Focus 580; Utility Deregulation in Illinois

In this hour of the show we'll be talking about electricity industry deregulation here in the state of Illinois something that is under way right now. In 1997 a law was passed known as the electric service customer choice and rate relief law and probably for consumers the most significant feature was that the power consumers would be able to choose their source their supplier. The big users the industrial users got to go first. They started some of them started to make that choice or that choice started to be open to them in I believe in 1909. That continues. In May of next year 2002 residential customers may cheers. So we thought it might be a good idea at this point to talk a bit about where we are in this process. Also just because it has been said that the power problems they're having in California have something to do with deregulation in that state. Which might make People's a little bit nervous here is state of Illinois with thought well perhaps we ought to look at some of these issues and we have as our guest

this morning George gross. He is one of the folks at the Institute of Government public affairs here on the U of I campus He's also a professor in the Department of Electrical and Computer Engineering. And we've discussed this topic with him before he's been good enough to come back and spend some more time with us to talk a little bit about utility electric utility deregulation and the folks who are listening have questions. You're certainly welcome to call here in Champaign-Urbana 3 3 3 9 4 5 5. We also have a toll free line that's good anywhere that you can hear us if it would be a long distance call for you to use the toll free line 800 to 2 2 9 4 5 5 so again here in Champaign Urbana three three three W I L L that's what you get to match the numbers and letters. Toll free 800 1:58 WLM. Well thanks very much for being here. Thank you very much for inviting me back again once again we are again maybe we ought to just talk a bit about where we now are in this process for some time now.

Some industrial users have had the option of choosing their supplier and that started in. Correct me if I'm wrong about this and in 1909 that's when that began correctly took over a 1099 with some of the large industrial users who basically made the choice of who would like their supplier B. And we have an example here in our backyard for example chose a different supplier and it will among you know of our Illinois Power in terms of getting its electricity. One of the things that I was interested in is. How much switching there has been. It's sort of my understanding at this that there hasn't been a lot of switching and that this also parallels the experiences of other states where there was that opportunity. People seemed to be a little hesitant about changing from one supplier to another.

I think that's absolutely correct. And there are few reasons for that. But in California we have the most let's say egregious example of restructuring and its impacts all together up to last year. I don't think we have had more than 200000. Customers which is service from their utility so to speak to whoever they chose to have supply from. And this is going to be a long term process. Don't forget we are now in 2001. AT&T was broken up by Judge Bell in one thousand nine hundred eighty four. So over 17 years after that and it took a good 15 years the large dinners would be interrupted by calls from various companies to switch our long distance carrier. So it's a little it's going to be an education no experience in terms of letting people know what it means. And by and large people are not that upset in terms of the

service the typically get electric utility. I don't think it's necessarily the same as it was a telephone company so there is a kind of conference which exists. Well you think then the reluctance at least at this point their reluctance to change has been based on individuals concerns concerns about stability they want to make sure that they have the supply. They probably would say themselves well the supplier that I have now does fine. Why should I change and take the chance perhaps that there might be some sort of problem. It's definitely one of the issues. It's difficult to have much faith in terms of calling an 800 number which distributor is going to give you or all they have is an electronic messaging system nobody to talk to. This utilities which are in existence have footings infrastructures that have the customer service troubleshooting units. And if you go through one of these units and look at them they can immediately pinpoint where the troubles

exist. And so to build up those kind of infrastructural support is going to take a long while. And people will ask questions who does it call when the power goes out. I'm not sure when we had this first for I had our first conversation on this subject. I know it's been quite a few years. At the time I'm sure that 2002 seemed a long way away. Now we're just talking about well a little bit more than a year that. Residential customers will be able to make the choice at what point do you think that will start become aware of this or potential providers will start to try and make sure that we are aware of them. Meanwhile six seven years from now I don't think we'll see any kind of major shifting come May 2002. People will have the right and some people may exercise it. But by and large I don't think there's going

