PRESS RELEASE
March 4, 2004

Contact: Janice Houston, Director of Research
(801) 272-8824, ext. 7
janice@utahfoundation.org

Growing Peak Demands Strain Utah's Electric System

Utah Foundation today released a Research Report analyzing the growth in electricity peak loads from 1991-2001. This report, entitled, "Peak Load Growth along the Wasatch Front: What's Driving Electricity Demand in Utah" should be attached to this release. If not, it may be accessed at www.utahfoundation.org/reports.html.

This report examined the growth in electricity loads during the days of greatest demand, "peak loads," and compared the growth to that of average annual loads for years 1991-2001 and tried to determine the largest factors behind the surge in peak demand for Utah. Additionally, this report compares the acquisition of electric appliances in Salt Lake to other western cities to determine if differences in appliances account for the growth in peak demand. Finally, this report details the growth of office and retail space in Salt Lake City and highlights electrical usage in commercial businesses. It is important to note that this report focused solely on demand side issues and that Utah Foundation did not examine the supply side of the equation to determine if transmission or generation capacity was adequate. The findings of this report are as follows:

• Peak demand has been growing faster than average load demand. Since 1991, the gap between the two has grown by approximately 200 megawatts, which is half the capacity of a typical coal-fired power plant.
• In terms of megawatts, Utah's commercial and residential sectors contributed equally to the growing peak electricity demand during the period 1991 to 2001. However, the residential sector began from a smaller base and therefore grew at a faster percentage rate.
• Residential peak demand accelerated in the late 1990s, growing at a compound annual rate of 7.4% since 1996 while commercial peak demand grew at a rate of 5.2%
• In 2000, Utahns used 1.6 times the amount of electricity on the peak day than on an average day.
• Building additional power plants to meet peak demand is very expensive. The average coal-fired power plant that services Utah costs $450 million to build and produces approximately 400 megawatts of power.
• Peak electricity demand is strongly correlated with summer temperature and air conditioning use. A growing number of Utah homes utilize central air conditioning, which probably explains the accelerating residential demand on peak summer days. In 1998, 83.3% of all new housing units built in Salt Lake City were built with air conditioning.
• Denver, Colorado, which has a similar climate, has not had as much saturation of air conditioning as Salt Lake City. Therefore, factors other than climate play into the acquisition of items such as air conditioners.

Janice Houston, Director of Research said "In the Salt Lake-Ogden area, 57% of housing units have some type of air-conditioning. This is higher than in any of the other areas we studied with climates comparable to Salt Lake. Additionally, air conditioning is the largest consumer of electricity in the commercial sector. Summer usage of air conditioning by these two groups has a large impact on the spikes in peak demand seen since 1991."

Peak demand is critical, according to Houston, because the infrastructure to meet it must be available but will probably sit idle for the rest of the year. "It's akin to building twenty lanes down I-15 to meet afternoon rush hour traffic. While that sounds great to commuters, the costs are prohibitively high and those lanes will sit idle the rest of the day. Unlike traffic, which can slow down during high demand periods, power must flow without interruption or blackouts result, causing inconvenience, economic costs, and safety concerns."

Utah Foundation is a nonprofit, non-advocacy research organization. Our mission is to encourage informed public policy making and to serve as Utah's trusted source for independent, objective research on crucial public policy issues. Learn more and view research reports at www.utahfoundation.org.