Recession Makes ‘03 Blackout Unlikely as Grid Investment Grows

[phantom power]

“The current recession definitely bought some time for utilities,” said Angie Storozynski, an analyst at Macquarie Capital USA Inc. in New York. “Economic contraction reduced traffic on transmission lines, easing the pressure to add new transmission capacity.”

Economic weakness in the U.S. and Canada this heating season will reduce peak electricity demand 2.5 percent from last season to 706,965 megawatts, according to the North American Electric Reliability Corp., which oversees power systems that failed 50 million people in the August 2003 blackout.

The drop in consumption and electricity prices makes spending on the nation’s aging grid more attractive for investors than power-generation projects, said James Miller, chief executive officer of PPL Corp., the Allentown, Pennsylvania-based energy supplier. Transmission-grid projects provide more predictable earnings, he said.

State public service commissions allow utilities to earn a higher return on transmission lines than on distribution business, Storozynski said.

http://www.bloomberg.com/apps/news?pid=20601072&sid=aEI1vab5US4A