to be a huge refuge from the current customer from the current provider to some other providers. One of the reasons is that the rates will not necessarily go down because there's some transition charges which may be in effect as far as 2008 so there won't be any kind of sizable savings that. A customer may be able to accrue out of switching to different suppliers. Now that I think that's a good point is something for people to understand that as the way the legislation was written there was a provision put in there to try to protect companies they had made investments. We could argue about whether they were good or bad investments perhaps for example building nuclear power plants that when it came time to switch if you switch off your existing provider you are in a sense rebating some of your savings to them over a period of time over a number of years eventually that that will stop. But that's something I guess to

consider when making comparisons about. Rates correct them. Those those stranded costs and they're in a competitive transition charges which are going to be imputed to every customer whether they switch or not. So because of those charges switching is not really going to be any panacea at least not in the short run. So you do you know of any companies that you think will start to aggressively at least try to solicit business starting next year will that will there be people calling us on the telephone as other service providers do saying how do you like to switch to a different power company I think is going to be more of a commercial level as opposed to the residential level. There is a residential level is very expensive to supply so consequently it's much less likely eventually there will be. And there are reports now that even co-ops are trying to go into this business in terms of becoming the retail energy electricity provider their suppliers

as they're called in this state. But that's not there's a real business is the real business is trying to get some of the refineries trying to get some of the large industrial plants because those are big loads. The and we talked about. The fact that commercial the big users commercial users have had the opportunity now for some time to switch we talked about the experience in California. I just want to make sure you you gave a number and I want to make sure we were talking there about California. Do we know if I ask a question straightforward here in the state of Illinois how many commercial users have changed to another. I don't know that number but it's relatively small. OK. We have a couple of callers here. Our guest is George gross professor in the Department of Electrical and Computer Engineering at University of Illinois and also from the Institute of Government and Public Affairs one of the many policy analysts there. And we're talking about deregulation of the electric industry in

Illinois if you have questions you can call us the number here in Champaign Urbana 3 3 3 9 4 5 5. We also have a toll free line so that if it would be a long distance call and use that number 800 to 2 2 9 4 5 5. The first caller in line here is on our toll free line. Number four. Hello hello. I work for a coal fired power. You told me you play at Central Illinois and we crank out electricity at a very economical rate. But all these. People I see jumping in building power plants or building gas fired turbans. Now gas is an extremely expensive way to produce electricity. It's quick and easy to build but those costs are going to be passed along in the form of didn't ask whenever the day on the open market when the price soars. These gas units are going to crank on when the price is low. They're going to buy coal fired in traditional generation. How is this going to affect the

market. And the other part of my question is also you talking about what you're talking about is a middleman buying electricity from a power plant and selling it to a retail customer or an industrial user. Aren't you adding some more people in there isn't the cost actually going to go up for the residential cutting their customers. Isn't it basically a situation where in large industrial customers will get the will get the lion's share of the benefit and they. Residential customers going. Going to pay out the nose for electricity. I got like you're your guest. OK thanks for the call. OK. Your first question was in terms of gas fired generation versus coal fired and coal fired. Yes is very very inexpensive you have some old units all over the Midwest and they're producing some of the cheapest energy that we have of course you know they have some problems in terms of the pollution and the emissions from those

plants and those have some costs associated with them. They push the gas came in the late 80s early 90s were we had this so-called five year gas bubble which is now just bursting and gas is a deregulated product and it has been very very cheap. Two years ago basically both gas and oil went down to such an extent that people just stopped drilling and now we are starting to feel the effects of that because lack of drilling two years ago and the fact that they're having a very cold winter has pushed gas prices up to sea level heretofore. In terms of a question about the millman that's there's always transaction costs associated in any in any kind of business that is that you're doing. The mere fact that it would be a broker or a marketer in between that it doesn't have

to raise cost because there are economies of scale that can be realized. So that's that's not a big issue in fact all of our distribution systems that we see here in terms of if we get the goods that we buy typically go through a middleman they don't go from the factory directly to see or sort of the pennies. They go through middlemen so I won't worry about that. And in terms of what is going to be Z impact they're always social engineering aspects associated business issue and those are legislated this we so here everybody in the state of Cal of Illinois who are customers of Illinois Power and comment got a 15 percent discount in terms of the electricity rates after the law was. Signed by Governor Edgar and went into fact and it will be another 5 percent next year. So those are legislated movements and those rates are still going to have a lot of

