Fortnightly Magazine - April 15 1998

AMERICANS ARE fascinated with lists. There are lists of just about anything you can name, from the Fortune 500 to baseball batting averages. There's even a book of lists. We especially like to rank "top tens," like the 10 best cities to live in or the 10 worst school districts in America. Television has popularized these lists. One thinks immediately of David Letterman, of course, but back in the '50s there was a black-and-white TV show, "Your Hit Parade." It presented the top 10 hit songs for the week, performed by singers like Gisele MacKenzie and Snooky Lanson (em inspiration for countless top 40, top 50, or top 100 lists by contemporary radio disk jockeys (em perhaps even for Mr. Letterman.

And for at least one engineer who is just a little concerned about reliable electric service.

So here, with apologies to Gisele, Snooky, Dave, et al., are my own "Top Ten Myths About Electric Power Deregulation."

A Drum Roll, Please

MYTH #10: WE ARE WITNESSING DEREGULATION OF ELECTRIC POWER SUPPLY IN THE U.S. Reality: Some deregulation of the generation or supply side of the utility industry is occurring, but so is massive new regulation of other aspects of electric power. In transmission, regulation is intruding to a degree unprecedented in the 115-year history of electric supply in the U.S. Moreover, in reliability and its assurance, and in the very institutions of the industry, federal regulation has already taken over, or is being delayed only by debates over "how" (not over "whether"). Indeed, thousands of pages of new regulations now fill corporate libraries and congressional offices, providing lucrative employment for both attorneys and consultants, not to mention Washington bureaucrats.

MYTH #9: ELECTRICITY IS JUST ANOTHER COMMODITY, LIKE GAS, OIL OR PORK BELLIES. Reality: "Electricity is not a commodity; it's a phenomenon." This statement, made by an unidentified state commissioner, was quoted by Bruce Radford in a Public Utilities Fortnightly editorial a few years ago. I don't know its source, and he won't reveal it, but it's one of the best characterizations of electricity I've ever heard. It perfectly sums up the fundamental difference between electricity and other so-called commodities. Electricity is difficult, really impossible, to visualize. I can hold a pound of coal, or a 16-ounce jar of oil or gas, in my hand. A few of us could hold a pork belly. But no one I know could hold a kilowatt-hour of electricity. That's because, no matter what the economists say, electricity is different; it's an abstraction. Or, as our wise but unknown commissioner said, it's a "phenomenon." (Who was that masked man, anyway? I don't know, but I wanted to thank him!)

Of course, I could say, "I am electricity," since it's the electromagnetic force that holds the atoms of my body together (yours, too), and electricity makes my brain (such as it is) and nervous system work. As Walt Whitman said in Leaves of Grass, "I sing the body electric." He wrote that long before Order 888.

MYTH #8: THE MARKET WILL TAKE CARE OF RELIABILITY. (If you really believe this one, I'd like to talk to you about some land in Florida.) Reality: There are two kinds of bulk power system reliability: generation reliability (or adequacy) and transmission reliability (or security). Generation adequacy is virtually all anyone ever talks about when discussing reliability (em yet it constitutes less than 10 percent of bulk power system reliability concerns. Transmission security, on the other hand, is responsible for more than 90 percent of all reliability problems. Don't believe me? Quick, think of five or six major blackouts. Which ones involved a generation adequacy problem and which a transmission problem? I'd be very surprised if even one involved generation.

Generation shortages, when they do occur, are usually predictable and controllable; you can use voltage reductions, public appeals or, as a last resort, rotating feeder outages. Transmission contingencies are usually unpredictable and uncontrollable; they happen suddenly, often cascading over widespread areas in a matter seconds. In the 1965 Northeast Blackout, the end was unalterably ordained in less than three seconds.

The market can deal to some extent with generation reliability; mostly through the types of products marketers will offer customers. While acceptability problems may emerge when folks start to get cut off, letting the market act is theoretically possible. This possibility is not true for transmission reliability. There's no way to keep some customers on, no matter how much they're willing to pay, when the bulk power transmission system collapses. Think again of the 1965 Blackout. When the system went down, everybody went down (em even the wealthy folks in their million-dollar condos on Central Park West.

