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Impacts of Power Industry Restructuring on Power System Planning, Operation and Economics or Decline in Influence of El

2. Chart of Future Electricity Prices. Fuel 40-60% of cost of electricity. 3. Systems. As stated by Thomas P. Hughes of the University of Pennsylvania in September 1986 issue of CIGRE Electra:Modern systems are of many kinds.There are social systems, institutional systems, technical systems, and systems that combine components from these plus many more..

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Impacts of Power Industry Restructuring on Power System Planning, Operation and Economics or Decline in Influence of El

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    1. 1 Impacts of Power Industry Restructuring on Power System Planning, Operation and Economics (or Decline in Influence of Electric Power Engineers) Presentation at: IEEE Southeastern Michigan Conference & Dinner November 9, 2005 By: Jack Casazza, President American Education Institute 8208 Donset Drive – Springfield, VA 22152 Phone: 703/569-3579 – Fax: 703/569-3579 E-mail: ameredinst@verizon.net Web: www.ameredinst.org; www.PEST-03.org www.obligationsneeded.com

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    3. 3 Systems As stated by Thomas P. Hughes of the University of Pennsylvania in September 1986 issue of CIGRE Electra: Modern systems are of many kinds. There are social systems, institutional systems, technical systems, and systems that combine components from these plus many more.

    4. 4 Systems (cont.) An example of such a technological system is an electric power system consisting not only of power plants, transmission lines, and various loads, but also utility corporations, government agencies, and other institutions. Problems cannot be neatly categorized as financial, technical, or managerial, instead they constitute a seamless web.

    5. 5 Systems (cont.) Engineering or technical improvements also require financial assistance to fund these improvement(s) and managerial competence to implement them.

    6. 6 Nature of Electric Power Systems Synchronous Operation Five Grids in North America Each a Single Machine What Happens Anywhere in Grid Affects all Other Parts of it.

    7. 7 Will Discuss Role of engineers as it evolved with time. Changes in electric power industry and resulting problems. Possible future solutions.

    8. 8 Economists/Engineers/ Bankers/Lawyers Economists concerned with prices Engineers concerned with costs, reliability and life expectancy Bankers concerned with financial returns Lawyers concerned with contracts, laws, regulations

    9. 9 The Shift in Control in Electric Power Industry Dominant Dominant Period Concerns Profession 1890’s – 1900’s Technical Engineers (DC vs AC) 1900’s – 1930’s AC Technology, Engineers economics (understood technology and costs) 1930’s – 1960’s Interconnection to Engineers establish regional (understood economic grids benefits)

    10. 10 The Shift (cont). Dominant Dominant Period Concerns Profession 1960’s – 1970’s Interconnection of Engineers regional grids, large generator units, higher transmission voltages 1970’s – 1990’s Shortage of capital, Government rising costs, OPEC Engineers oil problem, Bankers environmental Environmentalists concerns

    11. 11 The Shift (cont.) Dominant Dominant Period Concerns Profession 1990’s to present Industry restructuring, Lawyers, competition, mergers, economists sales of assets, desire bankers for immediate financial results, new technology

    12. 12 Problems of Engineers in Legal Proceedings In legal proceedings a “brief” is preceded by a “table of authorities” that provide basis for brief. Table limited to citations and documents from other legal proceedings. Citation of technical papers or other engineering documents is not permitted. Puts a severe restriction on ability to introduce relevant technical information into the decision process.

