants, up from 40% in 1993. The percent share
of other fuels used for generation in 1994 was 26.2% coal, 21.2% nuclear,
7.3% Louisiana lignite, and 1.1% oil. Before the gas and oil shortages of
the 1970s nearly all of Louisiana's generating plants were designed to use
natural gas as the primary fuel with oil as a backup. As long as gas remains
easily available and the price low, gas is likely to be the fuel of choice
(Tables 4, 5, 6,
& 14; Figures 7 &
12).
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