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^ ^ <br />e i in er etter <br />FORECASTS FOR MANAGEMENT DECISIONMAKING <br />1729 H St. NW, Washington, DC 20006-3938 • KiplingerForecasts.com • Vol. 84, No. 4 <br />Dear Client: <br />As climate and energy worries grow... <br />forging consensus among politicians, consumers <br />and businesses to start tackling global warming <br />and reduce U.S. dependence on imported oil... <br />Utilities will be in the hot seat, <br />pressured to produce more electricity <br />while trimming fossil fuel emissions. <br />Emissions are just part of the problem. <br />Demand for power continues to hum, <br />threatening to overwhelm the shaky power grid. <br />There are barely enough big power generators <br />and transmission lines to meet peak demand. <br />Plug-in hybrid cars mean more stress <br />on the system. With General Motors and others <br />betting big on them, odds are electric autos <br />are here to stay. If 20% of cars on the road <br />in 2020 were plug-ins, electricity needs <br />to power them would increase by around 5%. <br />Clean coal plants are years away. <br />They won't be ready until at least 2012. <br />Ditto, more nuclear power facilities. <br />Washington, Jan. 26, 2007 <br /> ~ ~• ~ <br /> Block on Iraq war funding <br /> Lots of criticism, but no cut <br /> Minimum wage hike <br /> <br />.......... Business tax breaks added <br />................................................ <br />. <br />. <br /> . <br />.... <br />...... <br />Lobbying reform <br />`,!,/ Plenty of loopholes <br />.......................... <br />~"y Immigration fix <br />~~ But maybe not until 2008 <br />p~ Estate tax repeal <br />1~! Not in the cards <br /> Oil industry tax hikes <br /> <br />........ <br />.. Dead in the Senate <br />. <br />. ........................................................... <br />Social Security fix <br /> Talk only, for now <br />~~ Fuel economy standards <br /> Increase coming <br /> C02 emissions caps <br /> Bush won't budge <br />Investors remain jittery. Despite faster regulatory approvals, <br />Wall Street continues to view large-scale power plant projects warily. <br />Many utilities still have weakened credit ratings...fallout from Enron. <br />The not-in-my-backyard syndrome plus uncertainty over the specifics <br />of coming state and federal emissions regs are also delaying projects. <br />In any case, there's a huge risk of blackouts for years to come. <br />The U.S. power supply cushion, currently 15% or 16% of daily consumption, <br />on average, is the minimum to cover possible summer spikes in usage. <br />The power cushion will likely shrink to a measly 11% or so by mid-2011. <br />The most vulnerable areas for power shortages: <br />~ ~~ The Rocky Mountain states as well as Texas <br />soon - plus areas served by the Tenn. Valley Authority. <br />U.S. Electricity Supply Regions with the best supply: The Deep South <br />+~ <br />asoo \ =-~ as well as the Northwest and New York state. <br />aooo '~ Moving power around the country is dicey <br />because of transmission line constraints. <br />ssoo ua. Eiectric\ oemami Moreover, major transmission line upgrades <br />(In bllllon kilowatt-hours) are just getting under way, nearly four years <br />3000 .oo ~oz ~oa ~oe ~oe •to ~tz ~ta after cascading blackouts in the Northeast <br />Sources: Department of Energy, Kiplinger and the Midwest illuminated the need for them. <br />The Kiplinger Letter (ISSN 1526-7130) is published weekly for $117/one year, $199Hwo years, $263tthree years Subscription inquiries: 600-544-0155 or subservices[?nMplingeccom <br />by The Kiplinger Washington Editors, 1729 H St., NW, Washington, DC 20006-3938. EdltOrl81 inlOrRl6fi0R: Tel., 202-887-6462; Fax, 202-776-8976; <br />POSTMASTER: Send address changes to The Kiplinger Letter, P.O. Box 3295, Harlan, IA 51593. E-mail, letters@kiplinpecmm; or Web site, Kiplingerforecasts.com <br />