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-Caveat Lector-

Eric J. Lerner
What's wrong with the electric grid?
<http://www.tipmagazine.com/tip/INPHFA/vol-9/iss-5/p8.html>

The warnings were certainly there. In 1998, former
utility executive John Casazza predicted that "blackout
risks will be increased" if plans for deregulating
electric power went ahead. And the warnings continued to
be heard from other energy experts and planners.

So it could not have been a great surprise to the
electric-power industry when, on August 14, a blackout
that covered much of the Northeast United States
dramatically confirmed these warnings. Experts widely
agree that such failures of the power-transmission
system are a nearly unavoidable product of a collision
between the physics of the system and the economic rules
that now regulate it. To avoid future incidents, the
nation must either physically transform the system to
accommodate the new rules, or change the rules to better
mesh with the power grid's physical behavior.

Understanding the grid's problems starts with its
physical behavior. The vast system of electricity
generation, transmission, and distribution that covers
the United States and Canada is essentially a single
machine- by many measures, the world's biggest machine.
This single network is physically and administratively
subdivided into three "interconnects"- the Eastern,
covering the eastern two-thirds of the United States and
Canada; the Western, encompassing most of the rest of
the two countries; and the Electric Reliability Council
of Texas (ERCOT), covering most of Texas (Figure 1).
Within each interconnect, power flows through ac lines,
so all generators are tightly synchronized to the same
60-Hz cycle. The interconnects are joined to each other
by dc links, so the coupling is much looser among the
interconnects than within them. (The capacity of the
transmission lines between the interconnects is also far
less than the capacity of the links within them.)

>  Figure 2. Electric power does not travel just by the
>  shortest route from source to sink, but also by
>  parallel flow paths through other parts of the system
>  (a). Where the network jogs around large geographical
>  obstacles, such as the Rocky Mountains in the West or
>  the Great Lakes in the East, loop flows around the
>  obstacle are set up that can drive as much as 1 GW of
>  power in a circle, taking up transmission line
>  capacity without delivering power to consumers (b).

Prior to deregulation, which began in the 1990s,
regional and local electric utilities were regulated,
vertical monopolies. A single company controlled
electricity generation, transmission, and distribution
in a given geographical area. Each utility generally
maintained sufficient generation capacity to meet its
customers' needs, and long-distance energy shipments
were usually reserved for emergencies, such as
unexpected generation outages. In essence, the long-
range connections served as insurance against sudden
loss of power. The main exception was the net flows of
power out of the large hydropower generators in Quebec
and Ontario.

This limited use of long-distance connections aided
system reliability, because the physical complexities of
power transmission rise rapidly as distance and the
complexity of interconnections grow. Power in an
electric network does not travel along a set path, as
coal does, for example. When utility A agrees to send
electricity to utility B, utility A increases the amount
of power generated while utility B decreases production
or has an increased demand. The power then flows from
the "source" (A) to the "sink" (B) along all the paths
that can connect them. This means that changes in
generation and transmission at any point in the system
will change loads on generators and transmission lines
at every other point-often in ways not anticipated or
easily controlled (Figure 2).

To avoid system failures, the amount of power flowing
over each transmission line must remain below the line's
capacity. Exceeding capacity generates too much heat in
a line, which can cause the line to sag or break or can
create power-supply instability such as phase and
voltage fluctuations. Capacity limits vary, depending on
the length of the line and the transmission voltage
(Table 1). Longer lines have less capacity than shorter
ones.

In addition, for an ac power grid to remain stable, the
frequency and phase of all power generation units must
remain synchronous within narrow limits. A generator
that drops 2 Hz below 60 Hz will rapidly build up enough
heat in its bearings to destroy itself. So circuit
breakers trip a generator out of the system when the
frequency varies too much. But much smaller frequency
changes can indicate instability in the grid. In the
Eastern Interconnect, a 30-mHz drop in frequency reduces
power delivered by 1 GW.

If certain parts of the grid are carrying electricity at
near capacity, a small shift of power flows can trip
circuit breakers, which sends larger flows onto
neighboring lines to start a chain-reaction failure.
This happened on Nov. 10, 1965, when an incorrectly set
circuit breaker tripped and set off a blackout that
blanketed nearly the same area as the one in August.

