Grid Lock
The Great Blackout illuminated one thing: a system in chaos
As a federal task force tries to pinpoint precisely what caused the largest power blackout in North American history in mid-August, one fact has become glaringly clear. No one was able to wrest enough control of the tightly interwoven, antiquated electrical grid to stop the chain of events that halted business and disrupted life for 50 million people in eight states and Canada.
The shadow of blame has fallen on one financially troubled firm, FirstEnergy of Akron, Ohio, which owned the power plant and transmission lines where the troubles first surfaced. But that company insists--and authorities so far agree--that responsibility for the fast-moving outage could actually lie with any of the other 22 entities that share management of the myriad power lines that crisscross the Midwest. And if policymakers hope to avoid future blackouts, they will need to address long-deferred questions about the adequacy of the nation's electrical "grid," who commands this interstate power highway, and who pays for its improvement.
The Electric Power Research Institute, an industry consortium that focuses on utilities' technical issues, will release a report this week detailing how capital spending on electricity in the past decade has dropped to levels not seen since the Great Depression. The study, underway long before the blackout, says the strain of underfunding is most severe on power lines, where the nation is "trying to squeeze more and more out of an aging infrastructure that was not designed or built for" a market where electricity is traded over long distances among deregulated companies. But the money needed to build new power lines and to retrofit the old ones with up-to-date technology is not likely to materialize until a fierce political debate over who is obligated to make it work is resolved.
Not me. Christine Tezak, an energy analyst at Schwab Washington Research Group, notes that many new power plants have been built in recent years to serve a high-tech economy. "But once we have plugged all this stuff in, who has responsibility to make sure that we don't fry each other's wires?" she asks. "Because now, no one is responsible."
That became evident shortly after 4 p.m. on August 14, when the electric grid went dark from Detroit to New York. The North American Electric Reliability Council, an industry group formed after the 1965 blackout in the Northeast, soon traced the origins of the problem to Ohio. FirstEnergy's coal-fired plant in Eastlake, Ohio, stopped generating electricity about 2 p.m. Such a sudden loss of supply certainly could have made the system unstable; even on a moderate summer day, the air conditioners that dominate the electrical load at this time of year tend to demand more current when voltage drops. Soon after 3 p.m., excess current surging through three of FirstEnergy's power lines caused them to overheat, sag (in at least one case, falling into a tree), and go out of service. Each line that failed shifted power to other lines, causing them, in turn, to overheat. The stress spread to neighboring Michigan, to Ontario, and to New York.
Last week, observers were beginning to wonder why FirstEnergy didn't have reserve power, or didn't buy power quickly from other companies, to make up for the lost juice at Eastlake. Failing that, they say, FirstEnergy could have contained the damage by instituting rolling blackouts or cutting itself off from the rest of the grid--a move that would have left only Cleveland in the dark. FirstEnergy, however, says the blackout was "a very complex situation, far broader than the power-line outages we experienced on our system," and pointed to "unusual voltage and frequency fluctuations" that preceded the shutdown. Officials from the U.S. Department of Energy and Canada are examining some 10,000 discrete events in the computer logs, recorded telephone calls between power companies, and even the fly ash expelled from the smokestacks of the Eastlake plant. The most difficult question: With nearly two dozen companies operating the grid in the Midwest alone, which one could have prevented the power hemorrhage?
Some utilities and analysts say that the blackout underscores the need for regional, independent authorities to manage the flow of electricity and long-term improvements. Pennsylvania and New Jersey are believed to have largely escaped the blackout because their systems are managed by an outside authority, PJM Interconnection, that had mechanisms in place to isolate itself from the damage and put reserve power onto the grid. PJM can also order its members to upgrade their power lines and substations, a step many experts believe has led to greater reliability. The Federal Energy Regulatory Commission has been pushing for the grid to be turned over to independent regional operators. But the plan has faced strong opposition, particularly in the South and the Pacific Northwest, where firms are loath to give up running the show.
