Articles by CBAssociates

Submitted, IFRA, December 2001

It is not a matter of "Do we have a problem?" but "When and where will the problem occur?" That was the clear message from the speakers at the annual International Newspaper Group in Dallas.

The problem is energy.

Despite being overshadowed by the beginning of a recession and the events of Sept. 11, the energy problem is real and may in fact get worse. At a minimum, it will become more expensive for most businesses, including newspapers.

The problem is complicated and the events in California are just the tip of the iceberg, with the northeast part of the United States also at risk of power shortages. Large cities such as Chicago lead the list of places to watch.

Why the shortage? The quick answer is a lack of generating facilities and a lack of power transmission lines. The transmission line issue is interesting as it almost always involves more than one state government, which makes action difficult.

The transmission lines are the heavy electrical lines that carry the power generated by a power plant to the user, or from a power company that has excess capacity to a power company that is short of power. The lack of transmission lines was part of the California problem.

Another factor in California's problems was a lack of power generation plants. California seems to want the benefits of unlimited power, but does not want power plants in the state. NIMBY, or not in my back yard, applies in California.

The process for building a new power generation plant in California, and in many other states, is so rigorous that it precludes any from being built. The result is increasing demand and static supply.

And to make matters worse, many nuclear plants are reaching the end of their useful lives, with no plans in place to replace the lost power. That will have significant implications. And without government intervention, there is little hope of a reasonable solution to the shortages that will surely occur.

California was unique in that not only was it short of power, but the cost also skyrocketed. This high cost was caused when the state government required the biggest power supplier in the state to buy power at the daily cost, rather than allowing it to enter into long-term contracts to protect their costs. The effect was sky high prices.

Deregulation of the power generation industry, which was supposed to result in lower prices, has only added to the already formidable problems. A panelist shared an interesting story about a community within the most populated part of California that owned its own utility. The utility did not increase its rates and had plenty of power because it had contracts to protect the price and only served its community.

Many factors are converging to cause this predicament: demand is exceeding supply; nuclear plants are closing; it is difficult to build new power plants and large transmission lines; deregulation, and private power companies looking out for their own interests.

The panel did not paint a pretty picture or one that seems to have a solution. It appears that it might take a crisis to create an approach to power for the entire country before the problem will be solved.

So what is a newspaper to do?

Get a generator, reduce consumption, become aware, take this seriously, be proactive and hope for cool summers, was some of the advice.

Self-sufficiency is the first order of business. If you want to publish, you better have your own electrical capacity.

If the power shortage was not enough of a threat, the priorities of private power companies now are. Public utilities typically give priority to newspapers right after essential services such as police, fire, government and hospitals, when restoring power. However, private power generators may favor their largest users, which will move newspapers way down on the list. Get a generator and be self-sufficient, was a strong recommendation for newspapers located in those parts of the country that could be affected by shortages.

Reducing power consumption should also be a high priority. Energy-saving light fixtures can pay back within a year. This is a quick payback on a low-cost investment. New buildings should emphasize energy reducing designs. And heating and air conditioning systems should be energy efficient.

In some cases the problem will be one of price rather than supply. An example of this may be natural gas. Natural gas consumption in the United States is increasing, with no increase in production, which means it is a world commodity and subject to world pressures. Most of the new power generation equipment coming online is gas fired. This will create more demand for gas and perhaps a more unstable market. One line of defense is boilers that use natural gas or oil, as the markets for each will not always be stable.

When will the situation become serious? California dodged the bullet this year when it experienced a cool summer. Had this not been the case, this story would have returned to the news. Many of the problems were mitigated by the poor economy and the reaction to the events of September 11.

Energy will be headline news and a serious concern to newspapers when the economy rebounds and hot summers return.

The panelists agreed that we can count on energy problems and must prepare for problems in most parts of the country. A long hot summer may be great for those going to the beach, but it will be extremely difficult for everyone else.

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