Aging grid ripe for more troubles

THE BALTIMORE SUN

Even as Americans pursue a 21st-century lifestyle in homes filled with centrally cooled air, high-speed computers, and bigger and better washers and dryers, the electric power grid they rely on to keep these conveniences humming is crumbling.

The grid - a superhighway of power lines dotted with power plants that crisscross the nation, allowing electricity to flow smoothly from region to region - is in desperate need of repair and expansion.

While demand for electricity has grown by more than 20 percent over the past decade and is expected to grow by 50 percent over the next two decades, investments in the infrastructure that carries that power have fallen far behind.

Spending on new transmission lines has been declining precipitously over the past 25 years, according to industry statistics.

The reasons are complicated.

They include politics, industry cost-cutting, the enormous expense of new lines, not-in-my-back-yard opponents, uncertainties created by utility deregulation and the years-long regulatory approval process that is typical for power grid projects.

The potential consequences are economically devastating.

While the specific cause of last week's blackout remains undetermined, experts say that the underlying cause is clearly an antiquated and weak transmission system that's ripe for trouble with more bottlenecks, more power disruptions and more cascading blackouts.

"There's a systemic problem here that has nothing to do with lightning striking Canada or whatever happened," said Irwin Stelzer, director of economic policy studies at the Hudson Institute, a Washington think tank.

"We have plenty of generating capacity. That's not the problem. It's that we can't move it around the country easily. It's like saying we've got plenty of steel mills, but we only own one truck."

It wasn't always this way.

In the past, power was something that moved only relatively short distances.

Local utilities were allowed a virtual monopoly in their various service territories. With regulatory approval to make a limited profit on investments, utilities invested their own money in building power plants to keep up with the rising demand of their customers. Over time, they began building transmission lines connecting with other utilities to help cope with peaks in customer demand.

Even then, building transmission lines was never an easy process.

It took 14 years of litigation for Washington-based Potomac Electric Power Co. to build a 10-mile, high-voltage power line through Montgomery and Howard counties. That line was a key piece of a power loop spanning 10 counties in Maryland and Virginia, but public opposition delayed its construction for years.

'Not attractive'

"Transmission is not attractive," said Bill Brier, vice president of policy and public affairs at the Edison Electric Institute, a trade association in Washington. "Most people don't want it. They worry about health issues related to the lines. They worry about the environmental impact of such a huge project. All that opposition causes delays, and that means escalations in cost. Sometimes, despite the need, they never get built."

In 1992, Congress passed the Energy Policy Act, opening up the nation's power grid so that energy companies could buy and sell power wherever they wanted. Meant to spur competition and lower electricity prices, the partial deregulation that followed created an array of economic and technical problems.

Deregulation wiped out any guarantee that rates would cover costs, making it much less attractive for utilities to build plants and upgrade lines just for the sake of reliability, according to a study prepared for EEI by consultant Eric Hirst.

Also, deregulation meant that the system was being used to transport power over longer distances as energy companies sought to sell power to anyone who would buy it and local utilities sought to buy cheap power from anyone who would sell it.

All that buying and selling and too little building have greatly expanded the load on the transmission system.

"Our high-voltage transmission system is obviously straining," said Dave Penn, executive vice president for the American Public Power Association in Washington, which represents more than 2,000 locally owned electric utilities. "It's near to its capacity."

And when new transmission lines are planned, they are ever tougher to build because of opposition from environmentalists or people who don't want power lines in their neighborhood.

'System is just stressed'

The Tri-State Generation and Transmission Association in Denver has been fighting for three years to build 20 miles of line in two southwestern Colorado counties near the exclusive Telluride resort area, a National Historic Landmark District. Commissioners in one county want Tri-State to bury a section of the lines, which would increase the cost of the project tenfold, company officials said.

"In that Telluride area, there's so much development ... the system is just stressed to a breaking point," said Tri-State spokesman Jim Van Someren. "We find ourselves in a difficult position to maintain the reliability, but not able to go in and upgrade or build facilities in order to do so.

"It's just getting harder and harder to work with people, regardless of how much need there is for the line."

The heavy cost of fighting such battles makes many companies think twice about transmission upgrades, experts said.

Meanwhile, growing technical challenges make new lines an urgent priority.

Electricity is governed by the laws of physics. It will flow wherever there is an open line and need for power. The electric grid, when operating normally, needs a continuous and near-instantaneous balance of generation and "load," the amount of power consumed by customers.

Danger of imbalance

When new lines can't be built and old ones upgraded, the system faces a growing danger of imbalance that could result in partial power losses or other disruptions, up to cascading blackouts.

When a system is working close to capacity, a problem in one spot on the grid can ripple through the entire grid, which is what happened Thursday, experts said.

President Bush promised Friday to do whatever is necessary to fix the power transmission system. But that will be a challenge.

Apart from public opposition, there's the question of who will pay for the upgrades and related issues. Should the local utilities pay? Or should independent system operators that oversee the regional grids pay? Should the states or federal government provide financial incentives to build? Who should have final approval for transmission routes?

"It's a whole host of problems," said Stelzer of the Hudson Institute. "I think someone has to decide that this is very important as a security issue, it's very important as an economic issue for the country and a safety issue. Just as the federal government has pre-empted security at airports ... somebody has to say there's going to be one [permitting] authority - it decides what gets built."

Until the government acts, it will be largely up to utilities to improve the system.

Overcoming obstacles

Conectiv Power Delivery, a company serving parts of Maryland and New Jersey and all of Delaware, offers an example of how local companies can overcome the obstacles and work to improve their transmission systems.

The company has launched an eight-year, multimillion-dollar project to improve about 100 miles of its high-voltage lines.

It has already spent $70 million over the past three years to upgrade its transmission system, which snakes through Maryland's Eastern Shore and zigzags across Delaware.

The improvements will allow power to move more smoothly through areas that have long had congestion problems that made it difficult to import cheaper power from other states or to tap an alternative supply when local plants encounter operating problems.

And Conectiv plans to pump an additional $115 million into the transmission system over the next five years by rebuilding old lines and constructing a 90-mile line from New Castle County to the Millsboro power plant in Delaware.

Still, Conectiv's effort also illustrates the challenges.

Some parts of the project have not received regulatory approval. Some pieces have been waiting for three years for oversight and review. And there is considerable opposition from some communities over the ugly and large power lines.

But Conectiv says it doesn't see how it can stop now. Tens of thousands of people have moved into the Delmarva Peninsula over the past decade, bringing with them a voracious appetite for more electricity.

"They need the power," said Jerry Elliott, vice president of transmission and distribution reliability for Conectiv. "This will help get it to them. It's money well spent."

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