And why policy on
stranded costs defies
a traditional legal or
There are sound economic reasons why policymakers should allow electric...
A Mirage of ReliabilityBy John C. Hoag
The Internet doesn't suit companies
that are vulnerable to security or financial risk (em
like electric transmission providers.
THE RUSH IS ON TO SET OASIS IN MOTION.
First proposed by the Federal Energy Regulatory Commission (FERC) in its so-called electric "mega-NOPR" as "Real-time Information Networks" (RINs), and then codified in FERC Order 889 as the "Open-access, Same-time Information System" (OASIS), the idea is to bring the market for electric transmission capacity out into the sunshine.
But which factor should pose the greater concern: The approach taken by the RINs program designers in FERC Order 889, or the scope of the problem they attempted to solve in the first place? Both merit more serious thought despite the rush to implement OASIS, now set to begin on a test basis on December 2, and for commercial operation on January 3, 1997.
The Joint Transmission Services Information Network, an industry task force with 250 company members and nearly half the nation's transmission mileage, has awarded a contract to develop a system to carry capacity information and transact sales over the Internet. Each utility will have a "node" on OASIS that lists its available transmission capacity.1 A working prototype of an OASIS node is currently accessible at: http://www.tsin.com.
Nevertheless, is the Internet a safe and secure place for companies to do business? Probably not, at least not for companies with a great deal of safety vulnerability or financial risk. Electric transmission operations feature both of these characteristics.
The Internet: An Open Door?
For obvious technical reasons, most industries have not felt the need to transact electronic commerce across the Internet. "Even its most zealous supporters know that the Internet is not yet a utility-grade system," reported the Institute of Electrical and Electronic Engineers (IEEE).2 The most obvious reason lies with security, but reliability also poses concerns. While cryptographic technology appears readily available, its use so far has been limited by the U.S. Government as a "munition." Netscape is now allowed to distribute software for the World Wide Web that contains theoretically unbreakable algorithms, but by the company's own admission, the scope of this security remains limited.3 The U.S. National
Research Council4 further notes that cryptography "may lead [a determined] opponent to exploit some other vulnerability in the system." A 1995 study of Pentagon computers revealed as many as 250,000 attempts to penetrate military computers, of which 65 percent were successful. Only one in 150 intrusions was detected.5
The general reliability of Internet-based systems is also suspect. The New York Times reported this summer that during one week in June 1996, major Internet providers America Online (AOL), Microsoft, and Netcom went "down" for a total of nearly 24 hours, inconveniencing over seven million customers.6 AT&T has found it necessary to reserve up to eight hours of downtime each week for scheduled maintenance of its Internet infrastructure. Internet communications remain subject to "denial of service" (em connections "upstream" can be attacked, disabling corporate and individual end users. In September, InternetMCI lost its ability to route messages, effectively disconnecting Minnesota from