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Blackout Special

John Hanger's picture
Acting Secretary Pennsylvania Department of Environmental Protection

John Hanger is the Acting Secretary of the Pennsylvania Department of Environmental Protection. As Acting Secretary, Mr. Hanger manages an agency of more than 3,000 employees with a mission to...

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  • Sep 3, 2003
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Thanks to last Thursday's blackout, a political circus has arrived in town. This circus is short on animal acts but long on clowns. Politicians are grandstanding, and the blackout is being used to advance all manner of causes.

Sean Hannity of Fox News tells us that the blackout has something to do with oil drilling policy in Alaska. As for that nonsense, one can only say that the mind of Sean Hannity frequently blacks out. And he has company.

The Wall Street Journal yesterday published a column by Jerry Taylor of the CATO Institute, which stated that owners of the grid - which include the federal government, municipalities, rural cooperatives and for-profit utilities - should be allowed to charge others whatever they want for using their monopoly transmission and distribution systems.

End price regulation of this natural monopoly, plus stop wind power, and all will be well is the predictably ridiculous CATO contribution to our national understanding of the blackout. But if the entire country followed this advice, the California power prices of 2000 to 2001 would look like bargains.

Not to be outdone, on Saturday Robert Kuttner wrote in the New York Times that the blackout was caused by "deregulation." Of course Kuttner ignores inconvenient facts that contradict his left-wing orthodoxy.

He doesn't tell his readers that the transmission and distribution systems - where the fault of the blackout is thought to lie - remain fully regulated monopolies where state and federal regulators oversee reliability and have the power and responsibility to provide financial recovery of any needed investment.

He forgets that large sections of the grid are owned and operated by federal and municipal government agencies as well as non-profit rural cooperatives.

Finally, Kuttner neglects to mention that the main barrier to building more transmission capacity is zoning and siting regulation, as well as limits on the power of eminent domain, all of which serve vital purposes in a democracy.

In fact, electricity "deregulation" has moved only the generation part of electricity to competitive pricing. As a result, most regions of the country have a surplus of generation. So the blackout on Thursday was not caused by too little electricity coming from power plants.

All this commentary is entertaining but not at all enlightening.

Thursday's serious events must be thoroughly investigated by industry and regulatory professionals. The North American Reliability Council and relevant public agencies must establish the true facts of what happened, when it happened, and why. The root cause of this fiasco must be clearly identified. Investigators must also focus on what information was communicated when, and to whom.

Unfortunately, investigators must be alert for buck-passing and cover-ups given the huge stakes for all involved.

And of all the unknowns right now, one of the most urgent puzzles that must be solved is why measures designed to limit the initial disturbance to a small area failed to work. We suspect that a fundamental breakdown in communication between multiple control areas partly explains the cascading blackout.

In addition, the Federal Energy Regulatory Commission and state public utility commissions must ask basic questions about transmission and distribution expenditures. What are the trends? Are current levels appropriate? Is the current reliability standard - a system of generation and transmission engineered so that blackouts have only one day in 10 years probability of occurring - in danger of eroding?

Every public utility regulatory agency should also collect expenditure data annually. For example, in Pennsylvania, total utility expenditures to maintain transmission and distribution systems were stable between 1996 and 2000, according to data made available by the Pennsylvania Public Utility Commission. Additionally, over the last six years, $760 million has been spent to upgrade transmission within PJM.

State governments and agencies need to support larger regional organizations like PJM to operate the grid. Indeed, PJM was the wall that stopped the blackout - perhaps preventing it from cascading all the way down the eastern seaboard to Florida. Having all information under one roof and the buck stopping on one desk improves reliability. When it comes to electricity, no state can protect itself. Smart states welcome a strong federal role.

JUST GET MORE LINES, RIGHT?
While there is a pressing need to find the cause, there's also the danger in this superheated political environment of getting carried away and overreacting. Indeed, even before anyone knows the basic facts about what started the blackout and why it spread, many people are already calling for a whole lot of money to be thrown at expanding and upgrading transmission.

To be clear, we're not saying that targeted investment in transmission upgrades isn't needed. In certain areas of the country like Long Island and Boston, congestion on the transmission system is both a major reliability risk and economic problem. Some additional investment in transmission is needed, but we're not ready to sign onto a massive, almost inevitably wasteful, dumping of money into transmission.