supervision and let's move this or maybe less control but a lot of supervision by the state. I don't think that as a residential customers are necessarily going to get their all end of this. Let's go to another call or line number one. Hello. Hi. Obviously this competitive distribution of power that you're talking about has got to be accomplished without without separate power transmission lines for each power company. So so there's got to be some technology which allows each power company to feed electricity into a common into common transmit. On lines so. So my question is how does each power company know just exactly how much power to feed in to the common transmission lines to satisfy their customers and not not provide power for them. For that the customers of other power companies are using Well getting this is a good question and basically you're asking how this is done

in the real world. This this this is not something new because utilities always used to trade among themselves but they were the big boys. So what we have now we have certain smaller entrepreneurs who have opened up business as generators and they have a contract in their contracts says it at 11 o'clock. They are selling 100 megawatts too. Particularly load and that load could be another utility or it could be just an industrial customer and basically at 11:00 they will have ramped up all the generations those are 100 megawatts online. It's not necessarily true that 100 megawatts of this guys putting in is going to get the customer. And that is basically we cannot in any way check which electron gets to your house or to my house. But basically in terms of supply and demand this is the way it's being done and the system through various laws of physics

basically takes care of ensuring that their supply and demand stay in balance sucks so they virtually apparently that they know about how much electricity they're each speech each power company knows how much electricity its customers are going to use approximately how much and it contracts for that amount. That basically basically that's going to have a lot forecast and they have their generators ready and they can be raised up in terms of generational or down. It's a very complicated and engineering task to do this particularly around the clock. But we know how to do that and we've been doing that for many many years. OK thank you. Thanks. The one of the things happened is that we have moved from the old way the utilities were structured as regulated monopolies so that basically you had you had no choice. First of

all whatever that was the power company was the power company. And it seemed it was likely that they generated the power they had the transmission lines they maintained the lines if there was some kind of problem when it came to your house. They were the ones that you called to fix it. They were the ones that took care of the billing that one company did all these things. Now there is the possibility that all of these various functions could be carried out by different companies one company could be the generator one company could be the distributor one company could deal with service sorts of issues. Has and has that in fact that happened here in the state of Illinois have we started to see the old sort of monolithic system break down. And we do indeed have separate entities handling that all these different functions. The answer to your question is yes and no. It's interesting yeah. It hasn't happened to the extent saying in California. But yes it has happened. But all the way through this happening and becoming much more widespread.

First of all the companies got sold. And every utility company that used to exist here in the state has new owners by and large every investor on utility so central and on public service became part of Amman as Amerind Corporation which owns that. In our part became really Nova first and then it was sold to die Najee one of the names often mentioned among the profiteering generators in California. We have come also this ritual sold through Pico and they have now what's called Exxon Corporation and as industry is moving there's a lot of this break up of the vertical integrations that we sell. So they'll be parts of the company which are going to be totally doing transmission parts of the company which are basically in customer service distribution type of activities. And there are others which want to do generation

and they. Synergy which ever which was there in terms of Pico which is Benson or valley Philadelphia Electric company merging with his comment was that they had nuclear. They were very interested in getting the nuclear plants here in Illinois and you should be aware that all the nuclear plants which are still operating online are operating very well. There is now clearly aligned profit motive. Those units have been cleaned up their management is much much stronger and that is these coming out and basically supplying electricity to Mars in more than 50 percent of the load. Illinois is served by nuclear. Is it the case do I remember correctly that the state of Illinois has more nuclear generation than any other state her and let's correct lands that's going. We have other callers here with let's go again to our line number four. Hello.