After the 1965 blackout, the industry set up regional
reliability councils, coordinated by the North American
Electric Reliability Council, to set standards to
improve planning and cooperation among the utilities. A
single-contingency-loss standard was set up to keep the
system functioning if a single unit, such as a generator
or transition line, went out. Utilities built up spare
generation and transmission capacity to maintain a
safety margin.

In 1992, the economic rules governing the grid began to
change with passage of the Energy Policy Act. This law
empowered the Federal Energy Regulatory Commission
(FERC) to separate electric power generation from
transmission and distribution. Power deregulation-in
reality, a change in regulations-went slowly at first.
Not until 1998 were utilities, beginning in California,
compelled to sell off their generating capacity to
independent power producers, such as Enron and Dynergy.

>  Table 2. Prior to the implementation of Federal
>  Energy Regulatory Commission Order 888, which greatly
>  expanded electricity trading, the cost of
>  electricity, excluding fuel costs, was gradually
>  falling. However, after Order 888, and some retail
>  deregulation, prices increased by about 10%, costing
>  consumers $20 billion a year.

The new regulations envisioned trading electricity like
a commodity. Generating companies would sell their power
for the best price they could get, and utilities would
buy at the lowest price possible. For this concept to
work, it was imperative to compel utilities that owned
transmission lines to carry power from other companies'
generators in the same way as they carried their own,
even if the power went to a third party. FERC's Order
888 mandated the wheeling of electric power across
utility lines in 1996. But that order remained in
litigation until March 4, 2000, when the U.S. Supreme
Court validated it and it went into force.

In the four years between the issuance of Order 888 and
its full implementation, engineers began to warn that
the new rules ignored the physics of the grid. The new
policies " do not recognize the single-machine
characteristics of the electric-power network," Casazza
wrote in 1998. "The new rule balkanized control over the
single machine," he explains. "It is like having every
player in an orchestra use their own tunes."

In the view of Casazza and many other experts, the key
error in the new rules was to view electricity as a
commodity rather than as an essential service.
Commodities can be shipped from point A through line B
to point C, but power shifts affect the entire
singlemachine system. As a result, increased
longdistance trading of electric power would create
dangerous levels of congestion on transmission lines
where controllers did not expect them and could not deal
with them.

The problems would be compounded, engineers warned, as
independent power producers added new generating units
at essentially random locations determined by low labor
costs, lax local regulations, or tax incentives. If
generators were added far from the main consuming areas,
the total quantity of power flows would rapidly
increase, overloading transmission lines. " The system
was never designed to handle long-distance wheeling,"
notes Loren Toole, a transmission-system analyst at Los
Alamos National Laboratory.

At the same time, data needed to predict and react to
system stress-such as basic information on the quantity
of energy flows-began disappearing, treated by utilities
as competitive information and kept secret. "Starting in
1998, the utilities stopped reporting on blackout
statistics as well," says Ben Carreras of Oak Ridge
National Laboratory, so system reliability could no
longer be accurately assessed.

Finally, the separation into generation and transmission
companies resulted in an inadequate amount of reactive
power, which is current 90 deg out of phase with the
voltage. Reactive power is needed to maintain voltage,
and longer-distance transmission increases the need for
it. However, only generating companies can produce
reactive power, and with the new rules, they do not
benefit from it. In fact, reactive-power production
reduces the amount of deliverable power produced. So
transmission companies, under the new rules, cannot
require generating companies to produce enough reactive
power to stabilize voltages and increase system
stability.

The net result of the new rules was to more tightly
couple the system physically and stress it closer to
capacity, and at the same time, make control more
diffuse and less coordinated-a prescription, engineers
warned, for blackouts.

In March 2000, the warnings began to come true. Within a
month of the Supreme Court decision implementing Order
888, electricity trading skyrocketed, as did stresses on
the grid (Figure 3). One measure of stress is the number
of transmission loading relief procedures (TLRs)-events
that include relieving line loads by shifting power to
other lines. In May 2000, TLRs on the Eastern
Interconnect jumped to 6 times the level of May 1999.
Equally important, the frequency stability of the grid
rapidly deteriorated, with average hourly frequency
deviations from 60 Hz leaping from 1.3 mHz in May 1999,
to 4.9 mHz in May 2000, to 7.6 mHz by January 2001. As
predicted, the new trading had the effect of
overstressing and destabilizing the grid.

