Spring 1986 RAIN Page 41 system. Whereas if we have a series of independent power producers who are using an array of technologies, the likelihood that a large number of those will fail at the same time is rather minimal. You're clearly going to lose a few entrepreneurs simply because they don't do their business well. But I think a variety of power producers will give you more security than we currently have. RAIN: There are certain states or regions of the country which seem to be promoting independent power production more than others. What are some of the noteworthy examples, and what should other states and local governments be doing to follow their lead? Munson: Well, it's not surprising that the record of the states is rather mixed. That's because although the PURPA legislation was passed in 1978, it really wasn't upheld until 1983. So a lot of state regulators didn't do much to implement the law until 1983. Only now are they in the process of trying to develop the rules and regulations to implement it. You could look at a variety of states that are taking the leadership—^Texas, Maine, California, Michigan, New York, Florida. A series of regulators have gone out of their way to ensure that the marketplace does open to competition. In several of these, the results have just been extraordinary. In California, for example, three years ago, independent power producers supplied only about 100 megawatts of electricity. Today they supply about 2,200 megawatts on line. That's the equivalent of the Diablo Canyon nuclear reactors, brought on Small power production (Illustration by Cherry Britton) line in one fifth the time, one eighth the cost, and one one-thousandth the controversy. They've got another 9,000 megawatts that are under contract and under construction. When those get completed in two or three years, you're talking over 10,000 megawatts, which is 25 percent of California's electricity, coming from independent power producers, people other than the utility monopolies. That's a revolutionary, rapid change. In Maine, by the end of the decade they expect 30 percent of the power to be coming from independents. In Texas, In California, three years ago independent power producers supplied only about 100 megawatts of electricity. Today they supply about 2,200 megawatts. That's the equivalent ofthe Diablo Canyon nuclear reactors, brought on line in one-fifth the time, one-eighth the cost, and one-thousandth the controversy. independents supplied about 1,300 megawatts of new electricity within the last two years alone. So where the regulators have opened up the marketplace, I think you've seen incredible growth. However, you still have to realize that it's a competitive marketplace, and the market is going to regulate where the independents do well. Independents will probably do best in those areas where either utility companies are now buying expensive fuels—like oil or natural gas—or where a utility company thinks that it needs to be building new power plants, and the entrepreneurs believe they can build the power plants cheaper and faster than the utility company. The corollary is that in those areas where the utility is using inexpensive power—like an old hydroelectric facility that has been paid off for 20 years—or in areas where the utility is not thinking about building new power plants, then it's probably unlikely that an independent power producer can generate electricity cheaper than those old hydroelectric plants. So I think the market will be the determiner of where independent power producers really flourish, assuming that the regulators do implement the PURPA law. RAIN: Lastly, the environmental issue, which has been raised in a number of places, especially with respect to new small dams and to some extent with air pollution from cogenerators. How do you respond to that? Is that much of a problem? Munson: It could be a problem. In the Northwest it has become a problem because there have been hundreds, if not thousands, of entrepreneurs who would like to go out and put new dams on a variety of the rivers throughout the Northwest. It's a problem for two reasons. One is that there are some
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