There are No Free Lunches

Although this week’s question addressed electric power, gas and water, our most critical need is to upgrade the electric power grid. The problems of upgrading the grid reflect the complex structure of the electric power system, the lack of real competition in about half of the states, and a lack of a national strategic vision and plan. Ultimately, the cost of decades of neglect in addressing known issues with grid reliability, resilience, and efficiency will be borne by all tax payers and the economy.

The nation has about 3,500 utilities, thousands of power plants, many thousands of transformers, and about 200,000 miles of power lines. We need a national electrical power system but have one that was built to meet state and regional needs. We have known for decades that as the economy changed and technology advanced that we would need a more modern and robust electric power system. But, as with many important national problems state and federal officials have been satisfied to muddle through with their fingers crossed.

In the post 9-11 world it has become increasingly clear that approach is even less acceptable. Recent acts against transformers and a recent DOE report have made clear that our national power system could be shut down by acts that take out a small percentage of transformers. This is a national disgrace. Debating whether rate-payers or investors should pay for upgrading the system is a distraction.

Since our economy will increasingly be dependent on abundant and affordable electrical power, we need a realistic national vision and an affordable strategy for achieving it.  The more that Congress and state utilities attempt to force wind and solar into the grid system, the more difficult it will be to achieve a highly reliable national power system. Just think of Germany as a case study of what not to do.

Recent articles on upgrading and security have pointed out that the grid is controlled one way or another by local municipalities, state utility commissions, the North America Electric Reliability Council, the Federal Energy Regulatory Commission and other government agencies. At each level there is a patchwork of rules and regulators who can approve, deny, or delay improvements. With so much complexity and so many people involved in decision-making, it is clear that no one is really in charge. This is not an argument for a federal take over or for command and control regulation.  It is a call for a more rational approach and a recognition of the need for a management system that involves a productive private-public partnership.

A NAS study on the need to upgrade the transmission system pointed out: “The new operating standards being prepared by the electric utility industry and its reliability organization under the Energy Policy Act of 2005 (EPAct) will help, but EPAct doesn’t directly grant authority to order upgrades in the physical system”. This observation was made years ago but still nothing has been done.

Writing in Forbes in 2012, Eric Savitz made the point: “What has caused this hindrance in development? Quite simply, we’ve wasted 10 years arguing the roles of the public and private sectors while our global competitors adapt and innovate. We need to renew public/private partnerships, cut red tape and reduce the cloud of uncertainty on the ROI of modernizing and upgrading infrastructure”. Another Forbes writer ended his article this way: …, “reports coming out right after Sandy’s impact describe a Tower of Babel … Nobody had clear accountability …This is not an argument for a government take-over. The private sector can do a better job and more efficiently. But it probably makes sense for a single body to have oversight concerning these issues. … (W)e must quickly develop – at the federal level – the responsibility and authority for oversight relating to power grid security, reliability, and resiliency. The good news is that the NAS outlines a number of solutions to address and mitigate these vulnerabilities, … There is much that can be done to minimize the danger. The bad news is, there is nobody yet in charge”.

Effective private-public partnerships are not easy to develop and the need to have one that integrates federal, state, and local considerations makes the task even more challenging. But, tough problems are not a justification for kicking the can down the road. Congress and the Obama Administration agree on little but they should be able to agree that the problems of the grid are
critical and non-partisan.

This article appeared on the National Journal’s Energy Insiders weblog at http://disqus.com/wokeefe/

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