Academic journal article Forum for Applied Research and Public Policy

Gridlock Ahead?

Academic journal article Forum for Applied Research and Public Policy

Gridlock Ahead?

Article excerpt

The North American electric grid, with its myriad generators, wires, switches, breakers, and more, moving vast amounts of electricity to virtually every point on the continent is aptly called the world's largest machine, says TVA Executive Vice President Terry Boston. Unfortunately, that machine has been sputtering a bit as of late. Witness the string of blackouts last summer that left hundreds of thousands without power.

What's happening? Boston says part of the problem rests with restructuring, which has the electric utility industry "sprinting toward competition before it can walk." The result? Reliability suffers and "instead of acting as a lifeline, electricity is in danger of becoming just a bottom line." Indeed, Boston, citing a Department of Energy report on the blackouts, warns that: "the necessary operating practices, regulatory policies, and technological tools for dealing with the changes are not yet in place to assure an acceptable level of reliability." Simply put, the transmission system--the lines and facilities that move electricity from generator to consumer--cannot handle the flood of activity unleashed by restructuring.

Of course, not all competition is bad; many can benefit from the lower prices that competition and added generation will bring. However, unless improvements to the transmission system are made along with increases in generation, says Boston, "we may be putting out the fire with gasoline."

Paul Sotkiewicz, an economist at the Federal Energy Regulatory Commission, echoes those concerns about reliability and raises others such as market power and rate pancaking. The former refers to utilities interfering with competition; the latter, to the stacking of charge upon charge to transmit electricity across multiple systems. In response to these concerns, FERC, in December 1999, issued Order 2000 encouraging utilities to form regional transmission organizations. If successful, RTOs will help ensure that competition achieves its goals of increased efficiency and lower rates without jeopardizing reliability. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.