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Review of Last Week’s Events
From an engineering standpoint, providing reliable, uninterrupted electric service is a formidable challenge --particularly when demand for electricity is high.
The operating requirements applicable to delivery of electric power to end use customers differ from almost any other commodity.
In addition, as the New York Times has observed, the Grid is unlike any other network in that it literally carries within itself the “power” to destroy itself and much of the equipment connected to it.
From an engineering standpoint, even a relatively small imbalance between supply and demand can cause voltage levels to swing wildly and/or cause frequency levels to fluctuate outside of the narrow design tolerances the Grid is designed to accommodate. In a matter of seconds, these deviations can have catastrophic consequences, causing widespread damage or destruction to end user-owned equipment (i.e., the computer down the hall) and/or fires and explosions at power plants and transmission substations hundreds of miles away from the point of the initial disturbance.
To prevent potentially catastrophic damage from occurring, the Grid is designed so that whenever unacceptable fluctuations in voltage levels or frequencies begin to occur at any point on the system, the generation in the area in which the fluctuations have begun to occur will immediately shut down -- literally, in a matter of seconds.
Further, when such shut downs occur, the connections to adjoining areas are designed to automatically de-couple, in order to instantly isolate the area in which the imbalance occurs from the rest of the Grid.
If adjoining areas do not immediately detach, the Black-Out can quickly cascade to adjacent areas --i.e., literally, in a fraction of a second, since electricity travels at the speed of light.
This is because, if adjoining control areas remain interconnected, the load (i.e., customer-owned devices or equipment) in the area in which a Black-Out initially occurs (e.g., northern Ohio) immediately will begin to physically suck power out of power plants in surrounding areas. This in turn can cause plants in surrounding areas to almost instantly overload and shut-down -- which in turn can lead to the same process being repeated near-instantaneously over larger and larger geographic areas, in theory to the point that the Black-Out quickly encompasses much of the U.S.
It was precisely this type of massive, cascading Black-Out that resulted in power failures that quickly extended over much of the East Coast in 1965 and again in 1977 and the power failure that affected a large portion of the Western U.S. in 1996.
The specific sequence of events that led to last week’s Black-Out won’t be fully determined for some time.
In a sense, however, the sequence of events that “caused” last Thursday’s black-out might be said to have started more than a year ago, when the 882 MW Davis-Besse nuclear unit in northern Ohio was shut down due to cracks observed in the reactor vessel head.
Shut down of this unit reduced local generation available in northern Ohio. As a result, the area has been – and will remain -- more vulnerable than normal to interruptions in service as long as Davis-Besse remains out of service.
Just after 2:00 p.m. last Thursday, this deficiency in the generation available in northern Ohio was exacerbated by an as-yet unexplained forced outage at the 680 MW East Lake Unit 5.
East Lake Unit 5 is one of the largest coal-burning units in northern Ohio. The combined effect of the loss of both Davis-Besse and East Lake Unit 5 (i.e., two of the largest generating units in the area) was to leave northern Ohio significantly more vulnerable to disruptions in service than if both units had been functioning normally. (Even when both units are operating, there is less generation and transmission physically located in northern Ohio relative to the size of the load in that area than is true in many other parts of the country.)
Despite the loss of both units (which collectively comprise more than 15 % of the generating capability in northern Ohio), during the first hour after East Lake Unit 5 tripped, FirstEnergy (which serves northern Ohio), apparently was able to maintain service to its customers without encountering major difficulties.
Just after 3:00p.m., however, one of FirstEnergy’s major transmission lines suddenly shut down.
The system is designed so that, when such an event occurs, power that had been flowing in over the line that fails automatically shifts to other, adjacent lines, reducing the risk that service to end-use customers will be interrupted. This apparently is exactly what happened when the first major transmission line on FirstEnergy’s system failed.
At 3:32 p.m., however, one of the high voltage transmission lines to which power had shifted after the first line failed apparently overloaded and automatically tripped. This may have occurred because the line was carrying more electricity than it was designed to accommodate and began to sag, causing it to make contact with a tree, short and automatically shut down.
