




		Does the August blackout mean there is a national ‘super grid’ in our future?

		Some would like to think so, but many say a stronger emphasis on technology, faster communications and control and regional consolidation is more likely.

		By Theo Mullen
		Advent of a national “super grid” growing out of the August 14 blackout across much of the Midwest and Northeast is not likely, regional transmission operators (RTOs) and others involved in the industry suggest. Insiders cite technical and political barriers that will likely be impossible to overcome. What is more likely, the industry says, is more robust regional transmission organizations (RTOs) managing electrical systems over broad geographic areas with a high degree of regional cooperation with nearby entities. Also likely, grow in energy storage, alternative energy, and easier approvals for transmission projects. Most agree large interconnected electrical systems are inherently more stable than small islands, but they also tend to agree there is a point at which making a large system larger provides no additional benefit. Strong RTOs can foster compatible technology, operating procedures, maintenance standards and outage coordination, and it can also provide a seamless market structure that allows for easy, and inexpensive access to the grid and generating resources. “We also support a regional market monitoring system that can see and analyze data across the same broad geographic region,” said officials at the California ISO, which is awaiting approval from the Federal Energy Regulatory Commission (FERC) to become a RTO. However, unlike other areas of the country, CalISO is running the regional grid, said CalISO CEO Terry Winter. At storm’s center Being able to see and analyze accurate data within the transmission system might have helped avoid the August 14 blackout, suggests James Torgerson, president and CEO of the Midwest ISO (MISO), which oversees the reliability of wholesale power transmission in all or parts of 15 states and the Canadian province of Manitoba. From MISO’s control room in Carmel, Indiana, Torgerson and his staff watched the blackout unfold from its beginning, when several small Cleveland-area line failures occurred in the service territory of FirstEnergy Corp., a MISO member. Torgerson watched as the well-documented blackout spread across 23 loosely controlled areas within MISO and then into the Northeast and parts of Canada (Indiana was not affected). Ultimately, some 50 million people lost power. Torgerson blamed outdated technology for exacerbating the outage. MISO does not directly move power, its members do. MISO is currently only a facilitator and will not obtain significant control until March 2004. Then, said Torgerson, MISO will begin coordination of energy trading between utilities. That increased authority is critical, noted Standard & Poor’s in a new analysis – Will the Lights Go Out on the Regional Electricity Transmission Organizations?. MISO, currently, "is responsible for regional system reliability, it is not the control area operator for the region, and thus lacks the ability to control key operations of the transmission grid, especially when the system is stressed." MISO members receive grid control recommendations from the ISO, but whether to follow them or not is optional, not a requirement, said S&P, like Platts T&D, is a unit of The McGraw-Hill Companies. In March, however, MISO –which is calling for $1.32 billion in grid upgrades over the next five years-- will still not be the control area operator, nor will it be when it and PJM complete development of a common market by October 2004. "The fact that PJM will have direct control over its system while MISO will not, presents interesting challenges," said S&P. (In response to the blackout, S&P put the credit ratings of Akron, Ohio’s FirstEnergy on its CreditWatch list "with negative implications.") PJM Interconnection, the New York Independent System Operator, and the Independent System Operator New England all operate centralized markets and run real-time communication with system functions. In the meantime, Torgerson and MISO control room staff are on the telephone with members. But telephone communication is slow when dealing with electricity, which travels at the speed of light. Torgerson said MISO –and all other RTOs/ISOs—desperately faster modes of communication with members when system trouble is identified. "Today, we just talk to them, and it's not quite as efficient," he said. Mandatory rules, tough penalties Supergrid or not, FERC commissioner William Massey said in a conference with reporters and the industry that: “I think the episode (the blackout) is enough for all of us to conclude that we need mandatory rules for reliability of the grid, and we need very tough penalties for violators.” Lynne Church, executive director of the Electric Power Supply Association agreed: ”We need tough, enforceable reliability standards. We need independent operators of regional grids whose jobs are to prevent the disruptions that occurred last week from happening. And until we go ahead and do that, this continuing regulatory and legislative uncertainty is only going to exacerbate the system.” “Congress has a decision to make, whether it's going to be part of the solution or part of the problem,” said Church. If there's one thing that's clear (from the blackout, it) is that the electricity grid does not respect political state boundaries. It is interstate; indeed, it is intercountry. And those who would argue that states ought to control that portion of the grid within their own states, I think are ignoring reality.” SMD. Will it go away? But the blackout will likely retard FERC’s push for a standard market design, said Leonard Hyman, senior associate with consultant R.J. Rudden Associates. "I