Of course, the battle over control is all about money. Transmission costs currently account for only 6 cents of every dollar that consumers pay for electricity. Edison Electric Institute, an industry group, estimates that $56 billion is needed over the next decade just to ensure that the grid can continue to handle the nation's insatiable appetite for power. The Electric Power Research Institute puts the figure at closer to $100 billion, citing the need for a high-tech grid that can better handle and regulate power flows automatically (story, Page 34). But why should the customers of just one utility pay for upgraded power lines when the customers of many other companies--some of them several states away--will also benefit?
Share the pain. FERC's plan is to let the regional authorities give the thumbs up to such projects, then spread around the costs. "If you have a really big service area and divide the cost among every person, you could have a really big project, and it could be a really small part of the bill," says Tezak, the Schwab analyst. But some utilities see problems with the regional scenario. They'd lose sway over their lines, they say, opening the door to competing firms in their regions. Even though by law they are supposed to allow all competitors to use their transmission lines equally, the regulations give them lots of leeway. In two recent cases, a FERC investigation concluded that customers overpaid for electricity because utilities didn't allow competitors onto the grid to sell their power. Cleco of Louisiana and Idaho Power were ordered to pay $2.1 million and $5.8 million, respectively, in refunds to customers.
But despite the financial advantage some utilities enjoy in ruling their portions of the grid, many are beginning to feel the pressure of trying to go it alone. In the current system, where decisions are made on a state-by-state basis, it isn't easy to gain approval for new transmission lines that people don't want in their backyards. An underwater transmission line linking New England and Long Island has remained dormant since its installation last year because of Connecticut's objections. (It was brought into service on an emergency basis when the blackout hit.) "People tend to agree we've got to do this, but if it's done where it begins to impact them, there's a resistance that we really have to face," says Jeff Sterba, CEO of PNM Resources of Albuquerque, N.M. PNM is working to upgrade power transmission into Santa Fe for the first time in 20 years. Utilities that want to build power lines would like to see either regional authorities or the feds empowered with backstop authority to site projects, an idea that doesn't exactly go over well with states or environmentalists.
These tough questions are now in the hands of congressional lawmakers, who have been engaged in a contentious debate over federal energy policy for the past two years. The immediate task when they return to session after Labor Day will be reconciling two very different energy bills passed by the House and Senate. President Bush has pledged to work with Congress to pass legislation to address the grid deficiencies, including making mandatory the existing voluntary reliability standards for companies that run the grid. "There ought to be serious consequences," Bush said last week, "if someone misuses the public trust."
But the White House hasn't made a decision on FERC's plan for regional control of the grid; some Senate Republicans want to slap a moratorium on the agency and put off the decision for another day. It's also uncertain whether lawmakers will be able to overcome the familiar stumbling blocks to passage, like drilling in the Arctic National Wildlife Refuge, which Democrats have vowed to defeat. It could be a moment ripe with opportunity for someone like Democratic presidential hopeful Sen. John Kerry, a prime opponent of ANWR drilling, who has in the past threatened to filibuster any proposal that allows it.
Glenn McCullough, chairman of the Tennessee Valley Authority, the federal power provider and grid operator across seven southern states, says that the blackout could break the logjam. "I believe it can bring diverse interests to the table and result in a sound regulatory agreement that can work for the good of this industry as well as for the American consumer," says McCullough. As the blackout occurred, McCullough said that his control room staff in Chattanooga watched the drop in voltage and ordered the large region's coal, nuclear, and hydroelectric utilities to power down to avoid overloads that would have cascaded further. It underscored the need to work together, because, he says, "we are all interconnected."
Who's the Boss?
North America's electric grid has three parts, but oversight, management, and operation are divided among many.
[Map is not available]
Eastern
109 operators
11 regions
Western
32 operators
5 regions
Texas
1 region
1 operator
[labels]
Canada
United States
Source: North American Electric Reliability Council
Rob Cady--USN&WR
With Carol Flake Chapman, Terence Samuel and Kenneth T. Walsh
This story appears in the September 1, 2003 print edition of U.S. News & World Report.