Gearing Up for Grid Shock

By PATRICK LEE

Aug. 14, 1996 12 AM PT

TIMES STAFF WRITER

The stresses on the West’s complex system of power lines promise to worsen as the electric industry deregulates, and this summer’s rapid-fire, regionwide blackouts have public officials exploring what it will take to ensure the grid’s reliability.

The easy answer is to spend more money--for sophisticated new devices to increase the capacity of existing power lines and to improve their stability so they don’t automatically shut down.

But such devices can cost tens of millions of dollars per line--which would ultimately be passed on to customers. That’s unlikely in the current environment of cost cutting and shareholder pressure on the state’s investor-owned utilities, which currently own and operate the transmission grid.

Analysts say there are better answers, notably doing a better job of managing the grid.

“You can always spend more money on the system and increase its reliability, but that’s not necessarily the answer,” said Bob Finkelstein, staff attorney with Toward Utility Rate Normalization, a San Francisco-based consumer group.

“A better answer is to take a hard look at how the system is planned and operated and change the way the system is run,” he said.

One suggestion: Create a single power administrator for the entire region instead of the current patchwork management of the grid by individual utilities.

“For the Northwest and potentially for the West [as a whole], you need a single, independent authority to require people to build the necessary transmission capability. You need an independent grid operator,” said Randy Hardy, chief executive at the Bonneville Power Administration, which would be happy to take on the task.

But such a change would require a wholesale transformation of the region’s utility industry, which is unlikely. The electric industry in California is already in the middle of a different kind of restructuring.

In any case, monitors of the widespread electric transmission system, which observers call the biggest machine in the world, are taking the reliability question seriously. That’s because the region has become so interconnected that what affects one area now redounds to all.

“The entire power grid, from Alberta, down through Washington and California to Baja, is tied together in one big, gigantic grid,” said Karl Stahlkopf, vice president of the power delivery group at the Electric Power Research Institute, or EPRI, in Palo Alto.

Utilities are attributing the blackouts to such factors as poor line maintenance and increased demand for power throughout the region, particularly during peak periods such as the current heat wave.

But market forces and other factors have also combined to add stress on the transmission grid at a time when fewer new lines are being built, analysts say.

One key change: utilities are now buying power from farther away, through a system of bulk power trades approved by federal regulators a decade ago, from electric-power brokers such as Enron Corp. that have become major factors in the industry.

Although the amount of power being consumed nationally has edged up a modest 2% a year, that power is being pushed over greater distances on existing power lines, rapidly filling up the capacity of those lines and leaving very little room for disruptions, EPRI reports.

In recent hot summers, the Pacific Northwest has been exporting the equivalent of four nuclear power plants’ worth of electricity to help cool California homes.

“What we’re seeing is a convergence of increasing load . . . overlaid on a burgeoning bulk power market, which is adding significantly to the [number of long-distance transactions] taking place,” Stahlkopf said.

The problem is not new: a 1991 report by the North American Electric Reliability Council, or NERC, which sets standards for the industry, said that voltage problems in the grid were due in large part to the intensive use of long-distance transmission lines between remote power plants and areas of high demand.

In California, the problem promises to become more complex under the proposed deregulation of the state’s electric industry, now under review by state legislators and federal regulators.

Among other things, the proposed deregulation would throw open the wholesale market for power to generators large and small, from within California and outside it, all competing for access to the state’s grid.

At the same time, the plan would remove operational control of the state’s transmission grid from the patchwork of huge investor-owned utilities and smaller municipal utilities, and place it under the control of a single independent system operator, directed by representatives from all sectors of the industry.

But it’s unclear where ultimate responsibility for the system’s reliability will lie. The independent system operator will have nominal responsibility for ensuring reliability and setting rates to pay for it, subject to federal approval.

But the utilities will continue to own the lines and will be looked to for maintenance and new construction.

“Depending on how deregulation is set up, the utilities may have less incentive to keep up maintenance to enhance their bottom line,” said John Pretti, assistant director of the state Public Utilities Commission’s Division of Ratepayer Advocates.

“It will all depend on how deregulation is actually implemented,” he said.

Moreover, any of the new power companies in the envisioned market free-for-all will be able to build new transmission lines if that will allow them to reach new markets. Details are still being worked out.

Overlaid on this new, untested structure will be the reliability standards set by regional coordinating councils--in the West, a consortium called the Western Systems Coordinating Council, or WSCC--and the NERC.

As it is, the regional councils responsible for setting reliability standards have little power to enforce those edicts.

A Department of Energy study of the July blackout in the Western U.S. found, among other things, that Northwest system operators had not followed guidelines set forth by the WSCC, the regional consortium, which in turn was acting on recommendations set forth by the NERC in 1991.

Not that such guidelines could have avoided the July problem.

“Despite earlier actions taken by NERC, WSCC and member entities in response to NERC recommendations from 1991 concerning voltage collapse, these recommendations and actions proved insufficient to avert the cascading outage of July 2,” the Energy Department said.

After deregulation, today’s voluntary rules may become mandatory operating requirements and the WSCC could evolve “into something with police power to impose rules and compel members of the council to follow the rules,” said Daniel Nix, deputy director for energy forecasting and resource assessment at the California Energy Commission.

In any case, supporters of deregulation believe that having a centralized, independent grid operator in California would enhance the system’s reliability by eliminating inefficiencies.

An independent system operator “should ultimately lead to an increase in the reliability of the grid,” Stahlkopf at EPRI said. “But the one question that has not been satisfactorily answered . . . is what are going to be the incentives for, and who will pay for, upgrades in transmission capacity as it is needed.”

If the grid cannot handle the increased stress, the degree to which power is moved from place to place may ultimately have to be curtailed.

Times staff writers Leslie Helm and Shawn Hubler and Times Senior Economics Editor James Flanigan contributed to this report.

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The Generators Most of California’s electrical power is created by utilities in the state, but some of it comes from as far away as British Columbia. *

California power sources and capacity, in megawatts*

Utility-owned: 43,232 (76.3%)

Alternative energy: 8,297 (14.6%)

Imports: 5,136 (9.1%)

Southern California Edison Co. buys power from more than 110 sources, including the following companies connected through the Pacific Intertie:

Bonneville Power Administration

Idaho Power

Montana Power

PacifiCorp

Portland GE PowerEx

Seattle City Light

West Kootenay Power