There are essentially two kinds of reliability: sufficient generating capacity, and sufficient transmission capacity. Although it often receives the most attention, generation accounts for only about 10 percent of reliability concerns. Even when there is a problem, there is usually time to prepare; demand can be reduced through voltage reductions, interruptible customers, public appeals, and as a last resort, rotating blackouts. Inadequate electric generating capacity causes "brownouts" or, at worst, controlled "rotating blackouts" of limited duration; not massive, uncontrolled blackouts.
The transmission system, on the other hand, accounts for about 90 percent of reliability concerns. When it fails, it usually does so suddenly and catastrophically. And the final result can be cascading outages and widespread, uncontrolled blackouts.
Coordination: Little or No Incentive
The reliability problems of the bulk-power transmission system are dealt with today by pool and regional cooperation and coordination. But the new, competitive era may place this process at risk. Transmission owners that are also power suppliers will have little or no incentive
to cooperate with one another or with others. Similarly, a world of "two-party transactions" could lead to quick fix solutions to the immediate problem, rather than an optimized long-term plan.