Where there are unacceptable levels of transmission congestion, owners and operators of the grid should find the least costly means of fixing those problems. Fortunately, there are ways to address transmission congestion, besides just building more transmission.

Building more generation closer to where electricity is needed will help solve the problem by not having to ship power across long distances. Distributed generation from smaller sources like microturbines, fuel cells, and solar technologies can also play a role. In fact, with the development of on-site generation technology, the grid itself may become less important over the next 20 years.

Energy conservation has always been much more than just a personal virtue, and it too has a role to play in addressing grid congestion and threats to reliability.

Increasing energy conservation to reduce demands, especially at peak times, could be the lowest-cost response. Stricter energy efficiency appliance standards, especially for air conditioners, would be very helpful, but the Bush administration has unfortunately opposed the strongest energy efficient air conditioning standard. Consumers should also have the metering available which would allow them to reap savings by reducing their consumption at peak demand times and to be paid spot market prices for the electricity they didn't use.

OL' RELIABLE
Lost in the hustle to turn the blackout to the advantage of a myriad causes or interests is the fact that the electric grid is engineered so that it is reliable enough to fail only one day in every ten years. Who or what else do you know that can say that?

At this point, there is little evidence that this long-standing reliability standard is not being met. Pennsylvania's last rolling blackout occurred January 19, 1994. New York City's last major blackout took place in 1977. And the last large blackout in the Northeast due to grid failure happened 38 years ago in 1965.

In fact, given the reliability standard of one day in 10 years, it wouldn't be surprising if a major grid failure occurred somewhere in the country every year or so. But most of the time, the system typically operates at not much more than 50 percent of its capacity. The grid currently only gets stretched to its limits about 100 hours per year. However, if investment in any part of the industry is too little to maintain the reliability standard as a whole, steps must be taken to end any erosion.

Yet despite a system with a good reliability record, many commentators want to know what can be done to make sure that nothing like Thursday's blackout ever, ever happens again. The answer is probably nothing.

Reliability of the grid could be increased so that the probability of failure is reduced to one day in 20 years, or even 1 day in 100 years. But electricity bills would have to skyrocket as a great deal more would have to be spent on transmission, generation, distributed generation, and demand reduction to achieve those goals.

Before blindly embarking on such a course, society needs to calm down and answer the question, how much reliability is enough? Whatever the answer, overreacting and grandstanding are not the solutions, and spending money to build more transmission is just one among several options.

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Jack Sprat's picture
Jack Sprat on Sep 2, 2003
John and Peter,

There have been hundreds of power engineers who tried to warn the industry, Congress and FERC that deregulation was leading to disaster as it was formulated. The engineers were ignored and often told to shut up or be fired. In frustration I wrote a book in an attempt to educate the American public. In the book "Power to the People" I predicted a wide-area blackout on the east coast before 2005 due to over stressing of the transmission system by deregulation. It took only two years from the publication date for the August 14 blackout to come to pass.

Now the powers will stack the deck with politically correct investigators to say that transmission is problem not electric power deregulation. Technically, they will be correct in saying that transmission failure was the cause of the blackout, but that's like saying that no one dies of aids, that they die of some kind of infection.

Deregulation was an ill-conceived plan that, as formulated, totally ignored the design of the transmission system. The political powers and FERC were warned but they chose to turn a blind eye to the coming problems.

Now the coverup begins.

I retired September 1, 2003 after 30 years as a professional engineer with the Federal Energy Regulatory Commission (FERC) and its predecessor the Federal Power Commission (FPC). I retired so that I might freely speak out against stupidity in the marketplace that masquerades as power engineering.

Jack Duckworth, CEO Expert Systems Programs and Consulting, Inc. and author of "Power to the People, Electric Power Deregulation, an Expose."

Ravinder Singh's picture
Ravinder Singh on Sep 9, 2003
Dear John and Peter, You were on track mostly but off track in the last few paragrphs. It is possible to save $1000b worth energy under electricity account in USA and $100b in Canada through innovative projects and technologies. I have worked on energy technologies for 28 years. I have written to Joint Canada-US Committee also. Different pressure groups ensure all the good ideas are defeated. Fuel cost in USA is 1cent to 2 cent only but consumers pay around 7/10 cents. Bulk consumers who have resources to generate own electricity are charged much less compared to domestic and commercial consumers. Since electricity can't be imported from China or India or Saudi Arabia people in USA are charged max. among nations that have own fuel sources.----Ravinder Singh, ravindersinghy77@yahoo.com

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