Too soon to call for grid overhaul

'It's a wake-up call," said President Bush. "The grid needs to be modernized, the delivery systems need to be modernized. We've got an antiquated system." Former Energy Secretary Bill Richardson called for passage of the Bush administration's energy bill.

President Bush and Mr. Richardson, governor of New Mexico, were responding to questions regarding the massive electrical blackout that occurred around 4:10 p.m. Aug. 14, disrupting the daily lives of a reported 50 million people in New York state, New England, the upper Midwest, and Canada.

But the president's energy bill may have little to do with either the blackout or providing safe, reliable, low-cost electricity. It's much too soon to say what's needed. At the time of this writing, the precise cause of last week's blackout is yet to be determined.

What we do know is the systems that are supposed to prevent this type of blackout didn't. The power system is protected, or kept intact, by a large, complex system of sensors, relays, and computers - the System Control and Data Acquisition (SCADA) system.

The SCADA system is designed to isolate the component of the power system that is malfunctioning, and the power system itself is designed to function normally with any one, or more, of its components out of service. As a last resort, the power system is designed to break into "islands" with each island having sufficient electric generation to meet the needs of the consumers in that island.

Apparently, this island operation did not take place, or at least it did not take place throughout the region of the blackout.

This will be an issue for investigators to resolve, and it may take weeks, or months. It has little if anything to do with an antiquated grid or delivery system. Had the problem been rolling blackouts, one could have blamed either an antiquated delivery system or insufficient generation.

But human error is the more likely cause. The cause of the 1965 blackout, which disrupted the northeastern United States, was "a lack of communications between the relay engineer and the power system operators and between the different utilities," as reported in the Institute of Electrical and Electronic Engineers Spectrum in June 1999.

One thing is virtually certain: No amount of money can guarantee that blackouts will never occur. Businesses that require near 100 percent reliable service have for years been advised to install stand-alone backup generators. The design of utility systems is a balancing act between rates consumers would have to pay versus the probability, duration, and costs of blackouts.

It is just this type of reasoning that gave the US the wonderful power system that Americans came to trust, one that served their needs at low cost. But as electric utilities grew larger, the cost per unit of electricity kept decreasing - until the first Arab oil embargo. Consumers were happy, regulators adopted a hands-off attitude, and utilities' management grew somewhat complacent.

The blackout of 1965 was a wake-up call. In response, the electric utility industry, prodded by the federal government, set up the National Electric Reliability Council to improve coordination among electric utilities.

Then came the Arab oil embargoes of the 1970s. For the first time since the freewheeling days of the 1920s, regulatory decisions began to be politicized to a much larger degree.

Consumers were promised lower costs if only the electric industry were restructured. Electric companies that carried responsibility from the electricity generating plant all the way down to the customer's meter began to be sold off in pieces. Generation, transmission, and distribution became separate entities.

Then came another wake-up call: the California "deregulation" fiasco. The deregulation of California's electricity market was supposed to bring cheaper electricity to the state. Instead, with wholesale electric rates 10 to 100 times as high as a year before deregulation, California's largest utilities faced losses of more than $8 billion.

Amid fears that California utilities would be unable to pay market prices, US Energy Secretary Bill Richardson signed an emergency order that forced out-of-state power producers to supply electricity to California. California's rate payers and taxpayers picked up the tab. And the new independent power producers got rich.

But deregulation itself was a misnomer. What really happened was that new laws and regulations were put in place, and a tried-and-true system that favored cost minimization was replaced with an untested system that favored profit maximization. It also fractured responsibility for the overall reliability of the system.

The "antiquated system" of which President Bush spoke is merely one outcome of this new legal and regulatory environment. It's time we took another look at the whole flawed concept of deregulation.

Enver Masud managed the US National Power Grid Study (1980) and National Electric Reliability Study (1981) for the US Department of Energy. A version of this article first appeared on

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