August 27, 2008
Summer days will soon give way to brisk autumn nights. But the nation cannot forget the often oppressive heat and the subsequent strains it places on utility systems.
Five years ago the country suffered its worst blackout ever. A sagging transmission line in Ohio disrupted and then rapidly tripped off the power in large swaths of Midwest, Northeast and parts of Canada. All told, 50 million people went without electricity and some for many days. With the collective economic toll in the billions, national policymakers set out to minimize the possibility of such an occurrence ever again.
Have they succeeded? The North American Electric Reliability Corp., or NERC, says that the reliability standards have come a long way since that dark day in 2003 but that it remains concerned with whether the investment in infrastructure will keep up with the demand for power. Today, utility companies are required to comply with mandatory rules while NERC is allowed to assess hefty penalties for those that do not.
"With the support and oversight of its stakeholders in industry and government, NERC has worked to fundamentally change the situation that allowed this catastrophic event to occur by developing mandatory reliability standards, enforcing zero-tolerance policies, leading extensive reviews of electric system components, and developing new reliability tools," says NERC Chair Rick Sergel. "As a result of these efforts, I can confidently say that the events that led to the 2003 blackout are now much less likely to recur."
Standards relate to the planning and operation of the bulk power system, and cover areas such as balancing customer demand with generation supplies, emergency operations, cyber security, vegetation management and disturbance reporting. More than 1,400 entities that carry out functions necessary to ensure a reliable bulk power system -- power plants, transmission lines and substations -- must now comply. NERC, along with industry trade groups, have been working with those enterprises to make sure they know what it is required of them.
Per the 2005 Energy Act, the first step toward building a modern infrastructure is the establishment of a so-called Electric Reliability Organization. That group seeks to ensure that all entities comply with the new reliability standards. It also serves to mediate all disputes in an expeditious manner. Corrective actions can be ordered and subsequent fines of up to $1 million a day can be imposed.
Beyond that, NERC has worked with the Department of Energy and stakeholders to support the application of next generation grid monitoring technology. Modern devices are allowing transmission system operators to better visualize the status of the grid in near real-time and address issues as they arise. As lines get overloaded, they can re-route the power to other lines and thus avert congestion.
Ongoing Effort
The effort to increase reliability and encourage investment in transmission is a work in progress. NERC is still concerned that the country is not investing enough in infrastructure to meet the expected demand in electricity. Improvements have occurred in some regions. But in other areas the problems are real and could eventually affect their local economies.
NERC says that California, the Midwest, New England, the Rocky Mountain States and the Southwest are most at risk. The matter is exacerbated because of the continued high level of dependence on natural gas in some of these areas, particularly the Northeast and Southern California. Unless those regions diversify their fuel sources and generation capacity, their difficulties are only going to deepen.
The nation will need an additional 141,000 megawatts of electricity by 2015 to accommodate a 19 percent increase by then, says NERC. But only 57,000 megawatts are planned. Meanwhile, the total number of transmission miles is projected to increase by 8.8 percent, or 14,500 circuit miles in the United States over the next 10 years. But NERC cautions that more investment is necessary as each peak season puts increasing strains on the network and especially in those regions of the country that are already experiencing the most congestion.
"Writing good rules takes time and we need a better idea of who bears the risks and who bears the costs," says Robert Stoddard, a vice president in CRA International's Energy and Environment Practice. "Certainly, at this point, we need to get back into the saddle addressing reliability."
It may have been a hard lesson but public officials now understand that capacity requirements and demand must keep pace with one another. The law, in fact, now streamlines high priority transmission projects. Investors now have more assurances, leading Fitch Ratings Service to predict spending on transmission to rise to $31.5 billion by 2009. That's 60 percent more than the last three years.
Ensuring the free flow of electricity takes a multi-pronged approach. Motivating utilities to invest is one aspect while streamlining the permitting process is another. And now, utilities and regulators are moving from a voluntary compliance system to a mandatory structure with keen oversight.
"The good news is that the technology to better manage risk exists today and can be implemented by utilities to avoid a repeat of the 2003 blackout," says Adam Rousselle, president of Utility Risk Management Corp. "There's a vested interest in it for all of us; from consumers and businesses, to the utilities and government."
The summer of 2008 may be fading away, but August 2003 will not likely be forgotten. It's not just ordinary citizens. It's also policymakers, who had long relegated transmission upgrades to the backburner. Now things have changed. Reliability has become a top national priority in the hopes of preventing another massive blackout.
More information is available from Energy Central:
Respond to the editor.
Ken Silverstein EnergyBiz Insider Editor-in-Chief
Read Ken's Blog
