Q.40. What are the anticipated effects of a national policy to foster greater coal utilization on consumer costs for electricity as well as other goods and services? A. 40. It would be reasonable to anticipate relatively large increases in the consumer cost for electricity resulting from a national policy to foster greater coal utilization. As mentioned in Question 30, higher financing costs would be translated into increased electricity costs. In addition, increased aggregate demand associated with the required production of conversion equipment could possibly create inflationary pressure, especially if the necessary manufacturing facilities and materials were in short supply. Since conversion would result in a greater demand for coal, higher coal prices as well as higher electricity prices could be anticipated. Higher electricity prices, in turn, would be reflected in increased consumer costs for goods and services. The Southern California Edison Company appreciates the opportunity to present these views to the Committee on Public Works in conjunction with the National Fuels and Energy Policy Study of the United States Senate. Respectfully submitted, WHL Seamo W. H. Seaman LRC:bm This Bill is of such importance and concern to our company that we have taken the liberty of furnishing pertinent information in such form that hopefully it might be placed in the record for consideration. June 18, 1975 Honorable J. Bennett Johnston Washington, D.C. 20515 RE: NATIONAL PETROLEUM AND PROPOSED SENATE BILL 1777 STATEMENT OF SOUTHWESTERN ELECTRIC POWER COMPANY Southwestern Electric Power Company respectfully urges that proposed Senate Bill 1777 should not be enacted, and submits this paper to support its position that any law requiring power companies to make a total conversion to coal as a fuel by 1985 would not only be impossible to effectuate, but would also be disruptive and disastrous to our Nation. Among other reasons hereinafter stated, it is our position that there is not enough manufacturing capability in this country to rebuild all of the boilers so as to be suitable for burning coal within the time frame suggested. In addition, coal production cannot be increased sufficiently to meet the demand that would be created by such a law within this period of time. Such a law would not only render useless our total number of generating units but would also require us to totally and completely relocate each of our power plants. Each of our operating power plants is physically located with sufficient land area to accommodate current fuel being utilized but none of our existing plants are located where we have available any additional lands that would be necessary to accommodate the support facilities for a coal fired boiler. To utilize coal, there must be rail facilities, unloading areas, coal storage areas, ash disposal areas, and additional areas for protective equipment for environmental purposes. None of our existing generating plants have the land area and space available, and our plants are so situated that no such additional space can be acquired near any existing plant. In this regard, it would be totally wasteful and disruptive to abandon existing units as they must be maintained for peaking purposes in order to provide our service areas with reliable service. This company has for several years been actively, energetically, and voluntarily taking positive steps to systematically reduce the use of natural gas as a boiler fuel and we will continue to do so. We have every reason to believe that every other power company similarly situated is following the same pattern and that if allowed to continue on a voluntary basis, the desires of Congress can be accomplished without undue hardship and without disrupting the reliable electric service to the consumers of the United States of America. In further support of this position, we respectfully furnish the following information: 1. This statement is in behalf of SOUTHWESTERN ELECTRIC POWER COMPANY ("SWEPCO"), an electric utility company that for over 60 years has been producing, transmitting, distributing and marketing electric energy. It serves a 25,000 square mile area including Northeast Texas, Northwest Louisiana, and the Western edge of Arkansas. The company serves 280,000 customers and a population of approximately 747,000. The peak load in 1974 was 1,932 MW and the estimate for 1975 is 2,130 MW. 2. SWEPCO concurs that a reasonable plan should be formulated to reduce the use of natural gas as a boiler fuel. This statement is to evidence that as early as 1969 this company recognized this concern and commenced positive action towards a systematic reduction and near phase-out of the use of natural gas as a boiler fuel. Also, this will suggest reasonable steps that could be taken by Congress without undue hardship to the citizens of the area we serve. The history and projection of SWEPCO in reducing the use of natural gas in its system is as follows: (a) In 1969, SWEPCO encountered difficulty in obtaining natural gas for a new unit (Wilkes Unit No. 3) already under construction and designed to burn natural gas, and through this experience we realized that sufficient natural gas was not available for any new base load generating unit. (b) In that same year (1969) we had under design a new 360 MW unit for our Knox Lee Plant. Originally this unit was to have been a duplicate of Wilkes Unit No. 3, but with our awareness of the gas shortage, we knew we must alter our plans. We were reluctant to install new generating capacity utilizing fuel oil as a heat source because we felt the large quantities required must be imported and we did not want the reliability of our system to be affected by the whim of a foreign government. However, because of the short time; limited land space at Knox Lee which prevented the use of coal; and because of the necessity of getting this unit into service in 1974 if we were to serve our customers, we changed the boiler design from a gas fired unit to an oil fired unit with plans of using available natural gas in the unit and supplementing it with #6 fuel oil. This unit is now serving our customers. We have a storage capacity of 400,000 barrels at this Plant, and in 1975 approximately 10% of the generation of the new 360 MW unit will be with fuel oil. (c) In March, 1971, long before there was any national or State suggestion that we seek other fuels, we began a vigorous search for coal for new base load generating units. At that time, the coal companies could not believe that an electric utility operating in Texas, Louisiana and Arkansas would place a new coal fired generating station into service rather than using natural gas. We considered eastern coal, but declined because of the high sulphur content. 55-305 75 pt. 3 30 |