Sen Bingaman Questions Use Of Gas To Produce Electricity

Dow Jones & Company, Inc. - Oct 7

WASHINGTON -(Dow Jones)- Sen. Jeff Bingaman , D-N.M., at a hearing on Thursday suggested the need for policies that encourage utilities to use fuels that are cheaper than natural gas to fire up their power plants.

Energy experts told the Joint Economic Committee of the U.S. Congress that high natural gas prices are here to stay for about the next five years as demand grows and the country waits for new supplies from Alaska and foreign sources.

North America is poised for a large increase in gas demand due to a growing number of utilities using gas to fire electric power plants, said Daniel Yergin , chairman of the Cambridge Energy Research Associates.

Over the last few years, the U.S. has installed about 200,000 megawatts of gas-fired power plants and today those plants represent about 25% of the country's gas demand, he said.

As a result, power demand is squeezing price-sensitive industrial demand out of the market, Yergin said.

In response, Bingaman asked Yergin if he sees a need for policies that discourage utilities from constructing gas-fired plants.

"You've gone right to a question we're looking at now," Yergin answered.

In the 1980s, Congress passed laws to encourage the use of gas to produce electricity because prices, at that time, were relatively low and gas is generally seen as a cleaner burning fuel.

"It seems like we're in a situation now where we're captive to earlier decisions," Bingaman said.

-By Maya Jackson Randall , Dow Jones Newswires; 202-862-9263; Maya.Jackson- Randall@dowjones.com

Dow Jones Newswires 10-07-04 1515ET