Even when the second line failed, though, service to end use customers was not interrupted or deliberated curtailed.
The stress on the system, however, clearly was beginning to accelerate. Within another 15 minutes, two additional high voltage transmission lines in the same area apparently also shut down, the second of which was on a major line on the American Electric Power (AEP) system. (The AEP system is interconnected with FirstEnergy, and therefore automatically experienced heavier power flows after the high voltage lines on FirstEnergy’s system failed.)
Despite these multiple transmission line failures, service to end use customers still was maintained.
At 4:06 p.m., one of the First Energy high voltage transmission lines was reconnected for a brief period.
By 4:08 p.m., however, voltage levels and frequency levels (which apparently already had been unstable earlier in the week) appear to have begun fluctuating wildly through much of the eastern U.S. and Canada.
At about 4:09 p.m., as the Grid in the eastern U.S. automatically attempted to reached a new equilibrium despite these multiple transmission line failures, a huge (i.e., 3,700 MW) Tsunami-like wave of power appears to have developed in Indiana, and swung through Ohio and then further east – putting huge pressure on the Grid.
This massive waive of power appears to have developed as power moving from Indiana further east tried to find new paths into northern Ohio. (This issue, however, is in dispute and undoubtedly will take some time to sort out.)
Around 4:10 p.m., a whole series of additional power lines began to trip – first in Michigan, then in northern Ohio and then at other locations in the eastern U.S.
At about the same time, several other generating plants also tripped, adding to the strain on the system caused by the shut down of East Lake Unit 5.
Rather than being concentrated in a single location, however, these outages appear to have followed a “hopscotch” or Mexican jumping-bean pattern.
First, a plant tripped in upstate New York. Then a second plant tripped in western Pennsylvania. Then a third plant tripped in Canada at a location near Detroit and a fourth near the portion of New York State closest to Ohio. Then a fifth plant apparently failed, this time again in western Pennsylvania, followed by a whole series of plants apparently failing at about the same time in eastern Michigan.
Between 4:11 p.m. and 4:12 p.m., another large coal-fired plant in northern Ohio tripped, followed by a whole series of nuclear plants in New York, New Jersey, Ohio and Michigan -- all of which shut down automatically due to loss of off-site power, as they are designed to do.
By 4:25 p.m., nine nuclear units at seven different sites had been shut down, taking out of service 7,850 MW of generating capacity that still had been in service at 4:10 p.m. (i.e., more than 10% of the power supply to the affected area) and most of the northeastern U.S. was without power.
Analysis
It will of course take many months for the precise sequence of events that led to the Black-Out to be fully ascertained. In the process, new specifics undoubtedly will be added and the current description of the sequence of events in all likelihood will be revised.
Even when “the facts” have been fully ascertained, however, the issue of what “caused” the outage is likely to be the subject of continued debate.
The Grid operates as an integrated whole. There is not necessarily a bright line that separates factors that “cause” a power failure to occur from normal, day-to-day events that may add to the strain on the system but arguably should not be considered primary “causes” of a Black-Out (e.g., a particular power plant suddenly tripping – an event that happens almost every day at one or more locations in the U.S.).
Virtually all of the public discussion that has taken place since the outage occurred, however, starts with the assumption that the Black-Out that occurred last week resulted from a problem with the transmission system – not with the way in which the Grid currently is being used to move power.
Specifically, the belief is that :
- The Black-Out could not have occurred unless the protective measures built into the Grid failed to operate properly (i.e., by isolating the area (or areas) in which the initial imbalances occurred); and
- This failure is symptomatic of a much deeper and broader problem – i.e. the urgent need to modernize and upgrade the existing grid.
As a result, a consensus appears to be rapidly developing that we need to launch an all-out, full-scale effort to massively upgrade the existing transmission Grid nationwide.