don't think anyone cares about it now" because "it's not an issue that has anything to do with reliability," Hyman said of the FERC proposal, which calls for uniform wholesale power market rules administered by RTOs. "I don't know if it will go away" altogether if congressional opposition continues, but it definitely will have less of a role than FERC originally envisioned, Hyman said. But because the blackout covered five areas overseen by RTOs or independent system operators (ISO), it "may close down the ISO movement for a while," Hyman said. The outage also may blunt any wholesale or retail restructuring movement because it gave opponents of restructuring an opportunity to blame deregulation for the collapse of the grid, Hyman said. The restructuring movement may “stop wherever we are now,” Hyman said. Hyman also suggested the outage could prompt federal lawmakers to include federal siting authority for new transmission lines in an energy bill, as suggested by FERC Commissioner William Massey and others. When the blackout hit, “everyone jumped on construction, about how we aren’t spending enough money, but we haven’t spent enough money on the system for years and the ongoing cost of the general unreliability of the system is about $40 billion annually, just in the nation’s industrial sector,” Hyman said. Hyman said "more capital spending is needed" to make up for the lack of investments over the past several years. He estimated that an additional $2.5-billion a year in transmission investments is needed and about $5-billion per year in distribution investments. Compared with the capital spending done by utilities on a regular basis, "adding another $7.5-billion in spending is not going to break the bank," he said. Bush wants a “super highway” The Bush administration apparently plans to a three-year freeze on FERC’s plan to create RTOs, which would control electricity flow in their regions, be responsible for upgrading the transmission system and pull authority form both state regulators and electric utilities. But Bush has publicly suggested he wants something of an electricity “super highway,” something the current grid and its control mechanisms cannot now manage. The grid is now largely operated and regulated on a state-by-state basis The blackout clearly demonstrates the need for a new national energy policy, said. U.S. Senator Pete Domenici (R-New Mexico), the chairman of the Energy and Natural Resources Committee. “This outage clearly demonstrates how close the nation is to its energy production and distribution limit." ERCOT – WestConnect: Emphasis on technology, consolidation There will not likely be a “super grid,” but a new emphasis on technology, providing better, faster switching, said Sam Jones, chief operating officer of the Electric Reliability Council of Texas (ERCOT). And ERCOT, witch is only lightly connected to regions outside of Texas will be making no effort to establish new ones, said Jones. Instead, ERCOT is beefing up its own system, with plans for 500 circuit miles of new transmission. “At least that is the amount currently under consideration,” noted Jones. “There is definitely a push on for badly needed transmission,” he said. WestConnect (formerly Desert STAR) project manager Charles Reinhold anticipates the blackout will lead to consolidation within the transmission infrastructure of the Rocky Mountains, the home of the proposed entity. WestConnect was set up to become a RTO and provide open grid access in a region that is expected to encompass Arizona, New Mexico, Colorado and portions of eastern Wyoming and western Texas. But WestConnect will be functional “no earlier than 2007,” said Reinhold, “and then only have limited functionality until 2010.” And there is no telling what the grid will actually look like, he said, adding “there are some problems finding ways to get the transmission lines built and determining who pays.” A for-profit national grid? Still, others, Richard J. Rudden, CEO of R.J. Rudden Associates, Inc. for one, argue for a nationwide, for-profit grid that is truly interconnected, and managed under competent, appropriately funded, federal regulatory authority. Rudden suggest FERC as the regulatory authority, “at least it would put someone in charge.” But Rudden acknowledges huge hurdles in the way of significant change: Low-cost regions do not want interconnecting grids that enable companies in those regions to sell low-cost power out of region into higher cost markets; State regulatory commissions do not want to cede regulatory authority over transmission assets; Other factions do not want increased federal control over the siting and certification of transmission lines; Nor do they want the possibility of enhanced federal rights of eminent domain, and; Investor-owned utilities do not want to be owners of assets over which someone else has control. But Rudden is not altogether optimistic about the chances for a nationwide grid. Significant regulatory agency reform is needed, as is institutional change, but “lawmakers will most likely go for the least efficient, most conventional solution,” he said. Industry consultant Robert Blohm suggests the National Energy Reliability Council (NERC) be given the authority and the power to make the grid system reliable, as the agency itself has suggested. “Right now NERC has no power,” said Blohm. “When NERC was a gentleman’s club there was pressure among the members and everyone cooperated. NERC is still a club, but the members are not gentlemen anymore –now they are fighting adolescents.” Blohm’s point was not lost on the agency. Said NERC CEO Michehl Gent in a telephone press conference with the media: "I personally am embarrassed and upset (by the blackout). This was never supposed to happen."

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