Cyber and Physical Security:
Although NERC and other agencies are helping out, utilities still face internal obstacles.
Outsourcing, Reliability, and IT
When the grid collapses or a hurricane wipes out power to millions of customers, how does a customer information system (CIS) information technology (IT) manager ensure his or her outsourcing partner works as an extension of the IT organization by providing system reliability? When customer privacy of a competitor is questioned, how can the company be certain that the team members of the outsourcing partner have had sufficient background security checks, and that company data is safe?
Deregulation, competition, and the back-to-basics utility strategy have created tremendous pressures for utilities to cut operating costs while improving customer service. In this environment, companies are being challenged to build the utility of the future-a lean provider of power generation, transmission, and distribution run tightly and efficiently, creating a low-cost, high-performance business.
Except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward.
There's plenty of talk about transmission, says Theo Mullen. "But real action on transmission construction is scant," he adds. "Conferences and reports abound. Projects of all sizes are being proposed. But, except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward. The vast majority of larger projects are stalled for lack of financial commitment."1
Southern Co. chose Francis S. Blake to stand for election to its board of directors. Blake is an executive vice president at The Home Depot. Blake's election would bring the board to 11 members.
Mirant announced that M. Michele Burns is the company's new CFO and executive vice president, charged with leading the company's financial restructuring. Burns previously has been executive vice president for Delta Air Lines Inc. and a partner with Arthur Anderson LLP.
Southern Co. appointed Chris Hobson senior vice president of environmental affairs, reporting to Charles Goodman, the company's newly named senior vice president of environmental policy and research. Hobson currently serves as vice president of environmental affairs for Southern Co. subsidiary Georgia Power.
Greater reliance on gas-fired power implies serious economic, technological, and national security risks.
Over the past two decades, the United States has, by default, come to rely on an "In Gas We Trust" energy policy. Natural gas increasingly has been seen as the preferred fuel for all applications, nowhere more than in the electric generation sector. However, the greatly increased use of natural gas forecast for the electricity sector may not be economically or technically feasible, and it does not represent optimal or desired energy policy.
Despite development challenges, LNG capacity is destined to play a bigger role in the U.S. energy mix.
When MidAmerican Energy announced its plans to build a pipeline to bring stranded Alaskan natural gas into the lower-48 states, the U.S. energy industry stood up and took notice. If successful, the project will bring the largest infusion of gas that this country has seen in many years-and not a moment too soon.
Business & Money
The consequences of exuberance are all around us.
Much of the 160 GW of new generation capacity added to the U.S. inventory since 1998 is now under water, economically speaking. At a per-megawatt cost of $300, this represents $50 billion of investment-much of which is concentrated in Texas (23 GW), Illinois (14 GW), and Georgia (11 GW). The key question for both merchant and other plant owners is how long it will take for plant values to recover.
A cost-benefit study shows the value of adding synchronized generating reserves to prevent blackouts on the scale of Aug.14.
If nothing else, the blackout of Aug. 14 showed just how physically vulnerable the electric transmission network has become to problems that begin at a very localized level. That vulnerability stems in part of the greater volume of long-distance transactions imposed on the grid by today's power industry.