While no one knows for sure what the cost of such an upgrade might be, Secretary of Energy Spencer Abraham has indicated that the cost to customers ultimately could be $ 50 billion or more; no one appears to be blanching at this figure.
I want to be clear regarding where I stand on this issue: like everyone else who I’ve ever heard discusses the current status of the transmission system, I believe strongly that there is an urgent need to upgrade the existing system and that a large-scale modernization program clearly is warranted.
At the risk of sounding heretical, however, I am concerned that a knee-jerk reaction that immediately concludes that we should spend “whatever it takes” to build the “best system possible,” without a careful examination of: (i) what these proposed upgrades to the Grid are intended to accomplish; (ii) how much these upgrades are likely to cost; and, perhaps most importantly (iii) which upgrades should be made first could prove to be a serious mistake.
This will be especially true if the public policy debate continues to assume, as the debate at the national level often has assumed in the past that we should build whatever transmission infrastructure is necessary to maximize power flows across the Grid without ever rigorously assessing: (i) what the cost might be in order to improve the Grid to the point that it can accommodate a much higher volume of power transfers without putting reliability at risk; or (ii) making any careful or systematic effort to determine whether the benefits from such an expansion program justify the costs.
It is important to recognize that building new transmission lines and upgrading old ones is a very expensive proposition.
There also are limits on how much even the richest country in the world can spend on transmission upgrades in any one-year or even a several-year period.
Further, many of the improvements that might make sense in a transmission engineer’s “perfect world” in which a large-scale interruption of service presumably never would be allowed to occur but cost is not a limiting factor may not be cost effective and in any event are not necessarily the improvements to the transmission system that need to be made first.
While we urgently need to focus higher priority on upgrading the Grid, therefore, it is essential that we prioritize and rigorously assess the costs and benefits of what we are attempting to accomplish before deciding what level of expenditures is appropriate or determining where our limited resources should be spent first.
If we do so, we may find that the additions to the transmission system that are most urgently needed may or may not be driven primarily by concerns regarding reliability. Further, it also could turn out that the problem we experienced last week is that we were attempting to move too much power over some pathways, not too little.
More specifically:
1. From the limited information that is available to date, it appears that what occurred last Thursday was not necessarily a cascading black-out of the same type that occurred in earlier years in the northeast or in the west.
The way in which the Grid is used today is entirely different than was true in 1965 or 1977, when previous large-scale black-outs occurred in the northeast and even than the use of the Grid that was occurring in 1996 when there was a large scale power failure in the West.
In 1965 and 1977, when earlier black-outs occurred in the East, most utilities still were operating largely on a “stand-alone” basis, with only small amounts of power transferred between utilities and few if any large-scale transfers of power occurring between regions.
Today, literally hundreds or even thousands of power transfers occur every day. Most of these transfers occur within the same region (i.e., within the boundaries of the New York ISO or PJM). But substantial amounts of power flow over longer distances (e.g., from Indiana into the northeast).
In effect, the more “efficient” the bulk power market becomes from an economists’ perspective (in which the cost of the transmission system typically is treated as a “sunk” cost and therefore ignored), the larger the number of power flows that are likely to occur each day and the more difficult it may be to reliably operate the Grid.
Over the past four to five years, the use of the Grid has changed dramatically – to the point that the flow of power throughout the entire northeast quadrant of the U.S. increasingly occurs as if it were being operated as a single, fully integrated network managed by a single system operator -- which it is not.
These increased power transfers have had a dramatic impact on the day-to-day operation of the Grid.
The Black-Out that occurred last week is not by any means the first time over the past 3 or 4 years in which the Grid has experienced a major stress which pushed the existing transmission infrastructure to its limits, with voltage levels and frequencies fluctuating sharply over large geographic areas and threatening to interrupt service to end use customers over large portions of the eastern U.S.
Instead, such events have occurred several times over the past few years.
None of these prior episodes received significant attention in the national media, however – presumably because, during previous events, service never was interrupted on a major scale (although we sometimes came very close).
