Legislation would set rules for grid
GOP-sponsored energy bill a response to summer blackout
By Peter Behr
THE WASHINGTON POST
msnbc.com
WASHINGTON, Nov. 15 — Three months after the worst blackout in U.S. history knocked out electricity from New York to Detroit, Republican congressional leaders have responded with an energy bill that they said would go far toward preventing such a calamity in the future.
THE LEGISLATION includes the first federally enforceable rules to protect transmission grids against cascading power surges such as those that triggered the Aug. 14 blackout, according to congressional aides.
But while it would strengthen reliability rules, the legislation does not deal with the disorganized, fragmented system of grid control centers in parts of the country — particularly the Midwest, where the blackout started, some experts said. That could leave the Midwest and neighboring regions vulnerable to serious power outages unless utility companies agree to tighten grid controls.
Utility executives said the new reliability rules in the energy bill would meet a long, unfulfilled need. “It’s very important. It should have been done years ago,” said Roy Thilly, chief executive of Wisconsin Public Power Inc.
The rules would prevent the “dithering” seen in grid control rooms on Aug. 14, as operators, struggling with faulty computer systems and inadequate information, delayed actions that could have prevented the blackout, said utility executive Elizabeth A. Moler, who headed an Energy Department study of the transmission system.
Although an industry-backed grid monitoring group — the North American Electric Reliability Council — issues operating rules, there are no penalties for violating them in most of the country. NERC’s president, Michehl R. Gent, told Congress that he believed an investigation of the blackout would uncover violations of the voluntary rules.
A U.S.-Canada task force is due to report next week on the blackout’s causes. Some energy industry officials predict the report will criticize one or more Ohio power companies for failing to deal in time with the worsening conditions in the grid. The companies have denied they acted imprudently.
FEDERAL AUTHORITY
Under the rules proposed in the Republican bill, grid operators could order a utility to increase or reduce power output from specific generators to ease congestion on overloaded power lines, or even to cut off power temporarily to groups of customers to lower demand. Rule violations could result in financial penalties.
The legislation also would give the Federal Energy Regulatory Commission authority to order the construction of transmission lines to eliminate bottlenecks in power flows if state governments fail to act, according to congressional aides. The details of the bill were not available yesterday.
The bill also would repeal a landmark energy law, the Public Utility Holding Company Act of 1935, which discourages non-utility or foreign companies from buying power company assets.
Repeal of the act could attract badly needed investment in transmission lines, some industry executives said.
Opponents of the law’s repeal contend that new transmission lines may not be built where they are most needed because the new energy bill does not fix the Balkanized structure of the transmission grids. The worst problems are in the Midwest grid, where 23 power companies share responsibility for operations.
“Having enforceable rules doesn’t solve all the problems that exist because control and authority is fractured.” Thilly said. “That’s an organizational issue.”
POLITICAL BACKLASH
FERC has tried over the past two years to force utilities to join independent regional grid organizations and surrender control of their transmission lines. That effort prompted a huge political backlash from Southeast and Northwest states. Powerful utilities in the South that prize their transmission networks persuaded Republican congressional leaders to write a restriction into the bill that would bar FERC from proceeding with its strategy until 2007.
“From a policy standpoint, we wish that hadn’t been adopted. But it was essential to get the bill passed,” said Moler, executive vice president of Exelon Corp., the Chicago-based power company.
Senators from the Midwest and Northeast pushed back, winning a provision in the bill that would allow FERC to create regional transmission organizations voluntarily if utilities agree to join, according to people familiar with the bill.
Moler said she hopes that the legislation won’t penalize regions and companies that are trying to coordinate electricity transmission operations. “We’ll have to see,” she said.
“For the Midwest, the Mid-Atlantic and the Northeast, it is not the best outcome. We have so much experience that a voluntary plan doesn’t get the job done,” said former Michigan public service commissioner David Svanda.
Complying with grid rules on reliability could reduce utility profits, he said, and if FERC can’t require utilities to create effective regional groups, reliability could suffer.
“Each time there is an opportunity for confusion, you’ve introduced the potential for things to fly apart quickly, as they did on August 14,” Svanda said.
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