Electric Power Transmission Reliability Not
Keeping Pace with Conservation Efforts

By George F. McClure

The United States is doing well with energy conservation. Data for the most recent three years show that growth in electric energy demand has been only half the growth in Gross Domestic Product. But transmission reliability improvements have lagged behind. The result has been that the incidence of electric blackouts in the recent past has been higher than the historical trend in North America.

After the major 1965 northeastern blackout, the North American Electric Reliability Council (NERC), a voluntary industry group, was formed to provide guidelines to prevent a recurrence. Some 35 years later, the Council was criticized for having vague operating rules, and for lacking independence from the utilities it supervises.

Poor reliability has significant cost

The interconnected electric grid covering nine western states collapsed twice in the summer of 1996. In 1999, the northeast, including New York City and the Chicago financial district, experienced outages stemming from a heat wave and equipment failures.The well-publicized rolling blackouts in California extending from 2000 to 2001 had several causes, including flawed energy trading regulations, capped consumer prices, drought in the Pacific Northwest, and congestion in the distribution network. The direct costs to high-tech manufacturing firms in the Bay Area ran as high as $1 million-per-minute of lost production [www.epri.com]. The California blackouts resulted in more than $10 billion in long-term debt for taxpayers because the state had to guarantee energy purchases for its utilities, which were pushed to the brink of bankruptcy [http://archives.cnn.com]. This latest debt was on top of the $10 billion the state already owed for electricity obligations incurred in the 1970s and 1980s under the deregulation law [www.consumerwatchdog.org].

The Northeast Blackout of August 2003, the largest in North American history, shut down 62,000 MW of generation capacity, and cost businesses an estimated $13 billion in productivity. Some 50 million users were affected over several days in eight U.S. states and Ontario, Canada.

Blackouts preventable?

Initial speculation of terrorism as the cause of the August 2003 blackout proved groundless. Instead, that blackout has been blamed on poor practices. An interim joint U.S./Canada report deemed the event “entirely preventable” [www.ppa.org.fj]. Ultimately, the task force identified four causes behind the failure:

• inadequate system understanding
• inadequate situational awareness
• inadequate tree-trimming
• inadequate reliability coordinator diagnostic support

Critics have also argued that part of the reliability problem is energy deregulation itself, coupled with the end of guaranteed return on investment (ROI). Typical ROI for utilities has been in the 9 percent range, while 15 to 18 percent may be needed to stimulate the amount of investment required to sustain growth.

Energy generation returns a profit to the producer as the energy is sold. But it is not as clear how costs incurred in the energy transmission network are recovered. Lacking any incentive, the result has been a decline in transmission investment, and hence reliability. In the regulated era, utilities were good about information-sharing and network cooperation, but less so after deregulation.

To position themselves for deregulation, utility companies tended to reorganize and sell off potentially less profitable parts of the business. Mergers reduced the need for multiple engineering departments, so many seasoned engineers were encouraged to retire. In some cases, the new grads replacing them lacked in-depth knowledge of the systems for which they were responsible. And to increase value in units sold, some utilities reduced expenses by cutting payroll and lengthening right-of-way maintenance intervals. These factors have all contributed to the decline in grid reliability.

Vision for the future

The Electric Power Research Institute (EPRI), a non-profit consortium of utility companies focused on research and technology improvements, issued a plan in August 2003 for a $100 billion upgrade of the regional power grids, to make use of modern information technologies. The centerpiece is a “smart grid” that monitors itself and takes corrective action when required, alerting officials immediately when problems arise. Digital control of the power grid would yield an interactive power system that is merged with the communications network to provide real-time information and power exchange. Businesses and consumers would be able to make energy consumption decisions based on the availability of real-time pricing information [www.computerworld.co.nz].

Who pays?

The EPRI initiative has grown into the "Intelligrid," with an estimated implementation cost of $160 billion over 20 years, according to Wade Malcolm, EPRI vice president for power delivery and markets. The Intelligrid has eight or nine attributes that improve power delivery reliability and security. The $160 billion price tag — which would include development of needed technologies that do not yet exist — could be recovered through a 6 percent increase in power costs.

Total retail sales of electricity exceed $220 billion per year. In 2001, the U.S. economy lost about $120 billion in productivity because of poor power quality and poor reliability. The utilities believe that they should reap enough cost savings from deployment of innovative IT solutions to warrant the investment. But in a deregulated market, the low-cost seller — who is under no obligation to invest in upgrades to improve reliability — can still make the sale. Legislation would be required to mandate participation in a program like Intelligrid [www.construction.com].

IEEE-USA weighs in

In 2002, IEEE-USA adopted a position statement calling for the establishment of an Electric Power Reliability Organization. Noting with alarm the deterioration of the reliability of electric power, the position cited causes, including under-investment in needed infrastructure to meet growing customer demands, and called for legislation to strengthen NERC as a coordinating group overseeing the complete North American electric system (including elements located in Mexico and Canada) and operating under the force of law, not purely as a voluntary organization [www.ieeeusa.org].

To dig deeper

• A complete timeline for the August 2003 blackout is found at www.doe.gov/engine/doe/files/dynamic/
  1282003113351_BlackoutSummary.pdf

• IEEE Spectrum has Web-only coverage at www.spectrum.org

• The full report on the Northeast Blackout can be found at https://reports.energy.gov/BlackoutFinal-Web.pdf.

George F. McClure is chair of the IEEE-USA Communications Committee and a past chair of the IEEE Member Conduct Committee. He can be contacted at todaysengineer@ieee.org. Opinions expressed in this article are the author’s.