These prior events raise the same basic issue as last week’s Black-Out, however: is the existing Grid capable of accommodating reliably the level of power flows that already frequently occurs in the eastern U.S. on hot days during summer months? And if that issue is in doubt, is there an even greater risk of black-outs in future years, when the number of power flows taking place on the existing infrastructure is expected to be even greater than it is now?
While the increased power flows that routinely occur over the Grid clearly produce at least some cost savings (at least on days when the Grid doesn’t fail), they also significantly increase the challenge of maintaining reliable operation of the Grid.
This is because, as the level of power flows continues to increase, generation and transmission outages at any one location increasingly have the potential to impact the operation of the Grid over far larger geographic areas.
Further, the scale on which these affects occur is huge, since the Grid in the eastern half of the U.S. accounts for a meaningful fraction of the World’s total daily energy use and covers a huge geographic area.
In this rapidly changing context, what appears to have happened last Thursday is not necessarily the same as the cascading black-outs that occurred in the past.
In particular, the sequence of events is not necessarily that a power failure occurred in one specific location and then quickly cascaded to encompass the whole northeast U.S.
Instead, before the outage occurred, the Grid in much of the northeast to a large degree already was operating as a single, massive (but in some critical respects poorly-controlled) system, in which power flows, fluctuations in voltage and frequency levels and transmission line failures at a few specific nodes potentially could have devastating affects on tens of millions of customers and hundreds of billions of dollars of equipment, located hundreds or even thousands of miles from the point of the initial failure(s).
When specific generating units and transmission lines began to trip at particular locations last Thursday afternoon, therefore, power flows, voltage levels and frequencies began to fluctuate sharply at literally hundreds of locations across a vast geographic expanse.
What appears to have “cascaded,” therefore, was not a black-out per se, but instability in the system that arose before any black-out occurred.
The rapid spread of this instability in turn appears to have caused generation and transmission outages to occur more or less simultaneously not just in a single utility’s service territory but at many different locations (i.e., at least 20 or 30) extending from eastern Michigan through much of the eastern U.S.
The key point is that it appears to have been the instability in the system that spread first, not the Black-Out per se.
Further, this instability appears to have spread rapidly and to have begun to disrupt operation of the system at numerous locations well before the initial power failure(s) occurred.
Could this massive region-wide failure have been prevented if the transmission system were stronger?
Perhaps -- but perhaps not.
Instead, the core problem may be this: we currently are attempting to use the Grid in a way that it was never designed to be used – i.e., to optimize power flows over a very large area, rather than simply to provide each utility with the ability to tap back-up power from its neighbors in the event that several generating units in its service territory happen to be out of service to operate at the same time.
This expansion in the use of the Grid is occurring nationally.
It has occurred, however, without any rigorous, systematic effort by the Federal Energy Regulatory Commission (“FERC”) or any other federal agency to carefully evaluate the scope or cost of the expansion of the transmission infrastructure that may be required to increase power flows across the Grid without putting reliability at risk.
Instead, for most of the past decade, under two different Presidents and a series of different regulatory officials, the policy has been to strongly encourage increases in power flows and then assert that all of the expenditures needed to maintain reliability as a result of this increased use of the Grid should be made to support these power flows -- irrespective of the cost.
Despite the more intensive use that currently is being made of the Grid, there undoubtedly is some level of expenditure on Grid improvements and redundant generation that, if it had been made prior to last Thursday’s Black-Out, would have prevented the Black-Out from occurring – at least under the particular scenario that actually occurred last Thursday beginning in northern Ohio.
To say this, however, is not to say that it would necessarily be cost-effective to build all of the facilities required to achieve this goal at every node on the system at which such a failure might originate.
It is important for the general public to be made aware that the cost savings that typically are achieved by allowing a much larger number of power flows to occur over the Grid than it originally was designed to accommodate are much smaller than many observers assume (i.e., according to estimates prepared by the FERC, at most 3 to 5% of total power production costs in the affected markets, and arguably only a fraction of this amount).