    13. 13 Problems of Electric Power Industry Costs to consumers higher Failure to produce promised savings Reliability worse More major longer lasting blackouts Deregulation requires an increase in regulation Economists, lawyers, bankers and politicians in control Decisions based on wishful thinking and political objectives Cannot legislate reliability

    14. 14 Why? Decline in role of engineering profession Lack of technical expertise at the top, including government and boards of directors. Boards don’t know questions to ask. Appointment of lawyers to top jobs setting technical policy, lack technical experience and judgment Dominance of lawyers, economists, and college professors with no practical experience as advisors

    15. 15 August 14, 2003 Blackout Reports USA/Canadian governments appointed panel to investigate Mostly political appointees, few technically qualified. Actual investigation made through NERC Those involved had to sign confidentiality agreement Investigation limited only to technical factors

    16. 16 Blackout Reports (cont.) Technical investigation flawed. Did not investigate! Failure of high-speed reclosing to reclose successfully What would have happened if: 40% of generation had not been incorrectly tripped? Relays had not tripped ties to other regions? Why 2 ˝ days required for complete restoration?

    17. 17 Blackout Reports (cont.) Final government report recommended investigation of non-technical causes by independent panel. Investigation delayed two years – until after Energy Bill was passed. Workshops conducted in September and October 2005 in D.C. and Toronto (sponsored by US and Canadian governments) (transcripts available: DOE Website, http://www.energetics.com/reliability,html)

    18. 18 Blackout Reports (cont.) Workshops did not comply with recommendations. Reviewed effect on markets, not on systems. Not conducted by independent panel. Did not consider many factors recommended for investigation in government report.

    19. 19 Changes in Industry Structure Separation of generation and transmission ownership mandated by FERC Order #888. Entrance of Merchant Plants. Transfer of control of transmission to ISOs/RTOs with majority of boards with little technical knowledge.

    20. 20 Changes (cont.) New market areas established – inconsistent with operating areas. Many more participants affected system design and operation. (NY ISO 245 vs. 8 previously) (PPM ISO 350 vs. 8 previously)

    21. 21 Change in Focus from Coordination to Competition Prior Objectives Minimize total system long range costs Maintain reliability Coordinate with others New Objectives Maximize profits now

    22. 22 Expenditure Reductions to Improve Profits Reductions in Employees from 1990 to 2000 per Department of Labor Generation from 350,000 to 280,000 Transmission and distribution from 196,000 to 156,000 Reductions in maintenance Intervals between routine maintenance often doubled 25% reduction in total maintenance expenditures Reductions in training Personnel cannot be released

    23. 23 Changes in Technical Qualifications of Managers in Government and Industry Major shifts in qualifications Stress on marketing and financial background Downplay of importance of technical experience Appointments based on political factors FERC commissioners have no technical backgrounds Many appointees beholden to specific industry segments

    24. 24 Failure to Pass on Past Technical Knowledge Blackouts – vast experience from past blackouts ignored by management in setting government policy Departure of key personnel Encouraged early retirements Breakdown of “doctor/intern” relationships Dissolution system planning/engineering departments Lost best technical knowledge in companies

    25. 25 General Conclusion of USA/Canada 2005 Workshops Restructuring/Deregulation was a contributing cause Report being written – see on DOE Web site

    26. 26 Some Recommendations Emphasize in policies the need to foster coordination between organizations. Develop standards for technical qualifications for key government and industry positions. Require that appointments to FERC, DOE Office of Electric Delivery, NERC Board have demonstrated experience and are vetted by the National Academy of Engineers with input from IEEE, EEI, APPA and NRECA

    27. 27 Mandate DOE in consultation with FERC, NARUC and NERC undertake a biannual “National Power Survey” modeled after the 1964 survey to review long range national bulk system needs. (Include study of possible change in grid design including breaking grid into smaller areas interconnected by DC.) Investigate effects that extensive labor reductions have had on overall national reliability, and on the ability to cope with natural disasters and acts of terrorism.

    28. 28 Develop programs to encourage transfer of technical experience, support exchanging information related to reliability, monitor maintenance expenditures, etc… A thorough independent investigation of blackout is needed as recommended in Task Force response. Workshops do not take its place. Engineers and IEEE to play a far more vigorous role.

    29. 29 A Key Question Would technical achievements of the past been made with present industry structure? 765 kv transmission? 500 kv grid? Nuclear generation?

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