Sunday, January 28, 2001

Q&A with Cincinnati energy executives




        Recent surges in utility bills — especially natural gas — have customers reeling. Meanwhile, rolling blackouts in California have made many states reconsider deregulation of utilities. To find out what's happening in Ohio and nationwide, we invited two Cincinnati experts for a Q&A with the Enquirer editorial board: James E. Rogers, chairman and CEO of Cinergy, and Alan Schriber, chairman of the Public Utilities Commission of Ohio.

        Following are excerpts of their replies:

        Q. As we watch the energy crisis in California, are we also looking at our near future in Ohio?

Rogers
Rogers
        Jim Rogers:
The left coast is much different. There are a couple of things to think about. There is a fundamental difference in the supply-demand balance. For 15 years, they have added no significant generating capacity. Their environmental regulations are extremely tough. I don't care if there is regulation or deregulation, they would have had shortages and prices going up. Factoid: Prices (for electricity) in California today are about 60 percent higher than our prices.

        They substituted one type of regulation for another, but built no plants, while demand is going up faster than ever, especially in places like Silicon Valley. In terms of demand, one web site equals three 40-story buildings.

        Ohio is better situated in a supply-demand balance. We can use the tools of the market. They (California) just don't trust the market. They call it deregulation, but it's not even remotely close to deregulation.

        Alan Schriber: If you set out to create the worst structure you could, we couldn't even think of a plan as bad as California's.

        Jim Rogers: We've added 1,700 megawatts in the last year to our system — three times what they've added in the last four (check this number) years.

Schriber
Schriber
        Alan Schriber: We have before us applications (to build and supply power) for many, many times more megawatts in Ohio. We're looking at a serious increase in capacity in Ohio. I have no concerns about Ohio.
       Q. So why are bills so high?

        Jim Rogers: There are two reasons. We've had an extremely cold winter, with 16 to 20 days of temperatures not getting up to freezing. And two, price is part of it. We have had the most extraordinary jump in natural gas prices in my whole career, going back to 1977-78.

        In real terms, natural gas prices are still less than in the early 80s. Why the fly-up? At no time in history have we had such dependency on one fuel.

        The thing so unfortunate is that for the last eight years, the EPA has been urging people to burn gas for electricity at the same time the administration has been making it harder to drill for gas and has been attacking coal as a fuel.

        It's a failure of public policy.
HELP PROGRAMS
    Since December, calls are up 40 percent with 10,000-11,000 calls per day, compared with 6,000-7,000 calls normally. Customers enrolled in Budget Billing have increased by 6.2 percent since June to about 120,000 in December. Home Energy House Call requests reached about 300 in the last four weeks. Normal monthly volume is 20 to 25 calls.
PROGRAMS TO HELP
    • Adjusted Due Date: Allows you to adjust the due date of your energy bill five to 10 days forward from your original due date to make bill paying more convenient.

    • Budget Billing Plan: Helps manage heating bills by setting your monthly energy bill at an average, fixed cost.

    • Extended Payment Plan: Provides you with additional time if you have difficulty paying your entire bill by the due date.

    • Gas or Electric Weatherization: Improves the energy efficiency in homes of low-income customers by making weatherization improvements.

    • HeatShare\WinterCare: Provides financial assistance to low-income customers who may not be eligible for other programs. CG&E and ULH&P have increased their matching amount for customer contributions from 50 cents to $1, up to $100,000 for HeatShare and $25,000 for WinterCare.

    • Home Energy Assistance Program (HEAP): Provides financial assistance to low-income customers who need help paying their winter energy bills.

    • Percentage of Income Payment Plan: Allows low-income customers to maintain gas and electric service by paying a percentage of theirr income rather than their actual bill.

    • Home Energy House Call: provides a free home energy audit. This plan gives you a step-by-step guide to help make your home more energy efficient.

    • Online Energy Analysis: Provides a set of interactive tools you can use to analyze and reduce your energy usage.

       Q. What relief can we expect for people who cannot afford to pay their utility bills?

        Jim Rogers: None. That's harsh, but it's candid. Utilities are carrying out government social programs, raising rates for everyone else to pay for those who can't pay. Our rates in Cincinnati are lower than any gas company in Indiana and Kentucky because we have the advantage of six gas pipelines to buy from.

        But we are in trouble in every fuel in this country because we've had a failed energy policy.
        Q. Many customers think their bills have gone up to pay for Cinergy's foreign investments, stadium-naming rights and EPA fines. Is that true?

        Jim Rogers: Absolutely not. None of those costs in included in any way.

        Alan Schriber: That's correct. Those costs are all below the line (of rates).

        I know people are upset. I'm getting letters that the highway patrol has to pick up for fingerprints. It's getting out of hand. But companies cannot disconnect people for non-payment, by our orders.

        I'm working with other cabinet members and the governor to fashion a program for relief, but I can't say more than that for now. There is great concern in Columbus about those who are hit hardest. And those people are not necessarily the poorest, who qualify for assistance. It's the people in the 150 percent to 200 percent of poverty guidelines who are getting hit the hardest because they don't qualify for help.
        Q. Will demand and high prices in California cause a ripple of price increases and shortages here?

        Jim Rogers: There are three grids: the Eastern grid, the Western grid and Texas, which is separate. In the Eastern grid, where we are, it will have no impact. It will have a dramatic impact on the surrounding states because California is trying to suck their power out. That becomes a political issue, because California is Democratic and the surrounding states are Republican.

        Alan Schriber: Transmission of power remains a huge debate. But there has been no leadership whatsoever at the federal level. The Federal Energy Regulatory Commission has been dysfunctional.

        Where we need to work on is demand-side management — conservation. We've gotten away from that. We've gotten away from fuel efficient cars. We have short memories.
       Q. Is there any future for nuclear power?

        Alan Schriber: The door is not closed on that. For the first time, we're seeing costs of operating nuclear power plants closing in on coal. But there are no nuclear plants on the books (to be built) and the lead time is 10-15 years.

        Jim Rogers: South Africa has a very small nuclear unit that can produce 100 megawatts at a time and can be built in a two or three-year period.

        Contrary to environmentalists, except for the disposal issue, nuclear is clean. Coal is under attack for producing sulphur dioxide, nitrous oxide and carbon dioxide. With natural gas, you still get carbon dioxide. Nuclear is far superior and you don't have those emissions.
       Q. With huge demand from the digital age, are environmental regulations stifling capacity?

        Jim Rogers: I want to answer that carefully. We're gluttons in this country. We use more energy per capita than anyone else. I think global warming is a problem. I know there's a debate about it, but I think we have to find ways to produce energy in environmentally responsible ways.

        We now produce what's called three-nines power, that is, 99.9 percent of the time. The digital users want nine-nines power — uninterrupted 99.99999 percent of the time.

        We have to have enough faith in the country to come up with technologies to produce that in environmentally friendly ways.

        Alan Schriber: Residential consumers are the absolute worst consumers there are. We peak at certain times of the day then come down. If we could give residential customers the chance to see, on a real-time basis, what it costs for power at 6 p.m. versus 3 a.m., we'd be shocked.

        Jim Rogers: One way to do that is we're looking to put computers in all of our customers homes if they will agree to do business with us over the Internet and let us read meters that way. We're spending $12 million a year to read meters.
       



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