THE WISDOM FUND: News & Views
August 18, 2003
Chistian Science Monitor

Too Soon to Call for Grid Overhaul

by Enver Masud

ARLINGTON, VA. --'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. . . .

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.

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Enver Masud was the Project Manager of the US National Power Grid Study (1980) and the National Electric Reliability Study (1981) for the US Department of Energy. An independent consultant since 1987 he has 35 years industry, state, and federal government experience in the US and international electric power sector.

Re Vertical Divestiture: "To separate the two [bulk supply and load management] would be likely to reduce reliability and increase costs."--John J Kearney, Edison Electric Institute, April 25, 1979 (written comments published in the U.S. National Power Grid Study, 1980)

"World's worst power outages," Wired Magazine, April 1999

"Examples of Major Bulk Power System Outages," National Electric Reliability Council

"The Changing Structure of the Electric Power Industry," U.S. Dept of Energy, October 2000

"National Transmission Grid Study," U.S. Department of Energy, 2001

"Electric Power Industry Restructuring and Deregulation," U.S. Department of Energy, Energy Information Administration

"Status of State Electric Industry Restructuring Activity," U.S. Dept of Energy, February 2003

"Factors Underlying the Restructuring of the Electric Power Industry," U.S. Dept of Energy, March 2003

"Timeline of the 2003 blackout," Associated Press, August 16, 2003

"Competitive Market Models and Transitions to Competition," Harvard Electricity Policy Group

[US consumers were warned on Sunday they would bear the brunt of the cost of updating the nation's power grid - put by some observers at up to $50bn--Neil Buckley and Demetri Sevastopulo, "US public faces bill for power upgrade," Financial Times, August 17, 2003]

Peter Behr and James V. Grimaldi, "Bush to Back Delay Of Power Grid Plan," Washington Post, August 17, 2003

[But uncertainty about the broader impact of a proposed new federal regulatory regime - which could lead to a greater separation of the electricity generation and transmission businesses - has contributed to a dearth of new transmission investment in the short term, observers believe.

The energy crisis in California has already contributed to some easing on rates of return. Trans-Elect has been allowed a 13.5 per cent return on its investment in Path 15, the transmission bottleneck that prevented enough electricity being transported around the state and contributed to power outages two years ago.--Richard Waters, "Utilities seek action over 'poor returns'," Financial Times, August 18, 2003]

"EEI: Five Steps to Assure Reliability and Transmission Capacity," Edison Electric Institute, August 19, 2003

["There is a continuing need for the reliability coordinators, transmission planners and operators to communicate and coordinate their actions to preserve the continued reliability of the E.C.A.R. system," the report said. It said that conditions in the region meant operators there had to remain vigilant.

"As long as transmission limitations are identified and available operating procedures are implemented when required, no cascading events are anticipated," the report said.--Andrew C. Revkin and James Glanz, " Oversight Group Warned Utilities on Power Flows," New York Times, August 21, 2003]

Martha McNeil Hamilton, "Do-It-Yourself Power Catching On," Washington Post, August 22, 2003

Enver Masud, "Say No to Proposed $50b Taxpayer Bailout for Utilities," The Baltimore Chronicle and The Sentinel, August 22, 2003

Chris Baltimore, "Report: Power Grid Upgrade May Cost $100 Billion," Washington Post, August 25, 2003

Jeannine Aversa, "Blackout Had Little Impact on Economy, Rebound Still Anticipated," Associated Press, September 3, 2003

Malia Rulon, "FirstEnergy Releases Timeline on Transmission Problems," Associated Press, September 4, 2003

AUDIO: Enver Masud, "The Blackout of 2000," New Focus, October 17, 2003

[The legislation also would give the Federal Energy Regulatory Commission authority to order the construction of transmission lines--Peter Behr, "Legislation Would Set Rules for Grid," Washington Post, November 15, 2003]

[A small transmission company that hopes to build a power line to carry electricity from upstate to New York City held an auction . . . The auction was canceled for lack of interest. . . . The energy market that the deregulators expected to create is not working the way it was supposed to.--"Power Shortage," New York Times, March 18, 2004]

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