May 26, 2010 / 4:05 PM / in 7 years

Recession crimps U.S., Canada summer power demand

NEW YORK (Reuters) - The United States and Canada should have more than enough power to keep homes and businesses cool during the peak summer air-conditioning season as a slow economy depresses electricity demand for the second year in a row.

In its summer reliability assessment, North American Electric Reliability Corp said the weak economy would result in reductions of 2.2 percent in peak demand this summer from last year and of 3.9 percent from 2008.

“Depressed electricity demand due to a slow economic recovery continues to be the major driver affecting bulk power system reliability during the upcoming summer months,” NERC President and CEO Gerry Cauley said in a release.

In fact, the recent recession has made Mother Nature take a back seat this time around.

Usually, when the economy is going at a steady clip, temperatures are the main driver of demand during summertime. But this year, with temperatures expected to be mild against the background of economic doldrums, supplies should be more than enough to meet forecast demand, NERC projected.

NERC, of Princeton, New Jersey, is a nonprofit corporation originally formed by power companies to ensure the bulk power system in North America was reliable. Today, NERC’s standards are mandatory and enforced in the United States and several provinces in Canada.

Projected peak summer demand has declined more than 10 gigawatts per year for two consecutive years, 2009 and 2010, NERC said. A megawatt can power about 1,000 homes and a gigawatt can power about a million homes.

In its short-term energy outlook, the U.S. Energy Information Administration said total U.S. electricity consumption declined 0.7 percent in 2008 and 4 percent in 2009 but should increase by 2.7 percent in 2010.

Even though homes and businesses are using less power, the price of that energy for residential users has continued to climb - most recently with fuel prices - every year since 2002, with a 5.7 percent increase in 2008, 2.5 percent in 2009 and a forecast 0.3 percent in 2010, according to EIA.

NERC said the weak economy was not just hitting U.S. consumers. Peak demand in Canada will drop 3.1 percent this summer from last year.

With homes and businesses already cutting back on energy usage, participation in demand response programs, which pay consumers to reduce power usage, will be unchanged this summer from last year. That’s because the recession has reduced the need and economic incentives the programs offer.

NERC, however, noted demand response programs would remain available to power grid operators to support emergency operating procedures and reduce peak demand if necessary.

Meanwhile, growth in wind generation continued to increase as power companies invest in renewable projects to meet state requirements and prepare for possible federal taxes on carbon emissions to fight global warming.

The industry added 7,000 MW of wind power since last summer, boosting the total wind capacity to more than 37,000 MW, NERC said.

Reporting by Scott DiSavino; Editing by John Picinich

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