Yes it read you. Yeah I was. With in the end and we had Marble Hill fiasco you remember. Yes. And so that went down the drain. Within the last two years we have like two or three proposed gas fired generating plants costing millions and millions and millions of dollars to construct. How can they afford to do that and it is only for peak generation. You know par supply you are saying. Yes and I think it's a very good question and your question is a session about the speakers which are coming up. Well if you recall about those summers ago in the summer of 1998 we had some price spikes were Yeah utilities were paying as much as seventy five hundred dollars per megawatt hour. When you see those kind of figures and

people feel while it won't be that high but maybe it will get to the level we're seeing California now around at thousand or even around 300. It was those confidence you can go to the banker and show kind of revenues you could get and all this plants typically sign some kind of contracts with some loads in terms of having some stream of revenues and they do this as speculative ventures. They get money from the bank and they pay back their loans. And so I think we'll see more and more of this because the there is a lot of money to be made in this area. If you look at revenues which some of this independent generators are showing in the last few quarters they're really very very healthy revenues for crude. Who regularly surprise me.

Now this is a market. This is a market and basically has a buyer and there's a seller. And whatever the market will take sometimes there's too much generation. And there were times in California certain hours when the price of electricity was zero. And basically everybody wanted to stay online generate not the incurs a cost of turning dialer power so they were willing to sell it for nothing just to be allowed not to turn down the generator. So it's a market and sometimes these locations do happen. We have scarcity rents some time were in certain hours if a nuclear unit happens to go off line then you're tight for power and and the suppliers will sense that it will charge more for the power. But this is a market just like when you want to go and get into a Super Bowl let's say for Sunday I think some of the people will be paying WAY WAY over the face value of all of that they get because there's a scarcity in terms of how many tickets are

available. Did you hear me. Well I think I think the future will be OK. What we're seeing is that along the way and there's going to be some accidents but in terms of the long run I think. I think the answer is not to turn back to what we had before was the answer to correct the problems that we've seen is the regulation and California for us is a wonderful wonderful test case from which you can learn tremendous amount. Thank you. Well thanks for the call we're here at a bar at our midpoint. And once again I'd like to do said Guest We're speaking with George gross from the University of Illinois Institute of Government and Public Affairs He's also professor in the Department of Electrical and Computer Engineering we're talking about utility electric industry deregulation in the state of Illinois and what that means for people here in the state and questions are welcome three three three. W. Weil toll free 800 1:58 WLM since we here touched on the

California experience. I have a couple callers I hope they won't mind waiting in here a minute or two if we so we can talk a bit more about that. The problems that we have seen in California the supply problems are those indeed due to the way deregulation was handled in that state. Certainly to some extent. Very difficult to do things halfway and very difficult to do restructuring. When you allow the wholesale prices to go to market levels yet you restrict retail prices and I've lived in Italy last year after year and the losers along says that you have each bakery must have a certain kind of bread which is very very cheap. Doesn't matter what I went through the white bakery never had that bread. On the other hand they had all kinds of breads which are at a much higher price. So one utilities are restricted in terms of what they can charge for that electricity scarcity will happen. We have the

utilities on the brink of bankruptcy. I think that those issues will be solved. But we're very experiencing problems in California in times when we shouldn't. This is a season one which is off peak. The loads are considerably lower. Everything about 3000 megawatts of load versus over 45000 in the summer when we really have peak demand in California. So it's strange in terms of what's happening but it's also you should realize. It's very much a buyer's market those utilities that have to buy in California they don't have much of a choice because they generate their skin cells of power if not in California outside it where people are going to pay those compiler high prices and California is not an island. It's much easier to do restructure in a place like England Wales which is an island. It's much easier to do that in Hawaii. It's very difficult in California which is part of

the Western system. So they're being quite a few mistakes which is easy to identify are going to be needed to identify even years ago. The problem is that we have an elephant designed by a committee and it doesn't necessarily walk where it will. And do we have any reason based on the California experience to be concerned here. Well we have a reason to be concerned but I think in the Midwest there's different there's a restructuring in Illinois different. We don't have the kind of market design that was put into place in California. Also I must say that I'm very pleased to see that we're starting to construct some pop plants. We completed three years ago one hundred seventy six megawatts of built in which are gas fired units which can be very useful. Two years ago and also last summer there's going to be this big plant in Sidney plant in Pike County which is going to operate somewhere between 300 and 500

