Power Grid Still Vulnerable to Blackouts
By J.R. Pegg
WASHINGTON, DC, August 2, 2004 (ENS) - Almost one year after the worst blackout in U.S. history, consumer advocates say the federal government and the power industry have failed to address the problems that caused the massive power outage on August 14, 2003.
The lack of action has left the system vulnerable to future failures and threatens the affordability of electricity, according to a report released Friday by the National Association of State Public Interest Research Groups (PIRGs).
"There is still a lack of accountability and lack of long term planning," said Tony Dutzik, primary author of the report and a policy analyst with the association. "Things are likely to get worse before they get better."
The report largely blames deregulation of the electricity markets for the troubles that caused last year's blackout, which left some 50 million people across eight U.S. states from Michigan to New York and the Canadian province of Ontario in the dark.
Power was not restored to some parts of the United States for four days and the blackout cost the two nations as much as $10 billion combined.
A joint U.S./Canadian Task Force determined three high-voltage transmission lines operated by FirstEnergy Corporation in Ohio short-circuited and went out of service when they came into contact with trees that were too close to the lines.
A litany of operator, system and regulatory failures allowed that event to cascade into the massive and unprecedented power outage.
In the wake of the blackout, there was no shortage of lawmakers calling for action.
But even the one change agreed to by Republicans, Democrats, industry, consumer advocacy and environmental groups - the need for federally mandated transmission reliability rules - has not been enacted.
The transmission reliability rules were also the primary recommendation by the task force, and they are currently part of a comprehensive energy bill that has twice been rejected by the Senate.
Republican leaders in the Congress have balked at attempts to pass the standards as a separate bill - an approach favored by Democrats who say the energy bill is bloated with subsidies for oil, gas and nuclear industries.
"Everyone agrees that these rules are a good thing but they are being held hostage to an energy bill that we hope will never move," said Anna Aurilio, legislative director for U.S. PIRG. "Instead of focusing on protecting consumers and increasing reliability the Bush administration and the Congress continue to promote a disastrous energy bill."
The PIRG report recommends policymakers enact the transmission reliability standards, tighten regulation of the electricity market, and encourage greater energy efficiency and more renewable energy production.
It says consumers have not reaped the benefits of electric utility restructuring and deregulation, which supporters tout as a means to deliver reliable electricity at lower cost through competition.
Dutzik acknowledged that electricity prices for residential consumers have gone down over the past decade, but he said declines have been in line with long term trends.
Price decreases for consumers have been largely due to lower fuel costs and mandatory rate caps, rather than competition and retail choice, according to the report, an explanation underlined by recent shifts in consumer costs.
Real rates for consumers have risen "on average in two of the last three years," Dutzik said, "and reliability concerns have worsened."
The U.S. transmission and delivery system is a complex network containing millions of miles of wire and millions of transformers, switches, protection devices, meters, insulators, and poles. The PIRG report notes that average annual number of major transmission system disturbances has approximately doubled since the onset of electric utility restructuring in the early 1990s.
Industry groups contend deregulation is still in its early stages and turning back would unsettle the system and harm consumers.
The report's claim that the grid is increasingly less reliable is countered by the Edison Electric Institute (EEI), which says the industry and regulators are "taking aggressive actions" to strengthen reliability.
According to the EEI, utilities are working with regulators to audit the readiness of all reliability coordinators and systems, and the 20 highest priority audits were completed by the end of June.
Another 30 will be completed by years' end, EEI says, and the industry is working on tougher overall reliability standards.
The North American Electric Reliability Council (NERC) now requires public disclosure of all violations of NERC standards rather than disclosure of only major or “high priority” violations.
In April, the NERC Board approved a set of templates for measuring the system performance necessary to comply with existing NERC standards on major reliability issues.
NERC also says it is working with the industry to develop a single set of measurable reliability standards to replace its existing operating policies and planning standards. The NERC Board is working to have these new standards ready to adopt by February 2005.
To deal with the issue of trees touching power lines, NERC, the Federal Energy Regulatory Commission (FERC), and the electric utility industry are working together to establish vegetation management practices and a requirement to report vegetation related outages for high-voltage transmission lines.
But Dutzik of PIRG says the electricity picture is not likely to improve for consumers, who face higher oil and natural gas prices, cuts in energy efficiency programs and the costs of deferred maintenance on the pwoer grid.
Increased incentives for the development of greater energy efficiency and renewable energy production would reduce strain on the grid and hedge against fuel price volatility, the report says.
But there is also the issue of the grid itself. Few would contest that the nation is asking its aging transmission infrastructure to do a job it was not designed to carry out.
Much of the nation's transmission system was built to move electricity from massive utilities to local customers, but the grid now handles massive power transmissions that zip across the nation.
This is a lucrative business for utilities, but some argue it is putting undue pressure on the transmission infrastructure.
Deregulation at the state level - mandated by a 1992 federal energy bill - means utilities are no longer required to reinvest ratepayer money into the transmission system.
The North American Electric Reliability Council says utilities spent some $300 million less on upgrades and maintenance to the nation's transmission system in 2000 than they did in 1990 and now have less people to carry out such projects.
The need to upgrade the transmission system is one reason Republicans and the administration say the reliability rules should be part of a broader energy package.
But consumer advocates are wary of providing financial incentives for utilities and others to modernize the nation's power grid as they believe the costs will ultimately fall on ratepayers.
The PIRG report urges policymakers to put the interests of consumers and the public at the center of the management and regulation of the electric system.
In addition to the approval of federal reliability rules, the report recommends states rein in retail deregulation and increase regulatory authority over the industry.
"The system is adrift and to restore direction we need a clear vision of where the industry should go and how we are going to get there," Dutzik told reporters on Friday. "It is time for states to end industry's self-regulation."
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