Don’t Believe the Hype

Steven Brown, editor in chief

Newspaper writers and editorial columnists are into the doom-and-gloom thing. We tend to be a “glass half empty” bunch. That’s what sells papers. Here is a sampling of headlines from across the country written in the wake of NERC’s most recent reliability assessment:

“Power Crunch Spotlights Deregulation Turmoil”
“We Ain’t Got the Power”
“A Dark Future for U.S. Power”
“Dark Days Ahead”

In fairness to those headline writers, NERC’s first long-term reliability assessment since taking on the role of electric reliability organization (ERO) for the United States (with the same designation pending in Canada) doesn’t paint a particularly rosy picture. The commission noted in its Oct. 16 report that, between now and 2015, U.S. electricity demand is expected to increase by 19 percent, while confirmed capacity will increase by only 6 percent. NERC projects minimum capacity margins to drop below minimum target levels in the ERCOT, MRO, New England, RFC and the WECC’s Rocky Mountain and Canadian regions in the next two to three years. It also noted that transmission projects continue to lag demand growth and expansion of generating resources in most areas. Maybe the general media can be forgiven for predicting “dark days” after reading NERC’s laundry list of power system ills.

However, all of these headline writers pre-suppose that the power industry will do nothing to alleviate the crunch NERC has laid out as just one possible outcome. Maybe they read too much (or not enough) into the opening line of the press release that accompanied the reliability assessment in which NERC head Rick Sergel announced that “The adequacy of North American’s electricity system will decline unless changes are made soon.”

Well, of course it will. And the performance of my pick-up’s engine will decline if I let it run out of oil, but that ain’t going to happen. Maybe I’m too optimistic to write for The Wall Street Journal, but I have more faith in the power industry than to predict a “dark future” for it. I’m more inclined to think that enough uncommitted resources will come on-line to meet minimum capacity levels, and that at least a few of the big proposed transmission projects like AEP’s I -765, the Western governors’ Frontier Line, Arizona Public Service’s TransWest Express line, or the Neptune project connecting LIPA with PJM will come to fruition and relieve congestion.

So, I’m not going to join the doomsayers in predicting a return to the dark ages, but I’m no Pollyanna either. There’s a lot of work to be done to ensure the lights stay on (as there always is), but going forward the power industry has some advantages it has previously lacked: namely, a potent reliability organization to police reliability, and legislative provisions (EPACT 2005) designed to overcome NIMBY-ism and, ostensibly, speed up transmission siting. In next month’s issue, we’ll take an in-depth look at the DOE’s recent transmission congestion study and discuss where we’re most likely to see “national interest” transmission corridors declared. That will mark a first step toward ensuring NERC’s worst-case scenario doesn’t come to pass.

I have a funny feeling we’re going to be OK, but I guess that doesn’t make for good newspaper-or good reliability assessment-copy.

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