megawatts. Zahl good news because one of the things that that is also clearly visible in California notwithstanding the other problems and nothing was build in the last 10 years. So you restructure you deregulate when there is some surplus or some abundant electricity and you ride on the coattails and you're old very well for three years. But it came home to roost. So here we are building and we have to build because if you're not going to build we have a lot of old plant which which is not only not efficient but it's also polluting the plant so it's good news if you're building I think the area which is of some concern is more of the Chicago area where it's much more difficult to build some of these plans because of this NIMBY ism not in my backyard syndrome. California has gone a little bit overboard. It has been called now banana state which is build absolutely nothing near

anyone. Well we have other callers let's continue to talk with them and go next to line one. Hello. Yes I have a couple points to make number one start with the California problem you just talked with California. Has a unique problem in that. Consumers are decided they were going to deregulate and they got together with the legislature and the legislature got together with the power plants and power companies namely Pacific Gas Electric and Pacific Gas and Electric controlled power of Northern California. When it comes to electricity and they set the rates that they were going to pay at seven hundred fifty dollars per megawatt and they thought that was so outlandish that nobody would ever get to that price. And then they set the heights that they could charge people at a price that they thought nobody would ever get that high because it would never be that kind of abundance of electricity. Well once they stop building the power plants and once that they had the independant

generators started generating they realized that they were short on power and they started pushing the price up higher and higher and higher. Now Pacific Gas and Electric actually subsidizes some of a lot of the customers in Northern California because they have to pay the difference between what they get from the company and what they have to charge to the generators. So now they are going bankrupt. And they're not at all happy about it and they're not going to generate as much right to stay from the plants that they own which are mostly hydro electric and a few nuclear plants. So you know I really don't feel a bit sorry. If you get an electric day they made their own bed and now they got to live in it. You know it's just tough luck for them and miserable people who in California are not very happy about that. Well they're going to have to work their way out of it. But to get to another point that you brought up earlier when the nuclear generation and it seems to me we've everybody's been screaming so much we don't need nuclear power alone that's not true. Nuclear power is probably the power we need in the future because it doesn't generate greenhouse gases. It produces

power very cheaply after you want to keep the plant built but building a plant is expensive. I have to admit the Europeans have done a much better job in IT that they've used to a slightly different system. That's not so expensive to build. And they've done a very good job of nattering and they don't seem to have near the kind of problems we do. Can I get your comment for her. OK let me. First the fallout clarifying certain issues. PJ he was one of the players when the restructuring was done in California. There were a lot of stakeholders at the table and no doubt about it. There's a lot of problems B.G. never said the price. The promise in California was that this utilities were told that they have to sell their generators so they have very little generation left to do still have the hydro but those generators are charging all those high prices those generators are producing power in units which be Ginny and Southern Cal of this in own before they have to sell those plants. So that's number one the $750 you're talking about

that was a price Cup which was set by Iowa so in the wholesale markets. Their retail side was frozen as part of the law AB 1890 which which was signed by Governor Pete Wilson in 1996 on the nuclear issue. I'm not sure that Europe has a much better experience than we do certainly in France where it's heavily subsidized by the government. There is tremendous amount of nuclear generation and have done it very well. But there are moratoriums or around Sweden it wants to shut down all the nuclear plants. Germany just passed a referendum to shut down the nuclear plants. So there I don't think those are necessarily examples that we want to emulate. They issue of building nuclear power is still alive. But I think nobody is going to run on that conflict they could that they want to turn the country back to build a nuclear power. There is an emotional

discomfort that is building nuclear but I think eventually it may come out to be as one of the options that we have. We'll just have to see. And even though we may be much more comfortable in a very hot environment with very nasty weather and. Healthy for for our life. Well experience is what that means today on the campus of the University of Illinois in terms of not having electricity. I think there will be some trade also drill have to make and some of them are going to be in terms of psychological discomfort some of them are going to be in terms of the environment and the population or the voters will have to choose that. But there will be tradeoffs. There's no free lunch. That's exactly right. Thank you very much and I thank you for the call. Just I'm curious the caller the caller made reference to the fact that it's expensive to build a nuclear plant it's also expensive when the plants come to the end of their