Further, a significant portion of these savings can be achieved by facilitating a relatively small number of transactions over certain discrete paths (e.g., moving energy from under-utilized coal-fired units into regions that our over-dependent upon high-cost natural gas-fired generating units).
If we establish our goal, however, as being to capture all of the potential cost savings that can be achieved by optimizing every power flow in every part of the country that conceivably could result in nominal to the buyer and seller prior to taking into account the costs of the Grid upgrades that may be necessary to reliably support these flows, we may wind up vastly expanding the number of power flows that occur over the Grid, without achieving any net decrease in total cost of providing electricity service, once we also take into account the costs for the transmission upgrades necessary in order to reliably support this expanded use of the Grid. Instead – to the contrary – the end result could be a massive increase in the total, “all-in” cost for producing and delivering power. (We should be comparing, for example, Secretary Abraham’s $ 50 billion initial estimate of the potential cost to upgrade the Grid with earlier estimates of the expected savings from increased power flows, which suggest total gross savings -- prior to taking into account the cost of needed infrastructure improvements -- of no more than $ 3 to 5 billion per year.)
We need to recognize that, to accommodate a far larger number of transactions than the existing Grid was designed to support, while at the same time preventing large-scale Black-Outs from continuing to occur, it may be necessary to make expenditures to upgrade the Grid that could prove to be far greater (i.e., potentially by a factor of 10 X or more) than the cost savings that are likely to be achieved as a result of increased use of the Grid.
Further, as last Thursday’s Black-Out demonstrates, unless every potential large-scale failure is successfully prevented, the cost to the economy from even a single power failure could dwarf the potential cost savings from a policy of attempting to maximize power flows over the Grid.
We need to carefully assess, therefore, what level of increased use of the Grid is cost justified after taking into account the cost of any required improvements in the Grid and what is not. At the federal level, these issues never have been examined in a careful or rigorous manner.
Unless they are tackled head on, however, in an objective, “no holds barred” manner, we will have no way of knowing with any confidence just how much of the $ 50 billion in proposed expenditures to modernize the Grid suggested by Secretary Abraham is worth making and how much is not.
I want to be very clear on this point: many specific improvements in the transmission system clearly are cost justified and many congested pathways clearly must be expanded.
Further, many – perhaps most – of these needed improvements have been known for many years.
There is no good excuse for not having implemented them many years ago. It something of a national disgrace that several successive Chairs of FERC have allowed so many years to pass with so few improvements having been made to the Grid.
In the end, however, these well known needed improvements aside, it is possible that in certain instances we should not be attempting to continue to expand the number of power flows that occur over the Grid.
Instead, at least in some instances, it could be that we would be better off limiting power flows over some lines below recent levels.
Further, it may that we can maximize cost savings and reliability benefits primarily by concentrating on expanding certain specific pathways that would make it possible to take advantage of certain particularly attractive opportunities to reduce costs (typically by allowing us to minimize utilization of certain high-cost gas-fired generating units) rather than simply assuming that the Grid should be expanded to reliably accommodate every power flow that already is taking place.
It is simply not sound policy to set out to facilitate every possible power sale that appears to be cost effective before taking into account the cost of required improvements in the Grid, and then to worry later about the transmission side of the equation. The potential costs, both from a cost standpoint and a reliability standpoint, are simply too great.
2. Just as importantly, precisely because continued reliability of service is clearly at risk, there is an urgent need to prioritize – i.e., to determine which projects to undertake first and focus on how to ensure that these projects are completed in the shortest time frame possible.
As a country we only can take on a limited number of specific projects at any one time. Yet, there does not appear to have been any systematic effort at the federal level to determine which improvements will provide the greatest benefit.
Nor has there been any meaningful effort to attempt to expedite completion of the highest priority projects.
Instead, ever since the FERC put its open access policy in place more than 7 years ago, its basic strategy has been to focus virtually all of its efforts on attempting to put in place a comprehensive new program for managing the operation of the Grid and then to trust that once its new system has been put in place, the new management “system” would ensure that, one region at a time, needed additions to the Grid would take place.
