ML20081C279

Affidavit of Jo Blackburn in Support of W Eddleman 10CFR2.758 Petition & Affidavits

ML20081C279
Person / Time
Site:	Harris
Issue date:	02/14/1984
From:	Blackburn J AFFILIATION NOT ASSIGNED
To:
Shared Package
ML20081C272	List: ML20081C271 ML20081C274 ML20081C279 ML20081C283 ML20081C288
References
NUDOCS 8403130207
Download: ML20081C279 (3)

Text

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AFFIDAVIT Presented in Support of Affidavit by Wells Edelman (June 30, 1983 and G. George Reeves (July 14, 1982, February ll, 1983 and June 28, 1983)

Presented by John O. Blackburn, February 21, 1984 Introduction Dr. Reeves has described a group of load-shifting, energy-saving and solar energy alternatives which would reduce peak de-mands by some 2600 MW (Affidavits #1 and #2) and by a further

. '1994 GWH (about 500MW by my estimate - Affidavit #3).

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All of these measures have estimated costs per kilowatt hour of electricity savalwhich are below rates currently charged by Carolina Power and Light Co.

" 'It follows that actions such as those listed are economically

, f. ; .rpreferable, from a consumer's point of view,-to tne construction

• • ofsnew poweriplants,'the: electricity from which would cost more.

Incremental Cost.

I concur in Dr. Reeve's conclusion , and wish to show that it holds with respect to incremental costs, as well as for exist-ing rates.

Let us regard all costs of Shearon Harris 1 to date as " sunk costs" which cannot now influence decisions based on incremental costs from this time forward. (Someone will, of course, have to pay these costs, but who will have tc pay is not at issue here).

The estimated cost to complete Harris 1, in round numbers, is $1 billion.

We now consider the incremental cost to the system and its customers of completing Harris 1, and compare them with the costs of alternatives. Incremental costs of electricity from Harris 1 include capital costs to complete, fuel costs. operating and main-tenance-costs, and any additional transmission or administrr.tive costs. I use a ca charge rate of 18%pacity factor for This results Harris 1costs in capital of 604 of and abouta 3capital 5e per kwh. Other costs bring this to 5 5-6 per kwh for electricity from Harris 1, considering only incremental costs (costs which may b_g, avoided h stopping now).

Any conservation / efficiency measures which save electricity at costs lower than this are preferable economically to the com-pletion of Harris 1. All of the items mentioned by Dr. Reeves To his listing I would add efficient re-fit in this category.

8403130207 840307 PDR ADOCK 05000400PDR 0

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. . frigerators (475 GWH, 54 MW saved). Other savings beyond CP&L's programs may be found in the commercial sector and in industrial cogeneration.

The completion of Harris 1 in the presence of so many and varied cheaper alternatives cannot be justified economically.

Price Elasticity I wish also to comment on Mr. Edelman's affidavit, p. 12.

1He correctly points out that:

(a) completing the Harris plant (now Harris 1, since Harris 2 has been cancelled) would raise the price of CP&L electricity so much (b) by introducing the expensive Harris plant into the rate base that (c) the demand for electricity would fe.ll below levels otherwise existing, the amount of decreased demand being (d) approximately tne output of narris 1.

I concur in this conclusion.

This conclusion could be attacked by citing the 1983 N. C.Public Staff Report Analysis of Long-Range Needs for Electric Generating Facilities in North Carolina.

.That Report explicitly used price and income elasticities in estimating that Harris 1 would be needed in 1991.

The Public Staff, however, has overestimated the demand for elec-tricity from CP&L in the 1990's, in the following mar.ner:

(a) The cost of completing Harris 1 is apparently understated thus understating electricity prices when it comes into the rate base.

(b) Residential demand per household is roughly constant (1983-2000) in each rate class. (This is consistent with a price elas-ticity roughly equal _to income elasticity, given the price and income assumptions.) However, there is a marked shift toward electric space heat, which gives most of the. increase in res-idential demand.

(c) While this may happen (it results from a rapid and contin-uing rise in the price of natural gas) such a development would be highly irrational for households.

(d) Abundant opportunities exist, at costs that are low relrtive to electricity or gas, to maintain comfort with much less energy for heating. Newly built homes where, presumably, all of this electric. heat is to be used, can reach standards of thermal integ-

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rity cnd pacsivo aclar gain 4o that very little conventiona'l space heat is needed. Put slightly differently In this critical area, a higher price elasticity is warranted by the steady di ffusion of technical change in the construction industry.

(e) Even if this were not so, gas heat, especially with new very hi6h efficiency furnaces, would be cheaper than electric heat. This reult hods throughout the 1990's even if all elec-tric heat is with heat pumps enjoying a coefficient of perfor-mance of 3 The Public Staff, incidentally, uses a gas price forecast which is quite inconsistent with recent gas discover-les and the apparent long-run marginal supply price of gas.

Mr. Edelman's conclusion thus holds in spite of its apparent contradiction by the Public Staff Report.

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STATE OF FLORIDA COUNTY OF ORANGE Today John O. Blackburn appeared before me and affirmed:

That he has prepared the attached affidavit concerning economic alternatives to Carolina Power and Light Company's Shearon Harris Plant, and the same is true and correct to the best of his know-ledge and belief.

n This 14th day of February, 1984 N'd #

John 0, Blackburn NOTARY PUBUC STATE OF FLORIDA

1. Y CoMM;55loN EXPMS JUNE 41987 My commission eXpiresDCDMU GENEMLINSUUNCE gg Q

' Notary

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