President of AEP says U.S. faces power crisis without further plant

Journal Record, The (Oklahoma City), May 1, 2008 by Kirby Lee Davis

If the federal and state governments do not take dynamic measures to ease construction of new electrical generation plants, the U.S. economy could face crippling power shortages within a decade, according to Michael Morris, chairman, president and chief executive of AEP, parent company of Public Service Co. of Oklahoma.

"My biggest fear in this country is that the leaders will dilly and dally until it becomes a nightmare and then we'll make every mistake we possibly can," Morris told a Wednesday audience at the University of Tulsa Friends of Finance luncheon.

To prevent a crisis like that now plaguing South Africa, Morris said the U.S. needs to create a sweeping energy agency with authority like that of the Federal Reserve.

The series of blackouts that have plagued economic growth in South Africa reflect predicted shortages following its post- apartheid economic boom, according to Washington Post reports. Despite repeated warnings, the South African government blocked efforts by the state-owned utility Eskom to expand its supply capabilities, hoping instead to privatize power generation.

After the nation's mining industry was shut down for several days in January due to Eskom's inability to guarantee power, South Africa President Thabo Mbeki apologized for his government's failure to act. As some areas began to lose power daily, Eskom warned that building the required coal and nuclear power plants would be five to seven years.

While Morris, an attorney, pledged his belief in the American political system, he sees parallels to the South African scenario in the U.S. In one example, his company required 18 years - 16 of those spent in the permitting process - just to build a 90-mile line to test new, more efficient transmission technologies.

A firm believer in coal and nuclear power usage - and a doubter of the abundant natural gas supply claims now forecast by Chesapeake Energy Chairman Aubrey McClendon - Morris said that continuing energy competition with China, India and other developing nations will require development of new, more efficient energy usage technologies and adoption of new conservation procedures and habits.

But even with further development of wind and solar power, technologies he said require further advancement before they will make a real dent on U.S. electrical needs, Morris said AEP faces construction of a new central power station every two to three years to meet continued demand.

Although he believes in the next-generation nuclear proposals, he said AEP would jump on that bandwagon with the second wave of applications, since Morris expects regulatory and legal hurdles will delay the first wave until 2020 or beyond - and even then, he wonders how regulators will allow them to pass the large construction costs to consumers.

Since Morris expects world natural gas demand to eclipse whatever new supplies come out of U.S. and Canada, he said AEP would continue its reliance on new advances in clean coal power generation.

"If not for our friends in Canada, we would be totally upside down in natural gas," he said of U.S. production and consumption. "We believe that you can put coal to work and you must put coal plants to work in this country."