US heat wave tests utility capacity, helps mall retailers - MarketWatch

DES MOINES, Iowa (MarketWatch) -- A record-setting heat wave baked much of the U.S. again Wednesday, testing power-utility capacities and sending throngs of people to shopping malls, theaters and other air-conditioned oases.
Power suppliers were expecting to face their biggest demand day, but predicted they could meet electrical needs with few interruptions, said Stan Johnson, a spokesman for the North American Electric Reliability Council, a Princeton, N.J., industry group.
Even so, calls for conserving energy were widespread and some big employers augmented their needs with on-premises power sources, and juggled work schedules, to accommodate the heat.
New York City's two biggest banks - Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) - are cutting their power use at the handful of buildings they own and operate. Both companies are shifting to backup generators, trying to reduce elevator use and turning up the thermostat anywhere from 2 to 10 degrees, spokespeople said.
Also, at three Citigroup buildings - on Wall Street, in Manhattan's Tribeca neighborhood and in Long Island City in Queens - hot water heaters were turned off.
"People are washing their hands with cold water," a spokeswoman said.
Verizon Communications Inc. (VZ) said some of its telephone switching centers have been running on generators. One office in Long Island has been relying on fuel cells to stay open, a spokesperson said.
Altria Group Inc. (MO), parent of Philip Morris USA and Kraft Foods Inc. (KFT), took steps to reduce power consumption at its New York headquarters, including using generators to reduce demand on the city's utility grid.
But spokeswoman Dawn Schneider said that despite the sweaty weather Altria wasn't seeing any increase in employee absenteeism.
Sales of home air-conditioners and fans have been predictably brisk in much of the heat-oppressed country. Home-improvement retailer Lowe's Cos. (LOW) said customers also are snapping up portable generators.
But others opted to take advantage of someone else's cool environment - a fact that may be a mini-boon to retailers.
Scott Mumphrey, executive vice president of the country's largest mall owner, Simon Property Group Inc. (SPG), said many of his mall's managers are noticing an increase in traffic as shoppers take refuge from the heat.
"We're seeing good crowds," he said. "People are getting out more often and spending more time while they're there."
In anticipation of such days, Simon Property Group has undertaken an energy-efficiency program, replacing lighting fixtures and air-conditioning units with units that are less costly to operate. Even so, Mumphrey said that during peak heat waves, the company will turn up mall thermostats a bit, to help keep A/C costs down.
The National Weather Service Web site has heat advisories posted for a large swath of the U.S., from southern Maine to Oklahoma for Wednesday.
But the Upper Midwest, which had sweltered under record temperatures over the weekend, got a big break overnight. People in Minneapolis-St. Paul, who had suffered 100-degree-plus heat just three days ago, woke up to cool weather Wednesday.
At 10 a.m. it was 67 degrees, a spokesman at Xcel Energy Co. (XEL), the Upper Midwest's largest utility, reported.
Even so, the weekend temperatures will result in higher utility bills for many of its customers come September. They will reflect increased fuel costs that Xcel paid, for coal, natural gas and nuclear power, as well as purchases made on the spot market to meet peak-load demand.
"We buy a lot of power from the outside," said Phil Zins, manager of pricing and planning at the Minneapolis-based utility.
Power of another sort - the battery in one's car - has become a concern as well. "We're seeing more battery sales and an increase in garage work," said Joe Spann, owner of the Schaller & Son Phillips 66 service station in Des Moines.
"We're also hearing from people who'd put off fixing their air-conditioning in their vehicles," he said.
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