"Under the new system, the financial incentive was to
run things up to the limit of capacity," explains
Carreras. In fact, energy companies did more: they gamed
the system. Federal investigations later showed that
employees of Enron and other energy traders "knowingly
and intentionally" filed transmission schedules designed
to block competitors' access to the grid and to drive up
prices by creating artificial shortages. In California,
this behavior resulted in widespread blackouts, the
doubling and tripling of retail rates, and eventual
costs to ratepayers and taxpayers of more than $30
billion. In the more tightly regulated Eastern
Interconnect, retail prices rose less dramatically.

After a pause following Enron's collapse in 2001 and a
fall in electricity demand (partly due to recession and
partly to weather), energy trading resumed its frenzy in
2002 and 2003. Although power generation in 2003 has
increased only 3% above that in 2000, generation by
independent power producers, a rough measure of
wholesale trading, has doubled. System stress, as
measured by TLRs and frequency instability, has soared,
and with it, warnings by FERC and other groups.

>  Figure 3. After wholesale electricity trading began
>  in earnest following Federal Energy Regulatory
>  Commission's Order 888, stress on the transmission
>  grid jumped and continued to climb, as shown by the
>  transmission loading relief procedures (a) and the
>  monthly average frequency errors (b).

Major bank and investment institutions such as Morgan
Stanley and Citigroup stepped into the place of fallen
traders such as Enron and began buying up power plants.
But as more players have entered and trading margins
have narrowed, more trades are needed to pay off the
huge debts incurred in buying and building generators.
Revenues also have shrunk, because after the California
debacle, states have refused to substantially increase
the rates consumers pay. As their credit ratings and
stock prices fell, utility companies began to cut
personnel, training, maintenance, and research.
Nationwide, 150,000 utility jobs evaporated. "We have a
lot of utilities in deep financial trouble," says
Richard Bush, editor of Transmission and Distribution, a
trade magazine.

The August 14 blackout, although set off by specific
chance events, became the logical outcome of these
trends (Figure 4). Controllers in Ohio, where the
blackout started, were overextended, lacked vital data,
and failed to act appropriately on outages that occurred
more than an hour before the blackout. When energy
shifted from one transmission line to another,
overheating caused lines to sag into a tree. The
snowballing cascade of shunted power that rippled across
the Northeast in seconds would not have happened had the
grid not been operating so near to its transmission
capacity.

How to fix it

The conditions that caused the August 14th blackout
remain in place. In fact, the number of TLRs and the
extent of frequency instability remained high after
August 14 until September's cool weather reduced stress
on the grid. What can be done to prevent a repetition
next summer?

One widely supported answer is to change the grid
physically to accommodate the new trading patterns,
mainly by expanding transmission capacity. The DOE and
FERC, as well as organizations supported by the
utilities, such as the Electric Power Research Institute
and the Edison Electric Institute, advocate this
approach. In reports before and after the blackout, they
urged expanding transmission lines and easing
environmental rules that limit their construction. The
logic is simple: if increased energy trading causes
congestion and, thus, unreliability, expand capacity so
controllers can switch energy from line to line without
overloading.

Figure 4. Blackout sequence of events, August 14, 2003

1:58 p.m. The Eastlake, Ohio, generating plant shuts
down. The plant is owned by First Energy, a company that
had experienced extensive recent maintenance problems,
including a major nuclear-plant incident.

3:06 p.m. A First Energy 345-kV transmission line fails
south of Cleveland, Ohio.

3:17 p.m. Voltage dips temporarily on the Ohio portion
of the grid. Controllers take no action, but power
shifted by the first failure onto another power line
causes it to sag into a tree at 3:32 p.m., bringing it
offline as well. While Mid West ISO and First Energy
controllers try to understand the failures, they fail to
inform system controllers in nearby states.

