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WEST COAST GAS TO SEE MORE USE AS POWER FUEL

Jan. 10, 1994

Big gains lie ahead in demand for natural gas as a fuel for independent power production (IPP) on the U.S. West Coast. So says a study conducted by Recon Research Corp., Los Angeles. The study pegs potential IPP demand at 1.041 bcfd in 2010, more than four times Recon's figure of 233 MMcfd for 1993. Recon pointed out that its figures are much higher than other industry forecasts of only 141 MMcfd of potential demand in 2000, slipping to 121 MMcfd in 2010. Charles Doering, senior vice

Big gains lie ahead in demand for natural gas as a fuel for independent power production (IPP) on the U.S. West Coast.

So says a study conducted by Recon Research Corp., Los Angeles.

The study pegs potential IPP demand at 1.041 bcfd in 2010, more than four times Recon's figure of 233 MMcfd for 1993. Recon pointed out that its figures are much higher than other industry forecasts of only 141 MMcfd of potential demand in 2000, slipping to 121 MMcfd in 2010.

Charles Doering, senior vice president of Recon and main author of his company's study, called the results "quite surprising."

Recon's analysis covers current market share and the capture of incremental gas demand among independent power producers.

In 2000, the study said, the potential annual IPP market for generation capacity will be 1.8 million kw, equal to 320 MMcfd of gas requirement. In terms of peak generation capacity, the potential IPP market in 2000 is projected to be more than 5.8 million kw.

Biggest West Coast utilities in terms of potential IPP power purchases are Portland General Electric, Puget Sound Light & Power, San Diego Gas & Electric, PacifiCorp, and Southern California Edison.

Assessing several cases to evaluate the sensitivity of the potential IPP market to industry trends, the study found that:

If projected utility demand side management savings failed to materialize, the potential IPP market could be larger than forecast. A 10% savings shortfall equates to a 9.4% increase in the size of the potential IPP market during the forecast period.
Faster development of an electric vehicle market on the West Coast will have virtually no effect on IPP development and only a slight effect on the overall power generation market during the next decade.
If regulators opt for a full restructuring of the U.S. power market unbundling of utility services, open access to transmission capacity, and retail "wheeling" the potential West Coast IPP market could expand considerably. A 1% share of the existing commercial/industrial market captured by IPPs will result in a 10.3% increase in potential IPP gas demand to meet annual conditions and another 3.6% to meet peak demand.