US government unable to assess reliability of power grid: EIA

Washington (Platts)--7Dec2004

Changes in the US power industry have outpaced the federal government's
ability to verify that existing and planned transmission capability is
adequate "to keep the lights on," the US Energy Information Administration
said in a report Tuesday. The study, "Electricity Transmission in a
Restructured Industry: Data Needs for Public Policy Analysis," said the data
collection that US agencies, including EIA and the Federal Energy Regulatory
Commission, rely on to monitor reliability "have not kept pace with the
ascendancy of transmission in a restructuring industry," where power
increasingly is flowing "across utility and regional boundaries in response to
commercial opportunities." The report added that the power industry's reported
plans for assuring reliable grid operation in the future "are not necessarily
those analyzed in the power flow analyses that industry does submit to FERC."
Further, the report said "investment in the high-voltage grid for metering,
monitoring, communications, software and computation is unknown."

"Neither the industry nor the government has data adequate to allow rigorous
cost-benefit analyses of transmission-related investments to enhance
reliability," EIA said. The agency said that much of the information needed to
better ascertain the reliability of the grid could be obtained by modifying
existing information forms, including high-quality power flow models, that the
industry is required to submit to the government. The EIA report also found
that FERC's so-called Form 1, which requires power companies to provide
capital and operating cost data, provides little information about the
"economics" of transmission, in large part because most transmission revenue
is bundled in with revenue from retail power sales. Although the report
suggested that FERC could require "line-of-business" reporting to separate
transmission from other operations, it suggested that changes to existing
reporting forms would make the data more "useful for cost and investment (but
not financial) analysis."

While the report said much of the data needed to evaluate the grid's support
of wholesale power markets is already being collected, "the data are
not...available for policy analyses." The North American Electric Reliability
Council's power flow and curtailment data was "not routinely available for use
in assessing how transmission constraints affect wholesale power markets," the
report said, recommending the information be consolidated into one database.
EIA also said that outside of independent system operators, spot market prices
and associated quantities, including inter-regional trade flows "are not
available." EIA said that while ISOs have the data they need to assess
competition within their areas, outside the ISOs "the government does not have
the data necessary to monitor and evaluate the competitive status of wholesale
markets. Government can subpoena data in response to clear evidence of
anticompetitive behavior or as part of a merger approval, but the subpoena is
not a reasonable means of obtaining data for ongoing market monitoring."

"Changing and consolidating existing data collections, the report said, "could
greatly enhance the data available to federal and state policymakers." These
changes, however, would require "long-term, coordinated efforts" across FERC,
EIA, the Dept of Energy, Office of Management and Budget, ISOs and possibly
NERC, the study said. While new data collections would be "useful to describe
wholesale prices and trade flows, congestion, regional costs and revenues, and
interconnectino-wde reliability management," the report warned that "the
reality is that new collections often are controversial and have long
gestations."

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