Still Groping in the Dark?

By Peter Van Doren and Jerry Taylor
This article was published in the Wall Street Journal, August 12, 2004.

It’s been nearly a year since a quarter of the nation went pitch dark in one of the most widespread power blackouts in U.S. history. Lobbyists representing various factions in the industry have labored to use the event as ammunition for their respective policy agendas. But it turns out that the blackout revealed less about the merits of deregulation — or various alternative institutional arrangements — than it did about the difficulty involved in ensuring that a system as complex as the electricity grid stays up and running in the face of foreseeable contingencies.

The final report of the U.S.-Canada Power System Outage Task Force tells a complicated but prosaic tale about dozens of small things that went wrong with few obvious policy lessons. It found little evidence for the case that lack of transmission investment or deregulation — two of the more popular explanations for the blackout — had anything to do with the event. Instead, it found that poor tree maintenance along transmission lines in the First Energy (Ohio) service area, combined with inoperative computer software and various human errors, were the key events that triggered the blackout.

In short, three 345-kilovolt transmission lines went down when heat caused them to sag and come into contact with trees. That created an imbalance between supply and demand along the lines feeding the Cleveland area, which led, in turn, to higher current flow and accompanying lower voltage on a large portion of the remaining Eastern interconnection as the power raced along other routes to get to Cleveland.

When devices known as “relays” detected the unusual power flows around the Cleveland area, they automatically triggered circuit breakers that removed a number of lines from service (a preventative measure to ensure that billions of dollars of capital stock are not fried by unusual power flows). In the words of the report, the “cascade became a race between the power surges and the relays.” The lines that tripped first were generally the longer lines that split the grid into those sections that blacked out and those that recovered without furthering the cascade. The upshot is that “protective relay settings on transmission lines operated as they were designed and set to behave on August 14.”

Would less sensitive or more integrated relays have prevented the blackout? Apparently not. “The investigation team has used simulation to examine whether special protection schemes, designed to detect an impending cascade and separate the grid at specific interfaces, could have been … set up to stop a power surge and prevent it from sweeping through an interconnection and causing the breadth of line and generator trips … that occurred that day. The team has concluded that such schemes would have been ineffective on August 14.”

How about mandatory, not voluntary, federal guidelines for industry reliability practices? To be sure, the lack of contingency planning and the lack of “situational awareness” by First Energy did violate the voluntary reliability guidelines which the company promised to uphold. Errors in that arena, however, were matters of secondary importance.

On the issue of vegetation management along the paths of transmission lines — the proximate trigger for the entire event — the voluntary guidelines established at the time by the North American Electric Reliability Council (NERC) were silent. Accordingly, if compliance with NERC guidelines were mandatory last year rather than voluntary — the main reform advocated by politicians and industry analysts — it would have made no difference.

In fact, First Energy went beyond the voluntary NERC guidelines by flying over its rights of way twice a year as was common industry practice. But in what surely counts as the understatement of the year, the Task Force report notes that flyovers do not appear in retrospect to be able to determine the distance between trees and transmission lines. Better practices are clearly in order, but First Energy was scarcely alone in believing that current practices were sufficient.

The report also discounted an intriguing explanation for the blackout that involves “reactive power,” which is required for the operation of motors and other devices that use magnetic fields. The theory is that an insufficient amount of reactive power from generators led to the voltage collapse and the cascading blackout. In this view, the shortage of reactive power was a consequence of utility restructuring that ignored the need to ensure that merchant generators were given proper incentives to produce such power for the grid. In effect, this theory argues that the introduction of imperfectly designed markets was responsible for conditions that make blackouts more likely.

The task force found that reactive power levels were indeed low in the Cleveland/Akron area but were in fact sufficient to preserve stable (although lower than normal) voltage until the three 345-kilovolt lines tripped from tree contact.

In short, the current debate is blurring the distinction between problems attendant to the restructured electricity system and problems that contributed to the blackout on Aug. 14, 2003. It’s certainly true that the transmission investment has not kept pace with the increase in system “throughput,” although the optimality of the old ratio of investment to throughput is assumed rather than established. It’s also true that utility restructuring has increased the number of players whose behavior has to be managed to prevent local system instabilities from spilling over into other service territories. And the evidence does suggest that under current voluntary industry guidelines some utilities are abusing the shared grid by deviating systematically from their supply and demand schedules. Likewise, analysts are right to worry that the restructured electricity system is dangerously cavalier about the need to ensure that sufficient reactive power is available to the system. Those four observations, however, have nothing to do with what actually happened to turn the lights off last year.

There are no quick or simple fixes for what went wrong last year. In fact, it’s almost certain that a system as interdependent as the modern electricity system will forever remain vulnerable to such mishaps. While we believe that a serious discussion about the problems associated with the restructured electricity system is long overdue, stapling that discussion to the events of Aug. 14, 2003 confuses rather than enlightens the debate.

Mr. Van Doren is editor of the Cato Institute’s Regulation magazine. Mr. Taylor is Cato’s director of natural resource studies.