May 22 - McClatchy-Tribune Regional News - Paul Adams The Baltimore Sun

Parts of Maryland are still at risk for isolated blackouts as early as 2011 unless new transmission lines are built to get energy to where it's needed most, regional grid operator PJM Interconnection told state utility regulators yesterday.

The latest assessment comes despite significant progress by power generators and utilities toward addressing the region's growing energy needs through a combination of power plant upgrades and conservation measures aimed at cutting demand. Though the risk has diminished some since a similar assessment last fall, whether the lights stay on after 2011 may hinge on a critical multistate power line proposed by Allegheny Energy.

The line must win regulatory approval from states including West Virginia, Virginia and Pennsylvania. Even then it faces expected court challenges from environmentalists and homeowners who don't want to see the line cross sensitive areas. Allegheny says it is on track, but some industry analysts are skeptical the project can get done in time, noting that past power line projects have sometimes taken at least twice as long to complete.

Steven B. Larsen, chairman of the state Public Service Commission, said commissioners must weigh those risks as they decide whether to partially reregulate the power industry and take other steps to ensure reliability. Among other things, the commission is studying whether to require Maryland utilities to enter into long-term contracts for new generation, which some consumer advocates believe is preferable to leaving it up to the competitive market.

The moves are part of the PSC's efforts to try to lower utility rates, which starting in June will be about 85 percent higher than they were before deregulation legislation was passed in 1999. Rates are rising along with demand, which Baltimore Gas and Electric Co. estimates will grow an average of 1.6 percent annually between now and 2015.

Without the Allegheny line, PJM says, it will take other short-term upgrades to existing infrastructure, or a combination of new generation to alleviate pressures to the grid serving Maryland. PJM, which operates the power grid for Maryland and 12 other states, and utility executives briefed the PSC on their projections for power demand yesterday.

"It would require everything going right for us to get through those summers," said Michael J. Kormos, senior vice president of reliability services for PJM. "I'm still very concerned for the next couple of years."

Allegheny says the line will be done in time, and PJM has used that assessment and its own analysis to conclude that the grid is unlikely to face a crisis after 2011.

The $1.3 billion power line would stretch from southwestern Pennsylvania, across West Virginia to Loudoun County, Va. It would bring mostly low-cost, coal-fired generation to the region that otherwise can't get in because of congestion over existing power lines. It is one of several new high-capacity power lines proposed in recent years to address a projected energy shortfall in the Mid-Atlantic.

William B. Pino, director of electric supply for BGE, agreed the multistate line is key to stabilizing the grid in years to come. If it gets built, worries about a power shortfall disappear, he said.

"If the line does not come in in a timely fashion, then PJM and all the utilities will have some work cut out for them to figure out what is the alternative solution," he said.

PJM's Kormos painted a more dire picture for state utility regulators at a public hearing in October, when he said parts of Maryland could see significant power outages if the Allegheny project and other power lines were not completed.

"This is not simply just a hot summer day problem," he told Larsen, in response to a question about the risk of overloading power lines. "This would be any day that it's a little hot."

Kormos' concerns were based on a worst-case scenario, but reflect PJM's concern for maintaining adequate power reserves to handle peak demand.

Since last fall, those concerns have eased somewhat because utilities in the PJM area have pledged to upgrade existing power generators or build new plants to meet growing demand in the region. In addition, BGE and other Maryland utilities have launched programs that reward customers with rebates for using less power during hot summer afternoons, potentially eliminating the need for several new power plants. For instance, BGE has projected it could cut its projected peak power needs 22 percent by 2011 through such programs, known as "demand response."

The added megawatts were bid into recent PJM auctions for new capacity, which are designed to spur construction of new power plants and increase reliability in the grid.

The most recent auction was for generation pledged to be in service from June 2011 to May 2012. The results exceeded expectations, drawing a net increase of 4,238 megawatts throughout PJM. PJM said the megawatts bid into the system exceeded demand and were evidence the market is working to resolve any shortfalls. One megawatt is roughly enough to power 1,000 homes.

A significant portion of the new megawatts bid into auction by BGE and other Maryland utilities came in the form of demand response, rather than from new or upgraded power plants.

p aul.adams@baltsun.com