Consultant Identifies Flaws, Suggests Remedies to Grid

Consultant Identifies Flaws, Suggests Remedies to Grid Shortfalls

Nov 09 - Power Engineering

On the first anniversary of the August 14th, 2003 power failure that affected a major portion of the Northeastern and Midwestern U.S. as well as parts of Canada, Power Engineering interviewed Dave Brown, viee president of NUS Consulting Group - a cost recovery company specializing in solutions to reduce utility costs, including electric power expenses, for commercial and industrial customers.

PE: A year after the August 14th event we have been deluged with newspaper articles citing groups and individuals who say nothing much has happened to remedy the underling shortfalls in our power delivery system, and touting their specific agendas in the process. Your impressions?

Brown: People with agendas will always tout their plans, but I don't believe anyone could have predicted the August 14th blackout or had the answer in hand prior to the event. Yes, the shortfalls in oui' power delivery system that existed then exist now and probably will continue to exist for some time to come. Very little action has been undertaken to prevent or minimize the effects of the next major grid failure.

PE: What is the mosl significant flaw in the U.S. electric power grid that needs to be addressed?

Brown: I believe that the most important issue facing the U.S. electric power industry concerns what direction are we planning to take in terms of deregulation. Right now we are "half fowl and half fish." There are those pressing forward with electric deregulation, however we are paying very little heed to some of the issues that led to the August 14th power failure. Should retail deregulation be the answer and future? We need more federal guidance and action in dealing with such issues as transmission, reserve capacity, and uniformed reliability standards. Unless we are ready to deal with such issues and make the financial commitment to pay for them, we would probably be better off returning to the more traditional vertical utility model.

PE: We have seen a consortium of distributed energy providers form an alliance - The Critical Power Coalition - to address the problem from the standpoint that traditional energy infrastructure cannot meet today's needs from either a reliability or power quality standard and urging an increased emphasis on self-reliance. Any comments on that approach to solving problems?

Brown: That's one of those agendas alluded to earlier. Don't get me wrong. I believe the distributed power industry serves a purpose to a very denned, almost niche, market. However, I don't believe we should view it as a viable replacement - either in whole or in significant part - to the traditional energy infrastructure. Certainly, distributed generation can be looked at as a means to address both bottlenecks and shortfalls.

PE: Has deregulation of the power industry undermined incentives to maintain grid infrastructure?

Brown: I don't view deregulation as undermining the grid, but it has exposed the grid for what it is, namely, something that was not originally designed with deregulation in mind. If we continue to press forward with electric deregulation, we need to address several critical issues including the upgrading of our national transmission grid. As a first step, Congress needs to enact federal guidelines dealing with uniform reliability standards. Thereafter, we need to arrive at some consensus among the grid owners on how to implement those uniform standards, including a timetable for such implementation.

PE: Can the grid be improved to accommodate more renewables, which tend to be remote from load centers and therefore not good candidates for transmission access.

Brown: Of course the grid can be improved and, where necessary, extended to accommodate renewable energy sources. However the more important question is whether the consuming public is ready to accept higher electricity prices in order to accommodate such renewables.

PE: In Dave Brown's perfect world, what steps should be taken to assure a dependable and economical power supply for the U.S.?

Brown: I suppose that in a socalled perfect world, we could have avoided electric retail deregulation; altogether. Let's face it: Our infrastructure shortfalls have increased or been heightened due to deregulation. The IPPs and others came up with this grand plan Io increase their profitability. Now it's up to the public to pay the costs necessary to facilitate their business plans. However, this is not a perfect world and should we continue ahead on our present course, the Federal government needs to step forward with a clear plan and Congress needs to arm FP]RC with the necessary authority and funding to implement it.

PE: Would there be any merit to placing the entire U.S. grid under federal control, as a means to both standardize transmission access and assure needed and uniform upgrades to the delivery system?

Brown: The Federal government needs to exercise more of its muscle. But I'm not sure that assuming absolute control of the U.S. grid is the answer. The Feds need to encourage, if not mandate, a set number of Regional Transmission Organizations. Moreover, a commission could be established at the Federal level wherein these RTOs, along with FERC, develop policies to better serve our country's transmission grid. In implementing such a plan, the RTO retains control of its system and related needs, but there would be a Federal governing body that could facilitate cooperation and resolve operating disputes.

PE: IJ we proceed with full-fledged national deregulation, how do we fairly and equitably extend the benefits of low-cost native power - such as hydro in the northwest and coal in the Ohio Valley and Appalachian regions - to the rest of the grid without those regions objecting?

Brown: This will depend on the level of utility economic socialization the country is willing to accept. In practical terms, an exchange such as NYMEX could be developed to facilitate financial transactions that would permit a degree of levelized pricing. This is currently done in our natural gas and petroleum markets. However, under this system, the benefit of low-cost electricity available to those near a coal or hydro generating facility is lost to a centralized pricing mechanism. Would Ohio residents be comfortable having their low-cost power subsidize electricity prices in New York? Until we resolve these issues, we will continue to be constrained by the physical nature to which electricity can be practically and economically transported.