The Department of Energy's Electricity Policy Project

Testimony was given on a Department of Energy (DOE) report which stated that the electric utility industry needs to build substantial amounts of new large generating capacity at a time when existing reserve margins are high and growth in demand for electricity is relatively low. GAO found that, by using a growth rate of 3 percent rather than its model's most likely electric demand growth rate of 2.49 percent, DOE forecast a growth rate over 80,000 megawatts higher than originally estimated. The DOE estimate of available generating capacity does not take into consideration power generation plants that are currently scheduled for commercial operation after 1991. In addition, DOE considered, but did not include, nonconventional supply strategies such as cogeneration and load management in its supply estimate. This further increased its projection of needed new generating capacity. Electric supply and demand varies significantly between regions and depends upon the availability of alternative supplies. Because it did not consider these factors, the DOE forecast cannot be readily applied to specific regions. GAO found that DOE made extensive use of contractors during the project to increase its analytical capability, obtain views of other groups, and meet its completion target date. Many of the contracts were awarded on a sole-source basis or were task order contracts due to the time constraints of the project. This did not ensure that quality products were obtained at the least cost. In addition, GAO found that conflict-of-interest determinations did not contain the data needed to determine whether the assessment had been completed.