Dave, Kim:
I think we should reference this article as an example of how price controls degrade reliability.

Bill,

If you have any further insights on what happened that day, let Dave Perrino or Sue Mara know.

Thanks,

Alan 

Officials study grid's close call 
Published Friday, Aug. 10, 2001, in the San Jose Mercury News 
BY STEVE JOHNSON, JOHN WOOLFOLK AND GLENNDA CHUI 

Mercury News 


Two energy agencies announced Thursday that they are investigating charges some California generators have disregarded orders to provide electricity, and Atlanta-based Mirant admitted it had a role in last week's incident that briefly imperiled the Western power grid.

California officials said two companies failed to deliver expected power on Aug. 2 and pushed the grid dangerously close to collapse, threatening outages on the electrical lifeline to 65 million people. 

But it could take state and federal officials some time to sort through conflicting accounts of what led to the power shortfall and how to prevent it from happening again. 

Some generators and a federal official questioned the California Independent System Operator's handling of the emergency and said the rules governing how power plants must respond to state orders for supplying electricity need to be clarified.

But Stephanie McCorkle with the California agency said the incident was just the latest in a series in which generators didn't follow orders. And she said state officials are particularly troubled at the reasons some of the firms involved have offered for falling short on delivering promised electricity.

``We asked them over and over why they're not following our dispatch instructions,'' she said, adding that some have provided ``explanations that don't add up. It makes us suspicious.''

McCorkle said the Aug. 2 incident occurred when two power companies balked at state orders to provide power. That left the Western grid -- a vast network of high-voltage lines, transformers and other electrical gear that spans 14 states and parts of Canada and Mexico -- with a sudden and severe electrical shortage. If uncorrected, she and others said, it could have led to widespread power outages.

Although officials need to keep the grid's electrical frequency at 60 hertz, the Aug. 2 shortage lowered it to 59.93 hertz. State officials said blackouts could occur at 59.65 hertz.

McCorkle declined to name the companies involved. But Patrick Dorinson, a spokesman for Mirant, which has three plants in the Bay Area, said it was partly responsible. While offering few details about what happened, he blamed the incident on an inadvertent error by a company employee ``not making a timely call'' and ``some software problems with our computers.''

``It happens,'' Dorinson said. ``People make mistakes.''

An official with the Federal Energy Regulatory Commission, one of the agencies investigating the matter, said it views the Aug. 2 incident with alarm and wants to ensure the problem doesn't happen again. The agency also intends to look into whether penalties are in order. But at this point, the official said, it's unclear whether the problem stemmed from confusion, incompetence or attempts to manipulate market prices. 

The official said the agency also wants to know why the California Independent System Operator didn't declare a statewide emergency on Aug. 2 when the promised electricity wasn't delivered. Had it done so, he said, the agency would have had more leverage over the generators.

Some power company representatives complained that the ISO doesn't always give generators enough time to get their plants warmed up sufficiently to provide the power it needs. For many plants, ``it takes a lot longer than 10 minutes to ramp up,'' said Richard Wheatley, a spokesman with Reliant Energy of Houston. ``You physically can't do it.''

But ISO officials defended their procedures, and spokesman Gregg Fishman said issuing an emergency declaration on Aug. 2 wouldn't have been feasible.

``This was so quick,'' he said. ``It was less than half an hour total from start to finish, and we were able to deal with it appropriately'' without suffering blackouts.

The incident also is being looked into by the Western Systems Coordinating Council, a voluntary confederation of energy suppliers and utility officials, which sets rules for managing grids in the region's nearly 1.8 million square miles.

Robert Dintelman, the agency's assistant executive director, said brief electricity fluctuations, such as the one that hit California or worse, occur once or twice a month across the West. On Aug. 1, for example, the frequency dipped to 59.75 in Montana when an electrical disturbance forced a large power plant offline there, Dintelman said.

But he said California's claim that generators aren't following orders is unusual. ``That is alarming,'' he added.

The council can issue fines for some rule violations. But Dintelman said he's not sure if they can be levied for defying orders to deliver power.

Nationally, such violators typically get away with little more than a slap on the wrist because penalties are so weak, said Ellen Vancko of the North American Electric Reliability Council. Her group has been pushing Congress to make the system tougher, but the legislation has stalled. Meanwhile, she said, grid rule violations appear to be on the rise nationwide.

Although the motivation for these incidents varies, she said, sometimes those responsible break the rules for no other reason than to benefit themselves, ``even if it means dragging down the frequency on the entire grid and putting everybody at risk.''






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Contact Steve Johnson at sjohnson@sjmercury.com or (408) 920-5043.




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