More big blackouts likely, experts agree
freep.com
February 13, 2004
BY BRAD FOSS
ASSOCIATED PRESS
Six months after the nation's worst blackout, experts say the electric grid is still vulnerable to widespread outages because many of the problems that contributed to the massive failure have not been resolved.
"Without significant investment in the transmission system, we're all going to face another blackout. It's inevitable," according to Jonathan Smidt, an associate in the energy group of Kohlberg Kravis Roberts & Co., a private equity firm.
Among the few tangible steps taken to strengthen the grid, according to several experts, are the intense scrutiny of the root causes and better intra-regional communication between power providers and grid operators.
However, a repeat of the havoc wreaked on Aug. 14, when outages in Ohio rapidly spread through southeast Michigan, six other states and Canada, remains plausible so long as the industry remains polarized by regional interests and competing ideas about market design, both of which inhibit cooperation, said Lawrence Makovich, senior director at Cambridge Energy Research Associates.
Stalled energy legislation, which is being attached to a massive transportation bill now before the Senate, is intended to clear up some of these issues, but Makovich said it could still take the industry several years to make the requisite changes.
"Setting the goals is only half the battle," he said, adding that one of the stickiest issues will be determining who picks up the tab for upgrading the power lines and computer networks that are the technological backbone of the grid.
Nora Brownell, a commissioner at the Federal Energy Regulatory Commission, said power providers need not wait for an energy bill to be passed before taking action.
New hardware and software, better employee training and aggressive vegetation management "could be implemented today" and would be useful regardless of what types of new federal rules are enacted, she said.
To spur investment in new transmission, experts argue, utilities need to be able to pass along more of the costs to consumers. And some say power providers should be allowed performance-based rewards for reliability.
It remains unclear whether the enforcement of reliability standards will be in the hands of the government or the industry.
"We've been grappling with the issue of how to maintain reliability as the market evolves," said Eugene McGrath, chairman and chief executive of Consolidated Edison Inc.
If there's any silver lining in the events of Aug. 14, McGrath said, it is that the areas of vulnerability are better known. That, in itself, reduces the risk of another cascading blackout, he said.
Originally built to handle the flow of electricity from monopolistic utilities serving a local customer base, the nation's power grid has been expanded over the decades to handle power transactions that crisscross the continent, giving generators the opportunity to sell their juice for the highest possible price.
Moreover, the power industry is only partially deregulated, with producers selling electricity in robust wholesale markets and most utilities receiving a fixed rate of return for the costs of transmission and distribution. That has led to significant investments in generation, where the profit potential is highest, while corporate spending on the grid has lagged.
And because the grid has been interconnected piece by piece over decades, Makovich said there are many loose ends, particularly in the Midwest, where power providers rely on different grid operators -- a source of confusion on Aug. 14, according to the findings of a binational commission investigating the event. |