3:41 and 3:46 p.m. Two breakers connecting First
Energy's grid with American Electric Power are tripped.

4:05 p.m. A sustained power surge on some Ohio lines
signals more trouble building.

4:09:02 p.m. Voltage sags deeply as Ohio draws 2 GW of
power from Michigan.

4:10:34 p.m. Many transmission lines trip out, first in
Michigan and then in Ohio, blocking the eastward flow of
power. Generators go down, creating a huge power
deficit. In seconds, power surges out of the East,
tripping East coast generators to protect them, and the
blackout is on.

(Orbital Imaging Corp; processing by NASA Goddard Space
Flight Center)

To pay the extensive costs, the utilities and the DOE
advocate increases in utility rates. "The people who
benefit from the system have to be part of the solution
here," Energy Secretary Spencer Abrams said during a
television interview. "That means the ratepayers are
going to have to contribute." The costs involved would
certainly be in the tens of billions of dollars. Thus,
deregulation would result in large cost increases to
consumers, not the savings once promised (Table 2).

But experts outside the utility industry point to
serious drawbacks in the build-more solution other than
increasing the cost of power. For one, it is almost
impossible to say what level of capacity will
accommodate the long-distance wholesale trading. The
data needed to judge that is now proprietary and
unavailable in detail. Even if made available to
planners, this data refers only to the present.
Transmission lines take years to build, but energy flows
can expand rapidly to fill new capacity, as demonstrated
by the jump in trading in the spring of 2000. New lines
could be filled by new trades as fast as they go up.

The solution advocated by deregulation critics would
revise the rules to put them back into accord with the
grid physics. " The system is not outdated, it is just
misused," says Casazza. "We should look hard at the new
rules, see what is good for the system as a whole, and
throw out the rest." Some changes could be made before
next summer, and at no cost to ratepayers. For one
thing, FERC or Congress could rescind Order 888 and
reduce the long-distance energy flows that stress the
system. Second, the data on energy flows and blackouts
could again be made public so that planners would know
what power flows are occurring and the reliability
records of the utilities. Other changes, such as
rehiring thousands of workers to upgrade maintenance,
would take longer and might require rewriting
regulations and undoing more of the 1992 Energy Act.

These changes also would have costs, but they would be
borne by the shareholders and creditors of the banks and
energy companies who bet so heavily on energy trading.
With cash flows dwindling and debt levels high, many of
these companies or their subsidiaries might face
bankruptcy if energy trading is curtailed. The decision
will ultimately fall to Congress, where hearings are
scheduled for the fall. However the decision turns out,
what is nearly certain is that until fixed, the
disconnect between the grid's economics and physics will
cause more blackouts in the future.

Further reading

Casazza, J. A. Blackouts: Is the Risk Increasing?
Electrical World 1998, 212 (4), 62-64.

Casazza, J. A.; Delea, F. Understanding Electric Power
Systems: An Overview of the Technology and the
Marketplace; Wiley: New York, 2003; 300 pp.
Hale, D. R. Transmission Data and Analysis: How Loose is
the Connection?; available here.

Loose, V. W.; Dowell, L. J. Economic and Engineering
Constraints on the Restructuring of the Electric Power
Industry; available here.

Mountford, J. D.; Austria, R. R. Power Technologies Inc.
Keeping the lights on! IEEE Spectrum 1999, 36 (6),
34-39.

National Transmission Grid Study Report; available here.
Tucker, R. J. Facilitating Infrastructure Development: A
Critical Role for Electric Restructuring. Presented at
the National Energy Modeling System/Annual Energy
Outlook Conference, Washington, DC, March 10, 2003;
available here.


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www.ctrl.org
DECLARATION & DISCLAIMER
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CTRL is a discussion & informational exchange list. Proselytizing propagandic
screeds are unwelcomed. Substance—not soap-boxing—please!   These are
sordid matters and 'conspiracy theory'—with its many half-truths, mis-
directions and outright frauds—is used politically by different groups with
major and minor effects spread throughout the spectrum of time and thought.
That being said, CTRLgives no endorsement to the validity of posts, and
always suggests to readers; be wary of what you read. CTRL gives no
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Let us please be civil and as always, Caveat Lector.
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