KEEP FUEL OPTIONS OPEN

THE ENERGY BUSINESS HAS BECOME increasingly competitive over the past few years. If you don't believe it, just look around:

The Organization of Petroleum Exporting Countries is only producing at about half of its nameplate capacity because of reduced demand and the growth of non-OPEC oil production. Crude oil, gasoline, heating oil and other refined products are openly traded worldwide on markets that can be accessed by anyone with sufficient capital and a telephone. A vigorous spot market for natural gas is becoming more entrenched each month.The market for electric power is becoming more contentious. The growth of cogeneration and wholesale power sales among non-contiguous utility systems is forcing utility managers to start thinking like competitive businessmen, just as the interstate natural gas pipeline industry was dragged kicking and screaming to competitive markets.

But some of the laws passed during the energy "crisis" of the 1970s are still around, and while they may be largely ineffective, the potential for mischief is great.

For example, the Powerplant and Industrial Fuel Use Act was intended to phase out the use of natural gas and oil in industrial and utility boilers. Of course, what was generally forgotten in the zeal to get the law on the books was that just about anyone who had a reasonable alternative to natural gas or fuel oil in 1978 was using it since oil was expensive and gas was in short supply (thanks largely to price controls that mandated it be sold at less than replacement cost).

The law also mandated that utilities stop using gas as a boiler fuel by 1990, and that new boilers couldn't burn oil or gas.

The ink was scarcely dry before Congress and the Department of Energy began chipping away at the law. The provision that mandated a phase-out of gas no later than 12 years after the law's passage was repealed a scant three years later. Why? Because using increasing supplies of relatively cheap natural gas made more sense than importing expensive OPEC oil.

And exemptions were granted on a case-by-case basis to the restriction on building new oil and gas boilers, again dictated by the economics of each specific situation.

Last fall, toward the end of the 99th Congress, the House of Representatives passed a bill repealing the Fuel Use Act once and for all. However, the Senate didn't act and the House bill expired when the 99th's session ended.

So far this session, Sen. J. Bennett Johnston, D.-La., introduced a bill, S. 85, to scrap the Fuel Use Act once and for all. Hearings are set to begin March 12; we hope he prevails.

Let the markets work. Give utility and industrial powerhouse managers the flexibility to use the most economical fuel available.

There is one provision in the Fuel Use Act, though, that should be retained. That is the provision that utilities building new fossil-fuel generating plants should build them with the capability of burning coal, should that become necessary.

When a utility builds a new power station it can realistically expect to get 30 years of service, or more, from its investment. And a boiler designed to use only oil or gas can't be converted to coal later on, although units are in use that have been designed to burn oil, gas and coal.

Considering how fast the energy markets have changed since 1978, there's no telling what may happen between now and 2017. Prudence demands that we keep our options open.

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