US unwillingness to sign up to binding climate standards, either domestic or international, is leading to a strange unintended consequence: the extent of regulatory uncertainty for power companies means that they’re unable to invest in new electricity generation capacity – and it’s hurting American energy security. The FT’s Sheila McNulty explains,
Concern is growing that the US could face electricity capacity shortages as utility companies delay much-needed new power plants, fearing restrictive carbon emissions laws under the next administration. Without additional capacity, some areas are projected to fall below their target capacity margins within two or three years.
“There is going to have to be a build-out in power to meet demand, but the environmental uncertainty out there is making it slow,” said Bruce Williamson, chief executive at Dynegy, which provides electricity to wholesale customers. “People just don’t know what the rules are going to be.” Besides this, the energy companies’ financing is becoming tougher because of the market turmoil. “Things are going to get pretty tight,” said Mr Williamson.
Rick Sergel, president and chief executive of the North American Electric Reliability Corporation, which is responsible for assuring proper operation of the power grid, said electricity usage was projected to grow more than twice as fast as committed resources over the next decade. “Many people are caught up in debates over which kind of generation we should build. Simply put, we need it all,” said Mr Sergel. “We are at the point where we can no longer afford to delay these decisions. We are jeopardising reliability by doing so. Every mechanical system has limits.”