life to shut them down generally known as decommissioning. I'm just curious how many plants have been decommissioned. Is that at large expense that. That awaits us in this country. I treat for decommissioning you pay all along the way the commissioning charge which is put into the rate base so that's being assessed throughout the life of the plant and be paid for some of that. The commission costs associated this Clinton you know in my power area. It's very expensive to build nuclear but in fact nobody is really thinking about it people are talking about it. And as the guy who's head of General Electric and nuclear He says that he doesn't exactly think his order book when he talks goes to talk to people. But it's it's of current ventures because it's still an option and I don't think we should shut that out. Well the lines are full here we have several folks will try to accommodate everyone we'll go next to line

two. Hello. Yeah a comment and a question. My comments to my knowledge. You know that's the whole thing about electrical production energy production being put into a market is not quite the subalterns you would let us believe you know you by your own admission you know the true market would require entrance and markets and the whole issue of building plants. What a difficult economic choice but. My question is Eastern Illinois is very proud of its product. Our production plant. And as I recall they got some way of I think they used coal and they got some way of getting rid of the waste you know scrubbing their emissions I think is the correct term. And I was wondering why isn't

if that's true why isn't that much more common type of plan. If you're familiar with used you know nice power problems. I'm not familiar the means AM Eastern Illinois University. Yeah right. OK well that's a small coal generation plant which is which is there probably and also providing steam for the campus not only electricity and then they sell their excess. Electricity or power to the grid at the close. I guess you're in Illinois Power area than its Illinois Power which would bind that generation. People are not building very much coal because of the emission problems. That's the reason the emission problems are very expensive and it's much cheaper much cleaner much better alternative. Natural gas and eventually the price of natural gas will come down. Is this

high prices it's very experiencing today. Is the beef started a lot of drilling and that in a couple of years there's a delay here. You have to be aware of food that is not going to be instantaneous takes time to drill for gas in 2 3 years will see the prices come down again. But this is an example I think it's a very good example. Where's the free market is working and regulation would not solve this problem. In fact that regulation is what caused the high prices at the start of it and when we got through the regulation there was competition rules of prices. So I'm not in favor for a gal.. Besides market can react much much more quickly and rapidly to events than regulation can. So regulation is not the answer. Well I kind of disagree but my point about the street was that they currently have still no University currently have a very very low emissions. In fact I think I read that maybe you know something about this.

The greatest police we have no more it's really from some plants and I want someplace that's particularly particular. Pollution from some plant I've read but I always thank you. Thanks. Illinois does have a significant coal resources the problem is that it's high sulfur and when you burn it you have the emissions issue. We've been here in this state and I'm sure other places they've been working on clean coal technology. I don't know how long is that such a difficult technological issues to solve. It's pretty difficult and they did here at this part of Bush's plans that he wants to energize that program. And clean coal technology. But there are there are quite a few research projects going on but those bills have suffered in terms of how much funding they've had in the last few years so if you had kind of a turn down at them self activities you know many of this issue is are solvable once there is enough interest and

enough money. We haven't been doing that much work because the funding was just not there. But 10 minutes left. Our guest George Gross is a professor of electrical and computer engineering at the U of I also involved with the Institute for government public affairs we're talking about electric industry deregulation and what it means here in the state of Illinois. We have several callers you will see we get everybody in the time it remains to go next to line number three. Hello. I'm a rural customer of the U.S. I lecture a copper to have champagne and I had a couple of questions there for several years offered and residential interruptible right which I signed up for the loud one to shut me down on peak days which as you know never been a problem I have an automatic backup system and it's only been for you know a few afternoons in the summer. But now I'm reading about people who signed up for the contract in California find them shop you know shut down for weeks on end what do you think is the likelihood of that. Those sort of peak days occurring much

more frequently in Illinois over the next few years and what I'd be wise to get off this right while I can while of the band in terms of whether we are building or not and if you're building there OK. If you're not building then this is a law of physics basically. Supply has to equal to the man and some of the man may not be satisfied. But in California for a long time. There have been customers take Miller Brewing Company which in the first five years of its interrupt or ball rate was not shot down even once. Last week they basically had to close a plant the east of Los Angeles because of the number of interruptions. You're striking a bargain is the utilities or utilities willing to sell you power for the last for a certain price but they haven't been shut down for week weeks basically because there's a clause in terms of number of interruptions which are permissible

