Where will power come from? Conservation and efficient appliances can put off the need for new power plants; Austin replaces 89,000 air conditioners

The great heat wave caught the Northeast off guard this summer, creating a demand for electricity that was wasn't expected in some instances until the early 1990s. In New England, for example, temperatures soared above 90 degrees every day for more than three weeks, and relative humidity of at least 60 percent blanketed the region most days. As a result, power companies throughout the Northeast reported record or near-record use of electricity, as people sought relief from the sultry weather with the cooling blast of air conditioners.

So for power company executives, the heat wave was more than a present plight. It posed a question for the future: Where will power come from, as society requires more and more electricity?

The classic response - build another power plant - has lost some steam over the years. In the case of nuclear power plants, the costs of building a plant and generating electricity are so high that they pose a financial risk to utilities.

``The utilities that have not been doing well financially have been the ones stuck in the middle of huge construction projects, usually nuclear projects,'' says Scott Fenn, energy program director at the Investor Responsibility Research Center in Washington.

Over the past five years, he says, most new plants coming on line have required a ``prudency disallowance.'' This means that the regulators don't allow the full costs of that plant to be passed through to ratepayers.

``So we certainly see a utility's awareness and ability to adopt sensible conservation and load-management strategies as being one indicator of whether it's likely to be in good financial health,'' Mr. Fenn concludes.

Conservation - or ``energy efficiency'' - is being promoted by regulators, and even being initiated by some power companies on their own, as a way to meet at least some electricity demand without building new power plants.

Efficiency can make a real contribution, supporters say. Worldwatch Institute, in a paper issued in March, said that ``since 1973, the world has saved far more energy through improved efficiency than it has gained from all new sources. The energy savings of the industrial market economies alone exceed the combined energy use of Africa, Latin America, and South Asia.''

Under energy efficiency, consumers of electricity don't give up any of the quality of lighting or mechanical power they now receive from power companies. Instead, they use types of lights, air conditioners, refrigerators, and other appliances that gobble up less juice but perform as well as or better than other models.

``For the same dollar that you'd be spending on a new power plant, you could get perhaps more energy just by tightening up efficiency standards,'' explains Michael Foley, director of financial analysis at the Washington-based National Association of Regulatory Utility Commissioners.

Among the power companies that are promoting efficiency are Central Maine Power of Augusta, Maine; Carolina Power & Light Company of Raleigh, N.C.; Duke Power Company of Charlotte, N.C.; Florida Power Corporation in St. Petersburg, Fla.; Florida Power & Light of North Palm Beach, Fla.; Wisconsin Power & Light Company of Madison, Wis.; Texas Utilities Company of Dallas; Bonneville Power Administration of Bonneville, Wash.; Seattle Power and Light; and Salt River Project of Phoenix.

``The companies who are in the tightest pinch, as it were, for needing more capacity the soonest are the ones generally who are showing the most interest in conservation and efficiency,'' says Fenn. ``If you look at the industry as a whole, there are a group of probably 10 or so utilities that stand way out above the rest of the industry.''

``There's a scattering all over, big and small, public and private,'' adds Amory Lovins, director of research at the Rocky Mountain Institute of Snowmass, Colo., which derives most of its income from showing utilities how to save electricity.

``They found they can sell efficiency for fun and profit, and they can make more money selling negawatts than they used to make selling megawatts.

``The reason is straightforward enough in any other business, but new to the thinking of many utility CEOs [chief executive officers] - that is, that it's OK to sell less electricity and bring in less revenue, as long as your cost goes down more than your revenue. In other businesses, we call this moving from a volume to a margin business. In the utility business, it's heresy, because they've sold more every year for a long time and brought in more money every year.''

Utilities indeed remain skeptical. ``You cannot just substitute energy conservation ... for building a new plant, because [energy efficiency] is an intangible object,'' says Mary Kenkel, a spokeswoman for the Washington-based Edison Electric Institute, a research and lobbying group for the investor-owned utilities, which are the majority of utilities. ``All investor-owned utilities have a legal obligation to serve customers, and so they must plan and they must have the generation available at peak demand.''

Fenn says, however, that a study done last year by his Investor Responsibility Research Center found that US utilities themselves estimated savings of about 30 thousand megawatts through efficiency by the year 1995. That's the equivalent of about 30 large nuclear power plants, he says.

But the issue need not even be whether efficiency can avert the need to build power plants, says Howard Geller, associate director of the American Council for an Energy-Efficient Economy in Washington. ``The point is, you can make a contribution, and you want to push available cost-effective conservation technologies as far as you can.''

And some communities are finding there are benefits to using electricity wisely.

Take Austin, Texas.

About a decade ago, the city was growing fast and summer peak electricity demand was rising so rapidly that the municipal utility was afraid it would have trouble meeting it. So the utility bought into the South Texas Nuclear Project in Bay City, south of Houston, as a partial supplier of its electricity. Estimated then to cost $1.5 billion, the project is now expected to cost $5.8 billion and is seven years behind schedule.

Some citizens were opposed to the move from the start, and persuaded the city government to create a Resource Management Department - separate from the utility - that would deal with conservation.

As a result, in the past eight or nine years about 89,000 air conditioners have been replaced with more efficient models, and 1,000 to 1,500 homes have also had weatherstripping, caulking, solar screening, and insulation work done to cut down on electricity use. The latter work is done by independent contractors, approved by the department, which offers to pay one-third of the installation cost by rebate or provide a loan with 2.9 percent financing over a seven-year period.

For the vast majority of customers who take out a loan, the reduction in their utility bills exceeds their payment of the loan, says Doug Garrett, senior energy coordinator with the Resource Management Department. ``So they're in the black right from the beginning.''

Mr. Garrett estimates that there are more than 100 companies in Austin specializing in energy efficiency. ``We generate a lot of jobs - thousands here in town,'' he says. ``It stays here in the local economy, that's what we're real glad about.''

Because of efficiency, the city has avoided the need to build 90 megawatts of generating capacity, adds Bob Russell, the department's consumer service representative, though he says the program reached ``the scale that's necessary to achieve substantial savings only in about the last five years.''

What happened in Austin can happen elsewhere, too, efficiency experts say.

Mr. Geller of the American Council for an Energy-Efficient Economy suggests a number of possible savings, using present technology.

In industry, for example. Pumps, fans, blowers, conveyors, and the like are not always running at their peak load. So high-tech variable-speed drives on their motors can cut the amount of electricity consumed. In a study of five ``rust belt'' states - Ohio, Michigan, Indiana, West Virginia, and Kentucky - the American Council for an Energy-Efficient Economy found that such controls could cut industrial electricity use in the region by 15 percent and total electricity use by 6 percent.

Lighting is particularly ripe for electricity savings.

``Lighting represents around 20 percent of total electricity use in this country,'' Geller says.

By using improved fluorescent lamps, improved lamp ballasts (the boxes in fluorescent-light fixtures through which power flows before it gets to the lamp), better reflectors, and controls that will automatically dim the lights when light is coming through the window, electricity use can be cut by 50 to 75 percent, he says.

More efficient appliances make a difference, too. Refrigerators alone could make a difference, Geller notes. ``If every household in the country just had the best model available today, we would need something like 12 fewer large nuclear-power plants in this country.''