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Reports of the Electric Grid’s Death Have Been Greatly Exaggerated

March 28, 2017

There have been numerous pronouncements recently about the upcoming demise of the bulk power grid as consumers are projected to move toward decentralized green energy sources. We don’t believe that the end of the electric grid is nigh upon us.

Investment in Transmission Grows

In the last decade, low load growth in the U.S. has been accompanied by continued transmission growth. Although the percent of load growth is declining or flat nationwide, investment in the transmission system is increasing. In addition, recent trends suggest that decarbonization efforts—installation of renewable resources and distributed energy resources—will likely be accompanied by increasing transmission expansion. Other factors are contributing to the increased transmission system investment as well.

Annual electric load growth has trended downward over our lifetimes, from 9.8% annual growth in the 1950s to 0.7% in the first decade of the 21st century. Nonetheless, the load itself continues to grow as does transmission system investment. Annual investment in the transmission system increased from around $ 2 billion in 1997, to $ 14 billion in 2012, an annual growth rate of almost 14%.…

Where Are We After 10 Years of Bulk Electric System Reliability Standards?

January 24, 2017

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As concerns about grid security increase globally, it’s a good time to review the history, scope, and effect of North American electric system reliability standards. As the threat landscape changes, standards alone are not enough.

Mandatory. That’s the key word in the Energy Policy Act of 2005 (EPAct) where grid security is concerned. Within two years of that legislative action, the electric power industry was welcomed into the world of operation and planning regulation far beyond anything that had come before. As of June 18, 2017, we will have 10 years of experience with mandatory reliability standards. Are we better off as a result? Are the costs of compliance commensurate with the benefits? Will changes in approach to compliance currently under way enable a more efficient regulatory environment going forward? This article examines how we got to the current system and where we may go from here.

The Triggering Event

The April 14, 2003, blackout of much of the northeastern United States and parts of Canada was the impetus for EPAct and the accompanying changes to Section 215 of the Federal Power Act.…

U.S. Electric Markets in Transition

January 2, 2017

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The U.S. market for electricity is trifurcated. More than half the country is served by competitive generators bidding against each other in wholesale markets. Almost half is served by conventional state-regulated, vertically integrated utilities controlling generation and transmission. The rest, a much smaller portion, consists of government-owned and customer-owned utilities, some of which are generators and most of which serve retail customers. All categories are in transition.

In October 2016, the Public Utilities Commission of Ohio (PUCO) offered Akron-based FirstEnergy a five-year, $ 600 million subsidy to be paid by the utility’s customers. The move was designed to compensate for the investor-owned utility’s (IOU’s) large, baseload coal and nuclear plants’ inability to compete in the PJM competitive wholesale market against low-cost natural gas.

Consumer groups slammed the PUCO order as “corporate welfare.” Tony Addison of AARP said the PUCO decision means that “Ohioans should subsidize the failing business model of FirstEnergy.” This, Addison said, “creates a terrible precedent by PUCO and others to bailout companies threatening to leave the state, on the backs of the people that work hard and pay their bills every month.”…