under this rate which actually is what I'm worried about. I don't think my contract has that limit on it. But well I think I think it's worthwhile to check because you certainly don't want to be in a on a contract were basically the utility can shut you down is out and any limit of course you have to realize it. These are not the they just to shut you down because when they do shut you down they can't collect any money from you right. Yes I had a related question which is that that that my co-op seems to be fairly adventurous in terms of entering other businesses say you know self like TVs and God only knows what else. What are the I mean I dangerous for them getting into the generation business you know. How are they likely to get themselves in trouble with the regulation. Trying to. Don't play the mark. Whenever I visit the diversification you're talking about has nothing really to do is the regulation or restructuring happened way before

that. But your co-op probably is no better no worse off than some of the filthy companies is a famous story in the utility business is that the floor of the progress which is a utility company in Tampa and decided that it's going to diversify so it's going to diversify into life insurance and buy this life insurance company because they said they have all these captive customers that we have. They didn't realize that most of the customers over 65 so it was very difficult to sell them life insurance and soon they they lost their shirts on that business. So if they know what they're doing then you are your copies are OK if they don't then they could lose your shirt on it also. OK and then my fine. QUESTION As you mentioned all these new power plants that are being built almost all of which are natural gas powered And do you think that the increase in natural gas supply over next couple years is really going to be enough given that there are also huge numbers of new gas

power plants being built all over the country and you know I mean I think in California now the natural gas shortage is really more of a problem an electrical shortage. I mean that's a that's a correct statement the last statement. Yes I think this is something that's going to respond to the price and be also so that we respond to the November when there was a lot of fuel switching. Is the price of natural gas going up. The switch the power plants or to power plants which could there on another fuel. So eventually there's going to be this like the Librium which is going to be met the high prices are giving an incentive for incentives for investment to go out there in the jail for new gas and will get enough new gas to supply all of the new power plants. I think in the foreseeable future I would say yes and they're also developing other sources. OK. Thanks very good Let's go to line number one next.

Hello. Yes sir. BTW DT back up. Yes it's possible to store natural gas unlike electricity and what you do is you compress it and you store it typically underground. It's also because of you've had milder winters that was another reason that people were not drilling because the price was low. Plus not all the gas was used this year as a December was so low that supposedly the coldest December in 106 years since we collected the weather data. And there they amount of demand that they had their own gas increased by more than their annual consumption of this kind and even

countries so it was a big jump in demand. We're working on alternate resources we're working on bio mass or working on photovoltaic. We're working on when the resources. Those are all possibilities. So if you're talking about alternate sources of natural gas you're talking about other other energy solar energy sources. OK one more here will go to line four. Hello good morning. Yes and don't let nobody building a coal fired generators. Here's a cold wise reso cones produced would that be cheaper and send the electricity out. Well that's a good question and that's the way we used to do it. And in the old days where it was easy to build a next to a coal coal plant the site the power plant is very difficult. It also has to do is a transmission capability. So because not all of that power would be utilized at the source.

I pair are by products from coal fired plants like. All right understand the wallboard that that they use is made out of the what's captured as it stack is that right. We have fly ash which we use for paving roads and eyeline and aspirin and things like that. It was not made from gas originally. Jefferson from from oil originally Yes well it's a car you see people's gas right. Koch right. OK drop the coke off of there one of these people are plants that they I think very smaller. Could you describe one of those. They're not very small the typically modular so you can make them as large as you like say in 50 megawatt modules and they would not be used around the clock like basically the plants they would be used in times of peak load so that's where the cold peakers isn't like the size of a small building are they seem to resist though now that those sort of large industrial plants typically they use the same kind of

machinery as the jets that we see the jet engines. So the combustion turbines we're going to have to finish there with the promise I'm sure that will be back on some of these issues again soon but for the moment we'll have to say thanks to our guest George gross from the Institute of Government and Public Affairs here at U of I also professor in the Department of Electrical and Computer Engineering. Thank you thank you very much.