Bill Herrington



Utility Consultant WHH Enterprises
Senior Vice President Orlando Utilities Commission, retired

Bill Herrington has 38 years experience in the electric utility business, 27 years with the Orlando Utilities Commission (OUC). He has served in various positions including Power Plant Manager and Director of Electric Generation. As Senior Vice President of OUC’s Electric Business Unit he had responsibility for the design, construction, operation and maintenance of the OUC electric distribution, transmission and generation system. In this position he managed on an annual basis, the preparation and justification of a five-year capital plan that typically exceeded $300 million. Since retirement from OUC in 1987, Bill has provided consulting services to all segments of the electric utility industry including municipal utilities, investor owned utilities, electric consumers and independent power producers.



Notes on Bill Herrington’s presentation to The Village Square (10.2.2007)

While the percent of our GDP that is in energy has decreased since the energy problems of the 1970s, electrical energy is a bigger piece of the pie

Electrical energy is related to our overall economy

Electricity can’t be stored – it has to be put into use the minute it is demanded – puts a strain. And you have to be ready to go from 2,000 mw to 5,000 mw – varies seasonally and hourly. SO, can solar be a meaningful part of our capacity mix?

If peak flow January 20th is at 7:30 in the morning – how much sun can we get then – solar is not going to help us satisfy the peak that day. It’s like getting wind when you’re sailing in gulf in august – can’t do it.

Economics of peaking capacity are completely different than economics of base load capacity.

Economics of building new plants – 50 year time frame. You won’t know if you were right or wrong for probably 20 years. POLITICAL process focused on political terms and business environment – those motivations don’t help us make the best 40 – 50 year decisions.

2 gasification plants in country – one is Tampa Electric. Department of Energy is supporting one to be built in Orlando.

Nuclear– no new plants since 1978 – 2 in Florida announced – expand capacity in Crystal River –

Fuel costs dollar per KW/ hr:

Natural gas – $80 / mw hour
Combined cycle – $60/ mw hour
Pulverized coal – $30 mw hour
Coal gasification – $22 /mw hour
Nuclear $6/mw hour

As we go this direction –capital costs have gone up – the cheap plants get bad mileage and the expensive plants get good mileage, so the choices are not easy.

We’ve learned a lot operating the 100 nuclear plants in the last years.

TAXES: About 20% of your bill goes to taxes
A lot of what you pay for in utilities are taxes –
State gross receipts on sales tax – businesses pay 6.0% sales tax (residential exempt)
Tallahassee owns its own utilities so that municipal taxes are embedded in the fees

When gas taxes went so high, we went from percent of sales for sales tax to a per gallon tax, perhaps its time to do that with our power consumption – go from percent of sales, where taxes increase substantially with rising fuel costs, to a tax on KW/hour consumed.

SCALE: Central power plants are big guys 100 mw or greater – a lot of the emerging technologies a lot smaller. Solar is really small.

Solar voltaics announced in hundreds of KW – what you can do in your house – they mention that it watts

You have to be careful in comparing numbers

If you put something on your house, don’t need 2,000 miles of transmission and 2,000 miles of distribution lines – it’s already there.

ALTERNATIVES:

• Nuclear

• Conservation – still do more to do to conserve, although a lot of the low hanging fruit has been picked.

• Renewable resources/emerging areas has a role to play – Governor Crist has announced the goal of 20% - now it’s about 1% emerging/renewable.

• 5400 MW of power in Florida – FP&L 300 MW plant solar – not going to solve a lot of problem - .6% of the state – not going to solve our energy problems

What’s the answer? I believe a little of all –
“It’s kind of like an investment portfolio – I don’t know which is going to be best 20 years from now, if I don’t know what interest rates are, I don’t know what fuel prices are - just like I don’t know whether bond investments or equity investments are going to be the right choice. Trust me, I have some of both.”