The U.S. is awash in electric power. During 2000-01, more than 78,000 megawatts of capacity came on line nationwide -- roughly nine times the amount installed in the previous decade. In theory, that ought to be enough to meet demand and prevent a repeat of the blackouts that swept the country from 1999 to 2001.
All that electricity won't help one bit, however, if it can't get to where it's needed. Even as power companies scramble to upgrade the far-flung web of wires and switches that transmit the country's power, industry executives predict we're still in for trouble. "When the economy comes back on, the lights will flicker," says Kurt Yeager, CEO of Electric Power Research Institute (EPRI), the industry's cooperative think tank in Palo Alto, Calif.
At the local level, there is encouraging news. Some utilities that got burned in 1999-2001 have improved transmission lines and enhanced substations so they can funnel more juice down the same wires. The bad news is that some regions lag behind. And national efforts, led by the Federal Energy Regulatory Commission in Washington, are bogged down in fractious politics. In power generation, "competition is here to stay," says John W. Rowe, CEO of Chicago's Exelon Corp. (EXC
), an energy player on the BW50 list. "But to make that market really work, FERC's transmission rules must be in place."
Two years after power failures rattled the West Coast, the Midwest, and the Northeast, parts of the grid are still shuddering. The new capacity helps, but until the networks are upgraded, additional power sent onto already fully loaded lines can compound congestion. In the eastern half of the U.S., for example, the number of grid warnings filed to FERC has grown steadily since 1999 and is on pace to hit a new record this year.
Utilities responded to the last big crunch by rolling out more robust equipment. For example, in the wake of blackouts during a July, 1999, heat wave, ComEd, a Chicago utility run by Exelon, spent $2 billion to bolster its transmission capacity. ComEd replaced smaller transmission towers with stronger steel structures so they could be loaded with new lines to carry more juice. It extended the network of sensors that relay line conditions to a central computer, which can identify risks and reroute power before lines fail. ComEd also upgraded old substations and built new ones. The improvements have reduced the frequency of interruptions by 51% and have helped Exelon rack up sector-leading returns.
Some solutions are more high-tech. In a substation outside Utica, N.Y., where high-capacity transmission lines from the north and west merge and head south toward New York City, the New York [State] Power Authority has installed a prototype device that's helping pass more juice down the line. Built by Siemens and developed with EPRI, "it acts like a very fast set of valves on a network of pipes," says Shalom Zelingher, NYPA's director of research and technology development. In milliseconds, the room-size device can reroute power away from congested lines onto less loaded links. Already, "it has boosted throughput by nearly 200 megawatts -- equal to a midsize power plant we didn't have to build," says Zelingher.
At the national level, FERC has been slower to push through reforms that will improve transmission among regions. It's working to set up regional transmission organizations and devise standard market rules that will lure investment to new grid infrastructure. Yet FERC can't get the states to fall in line. Utilities in the Southeast, for example, don't want to make their relatively cheap power available to the North for fear it could drive up prices locally. "It's a political problem. And it calls for a political answer," says Patti Harper-Slaboszewicz, an analyst at Frost & Sullivan.
For now, the best utilities can do is ensure their patch of the grid is secure. Until FERC implements the new operating and investment rules, investors aren't likely to pony up the billions needed to upgrade the larger grid. With luck, the lights won't go out while everyone waits.
MARCH 24, 2003 |
Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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