This strategy may have been reasonable when it was first adopted in 1996.
But it is no longer reasonable now, 7 years after FERC started down this road.
FERC’s strategy of attempting to force transmission-owning utilities to turn control of the operation of their facilities over to independent third party transmission operators regulated by FERC has met with fierce resistance from several key transmission-owning utilities and regulators in certain key states for many years.
Regardless of whether one supports or opposes FERC’s position from a policy standpoint, its efforts are likely to continue to meet with continued resistance now.
In the interim, the result of FERC focusing its efforts almost entirely in this “all or nothing” approach has been that very little needed transmission has been built in most regions of the country for more than 7 years.
The need to upgrade our transmission infrastructure is too urgent to continue to be dealt with in this manner -- which in effect treats improvements to the transmission infrastructure as an objective that can wait to be pursued until a later date.
This strategy has been utterly ineffective for 7 years and there is no reason to expect that it will be more effective now.
Further, even if last week’s Black-Out were to cause resistance to FERC’s Grid strategy to disappear overnight (which it won’t), putting in place a complete new system to manage the Grid takes years.
The past track record suggests that, during the multi-year period in which the new system is being put in place, little or no progress is likely to be made in making urgently needed improvements to the Grid.
In the interim, the Grid could again fail.
Indeed, this is arguably just what occurred last Thursday in the Midwest -- where FERC’s program for re-vamping the management of the transmission infrastructure has been in the process of being implemented for several years, but few if any needed improvements in the transmission Grid have been made during the multi-year period in which the transition to FERC’s new system has been under way.
As a direct result, improvements that might have prevented last week’s Black-Out from occurring were not completed – or, for that matter, even started – prior to last week’s Black-out, leading to economic losses that years of successful operation of the Midwest ISO may or may not ultimately be able to offset.
Rather than attempting to thoroughly overhaul management of the U.S. Grid all at once, therefore, FERC should focus first on immediately identifying the specific improvements to the Grid that are most urgently needed and attempting to ensure that these improvements are made in the shortest time frame possible.
Overhaul of the system-as-a-whole inevitably has a huge disruptive effect and in any event is not likely to happen for years.
Whatever one views of the merits of FERC’s proposed reforms, therefore, the time has come for the Agency to recognize that, as a practical matter, no matter how noble it’s intent, the effect of it’s core strategy in the power sector has been to severely impede efforts to upgrade our existing transmission infrastructure, not facilitate needed improvements.
The most prudent course for the Agency to follow, therefore, may be to defer efforts to comprehensively overhaul management of the Grid for at least the next 3 to 4 years, until after the most urgently needed improvements in the transmission infrastructure have been completed and new lines synchronized to the Grid.
Even Don Quixote presumably would have hesitated before continuing to devote his time to an all out campaign to tilt windmills after 7 years of failing – especially if the direct result of his efforts had been to leave 50 million of his countrymen in the dark for a 30 hour period in August. Chairman Wood should do no less.
3. Finally, while some of the most cost effective improvements that should be made to the Grid are needed primarily to enhance reliability, others serve a broader purpose.
There is an urgent need, for example, to expand the transmission pathways that connect the northern half and the southern half of the eastern U.S. (for this purpose broadly defined to include the entire area east of the Mississippi River).
There undoubtedly would be reliability benefits from expanding certain of these pathways.
These expansions are needed primarily, however, to increase the extent to which we are able to tap under-utilized coal-fired capacity in the Midwest to reduce growth in power sector demand for natural gas in certain portions of the southeast.
It would be nothing short of tragic if expansion of these pathways continues to be deferred for many years while FERC continues to try to solve every problem at once, rather than concentrating its efforts on the specific expansions to the transmission system that have the potential to produce the greatest near-term benefit by reducing the rate of growth in power sector demand for natural gas to more manageable levels.