MYTH #7: THE BULK POWER TRANSMISSION SYSTEM IS A HIGHLY UNDERUTILIZED RESOURCE. Reality: Probably more so than any other major industry in the modern world, the laws of physics define and control electric power. Ignore or violate them, and you do so at your own risk. Transmission lines will not neatly load-up proportional to their thermal capabilities. Nor can you "send" the electricity down this line or that as you wish. Power flows over a transmission grid according to the electrical characteristics of the various elements, according to Kirchhoff's Laws. Further, the system must always be operated according to defined criteria so that, at a minimum, no single contingency will cause cascading outages and a blackout. Actual transfer capabilities must be computed and continuously updated as the system goes through its second-by-second changes. In reality, many critical transmission interfaces are loaded at or close to their maximum transfer capabilities most of the time.

MYTH #6: PANCAKING AND LOCATION-BASED PRICING ARE ALL THAT PREVENT POWER TRANSFERS FROM BEAUMONT, TEXAS TO BANGOR, MAINE. Reality: The further you try to go through an interconnection, the more transmission interfaces you'll cross. Thus the more likely it will be that you'll encounter at least one interface that doesn't have available capacity. Then there's the matter of transmission losses (em both watts and VARs (volt-amperes reactive). Losses are equal to current squared times resistance (the inductive reactance for VARs). The further you go, the more electrical resistance you have to pass through (em and the more power you will lose. Beaumont to Bangor may look attractive on paper, but when you add up the losses, and add them to the price, the savings may disappear.

MYTH #5: WE DON'T HAVE TO WORRY ABOUT VARS (em AFTER ALL, THEY'RE IMAGINARY! Reality: VARs don't travel well; they're lost at a rate about 10 times higher than watts. Although they're "imaginary" in the mathematical sense, they are essential to the transmission of power. VARs hold the voltage up like the poles hold the wires up. Furthermore, since VAR losses are proportional to the square of the current, they increase exponentially as power flow increases. VARs are like the water in a steam locomotive; it doesn't provide any of the energy to pull the train (the coal or oil does that), but the train will not get anywhere without water to convert to steam.

MYTH #4: TRANSMISSION OWNERS CONTROL RELIABILITY CRITERIA TO ELIMINATE COMPETITION. Reality: There may be a few examples of a vertically integrated utility trying to control reliability criteria, but both the past and the future indicate this will not prove a significant problem. The reliability infrastructure in place today had its genesis in crisis. The Northeast Blackout of 1965 both traumatized executives in large portions of the industry and compelled them to make reliability a priority. The stringent planning and operating criteria that followed have survived the test of time and have served the customers well. Executives were committed to the principles of reliability, and to the coordination and cooperation necessary to assure it. Engineers and other technical experts became its guardians. But most important, perhaps, is the fact that this structure is nothing new; it's been the case since the 1960s, long before competition and open access were issues.

In the future, when traditional utilities have divested themselves of their generating assets, the transmission owners will be the most sorely tempted to lower reliability standards. Since their major source of income will be transmission usage fees, there will be a real financial incentive to make criteria less stringent (em even at the risk of blackouts.

MYTH #3: TODAY'S RELIABILITY CRITERIA ARE TOO STRINGENT AND RESTRICTIVE. Reality: Today's transmission criteria are based on the ability to survive, without blackouts or loss of customer load, the "worst single contingency." This standard holds true universally across North America and throughout most of the developed world. You can't just make the system "a little less reliable." You either design it to survive the worst single contingency, or you don't; there's no in between. It's a quantum kind of thing. Some have suggested that transmission criteria should be based on probability rather than the present deterministic principles. Actually, industry experts have been working on developing a practical system for more than 30 years but so far have experienced limited success. The problem is that the probability of any single event approaches zero, while the number of possible events approaches infinity.

The larger problem with relaxing reliability standards is a human inclination best described in Nobel Prize winning physicist Richard Feynman's book, What Do You Care What Other People Think? Mr. Feynman served on the president's special commission investigating the tragic accident of the space shuttle Challenger. He describes in his book how he asked many NASA officials why they had lowered the shuttle's design standards. He was shocked when he repeatedly received the answer, "We hadn't had any accidents, so we figured we could lower the standards." As Feynman points out, the reason they had not had any accidents was precisely because they had high standards. Lower the criteria, and you're entering unexplored terrain.

