US power grid faces biggest test since 2003 blackout: Kelliher

Washington (Platts)--19Jul2006

With seven North American electricity markets seeing record demand this
week, the chairman of the Federal Energy Regulatory Commission said the US
power grid faced its greatest test since the blackout of August 2003.

"So far we've met the test," Chairman Joseph Kelliher said Wednesday. "We
have not seen rolling blackouts; we've seen very isolated failures due mostly
to local distribution failures."

New York, New England, the Mid-Atlantic, Midwest, Texas, California and
Ontario, Canada, sweltered under higher-than-normal temperatures as the
interstate transmission grid, generators and local distributors kept churning
out energy for air conditioners.

"Frequently when we see record levels of demand in the US, it's in one
region, perhaps two regions," Kelliher said. "The end result is that you
import more power from a neighboring region. That's much harder to do when you
have seven regions hitting records at the exact time."

In testimony before a House subcommittee last week, the chairman offered
a cautious appraisal of the state of the nation's electricity grid. In
discussing constrained markets in the Northeast, he warned that the loss of
two big transmission lines into New York City and Long Island could test
reliability.

One of the two transmission lines feeding New York came back online
Tuesday, ahead of schedule, the chairman said. On Monday, the New York
Independent System Operator reported an all-time peak-load record.
"The system has held up very well this week," he said. "But what do you need
to have a backup system to keep the lights on?"

In a presentation at a US Chamber of Commerce panel discussion on
implementation of the Energy Policy Act, Kelliher said the danger posed by the
hot summer weather underscores the need for a stronger transmission grid,
pricing reforms to encourage infrastructure development and strong reliability
standards.

"You also need effective conservation programs because that's the one
thing you can do in the short term to mitigate that tightness," Kelliher said.

FERC's market monitoring center continues its daily assessments of
conditions in the major power markets. "This is the first serious test of the
summer," he said. "So far we've passed it, but we're not out of the woods
yet."

---Joel Kirkland, joel_kirkland@platts.com

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