MYTH #2: "IF YOU'RE FOCUSING ON RELIABILITY, YOU HAVEN'T GOTTEN THE MESSAGE." Reality: That's an actual quotation. So are these: "If your company is focusing on reliability, I'd downgrade your bonds right now." And, "Competition should be your top priority." It's difficult to comprehend, except for hubris, how anyone could make such a statement today. As a society, we are totally and irreversibly dependent on reliable electricity. Next to food and shelter it's probably the most essential of our everyday needs. We live in the Age of Information; its almost instantaneous acquisition and availability lie at the core of our economy. Without a reliable supply of electricity, almost nothing can happen. Yet intelligent people act like it isn't important. Would we tell American Airlines, "If you're focusing on safety, you haven't gotten the message?" Yet reliability is to electric power supply as safety is to air travel. Reliability should be everyone's top priority. It's in everyone's best interest, whether generator, marketer, transmission owner or customer.

AND THE #1 MYTH ABOUT ELECTRIC POWER DEREGULATION: RELIABILITY IN THE RESTRUCTURED INDUSTRY WILL BE JUST AS HIGH AS IN THE PAST. Reality: Don't bet on it! In fact, it's far more likely that deregulation and restructuring will lead to major degradation in bulk power system reliability. There are many reasons for this, some of which have already been touched on above. But here are a few of the most important:

Complication. Assuring reliability used to be fairly straightforward. There were few players, a relatively simple infrastructure, and near-universal commitment to the goals of reliability and conformance with criteria. Perhaps most important, there was a culture best characterized by cooperation and coordination. We now have an almost limitless number of participants, an increasingly complex infrastructure, little commitment to the goals of reliability, a "how can we beat it?" attitude toward criteria by many and a culture characterized at best by competition and confidentiality, and at worst by distrust, litigation and authoritarianism.

Legalism. Conformance with criteria is becoming an exercise in what we can get away with; how far can we go to just avoid violating the rules; and a search for loopholes. Conformance is "mandatory," and punishment assured. What a far cry from the days of so-called "voluntary" conformance, when players obeyed the rules because it was the right thing to do (how quaint!), and because they understood that reliability was in the best interests of all. You couldn't expect others to respect the rules if you didn't follow them yourself. That's a way of functioning that the bureaucratic mind simply cannot conceive of, and yet it's the way most of North America functioned for more than a generation. And functioned very well, thank you, as the record clearly proves.

Politicization. Now that the reliability infrastructure has made conformance with reliability standards "mandatory," which apparently it cannot legally do without governmental authorization, Pandora's box has been opened to politicians and bureaucrats. But, of course, this is the inevitable outcome of the regulatory takeover of the industry's own organizations. A federal "backstop," we are told, must be provided. Government must review and sanction all standards. And reliability is OK if it doesn't get in the way of the market. Political expediency will replace the judgment of professional experts.

Expediency. Many of the industry's own organizations, which were established to promote reliability, have in essence sold their birthright. They have judged that the pragmatic course is to follow the politically correct approach, "If you can't beat 'em, join 'em." Some did this because they genuinely believed they had no alternative, and this was a less-than-perfect way to maintain at least some leverage vis-a-vis reliability. Some did it to survive. Some saw opportunities to build new empires. A few became "true believers." And some simply lacked the courage. All have been, in my view, misguided.

The Bottom Line

We will see more blackouts. It may take just a few months, or it may take years (we are dealing with the subtleties of probability), but it will happen, make no mistake about it. If this is so, one might ask, how come so few people have said it? Ah, there's the rub! Well, for one thing, engineers love order (em and most of the people who would agree with me are also engineers. We don't like to rock the boat. We'd rather work from within, and we have a devotion to authority that is sometimes far too strong. Many believe that, given the present situation, the only way to help reliability is to work from within and try to make the best of a bad situation. And, some of us would like to keep our jobs! There's been a kind of blanket of silence thrown over the whole industry. It's not written down anywhere, but everyone knows that speaking out, even in private meetings, may, to paraphrase the Surgeon General, be dangerous to your career. Everyone knows, too, that decisions will be made at the top, and contrary opinions are not welcome; one organization actually bragged about turning itself into a "top down" organization.

What happens next? Well, it's far too late to stop this train, no matter what happens in the near term. We'll all have to sit tight and hope for the best. And do what we each can. Because, in the end, that's all we can do.

George C. Loehr is a consultant who also teaches courses on electric power systems and power reliability. He served as executive director of the Northeast Power Coordinating Council from 1989 until April 1997. His article, "Transmission Reliability in the 'Brave New World,'" appeared in the Feb. 1, 1996 issue of Public Utilities Fortnightly.

When a Nobel physicist asked NASA why it had lowered the space shuttle's design standards, he was told: "We hadn't had any accidents."


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