Repair bills for network would be big

Critics see hidden costs in transmission line takeover

By Jeff McDonald STAFF WRITER

February 19, 2001

While leaders of the Golden State plunge headlong toward taking over a vast network of steel towers and high-voltage cables that push electricity north, south and to all points between, critics question the wisdom of assuming ownership of thousands of miles of antiquated transmission lines.

Not only do California lawmakers have zero experience owning an electricity grid, the system is widely in need of upgrades that could pile billions of dollars in added costs onto the eventual price tag.

But as negotiators launch into discussions this week to put some 32,000 miles of poles and wires under state control, officials remain confident the buyout will help steer them out of the deregulation nightmare.

By leasing the grid back to Southern California Edison and Pacific Gas and Electric -- and using their existing crews -- the takeover would be seamless and utilities would get money to pay off debts, said Steve Maviglio, spokesman for Gov. Gray Davis. The plan also involves San Diego Gas and Electric's lines, although SDG&E has far less debt.

"The state would be responsible for the upgrades, which are long overdue in three or four spots," he said. "We have some major bottlenecks in transmission because of the lack of money put into the system."

Even so, major questions remain.

Who would be responsible for overall grid planning and operation? Where do transmission lines end and distribution wires begin? How would the state go about building the major links long put off by utility company executives?

"It's absolutely crazy right now to be talking about buying a transmission system," said state Sen. Bill Morrow, the Oceanside Republican and vice chairman of the Senate committee that oversees energy and utilities.

"If people are thrilled with the Department of Motor Vehicles, Caltrans and all the roads we've built to keep up with traffic demands, they'll just love a state-run power company."

Some experts predict that the transition from a mostly private grid to a public one may be less smooth than legislators expect and that ratepayers may have to pay billions of dollars.

"There is going to be a learning curve that's going to be painful for consumers," said Stanford S. Penner, founder of the UCSD Center for Energy Research.

Not until the state partially deregulated the electricity industry in 1996 did one agency -- the California Independent System Operator -- take over management of the majority of poles and lines delivering electricity to millions of homes and businesses.

But the ISO has little authority to order repairs or improvements to the system.

In addition to balancing the power supply and demand, the ISO compiles reliability statistics that map potential weaknesses. Like many fast-growing population centers across the state, San Diego County is among the top 10 trouble spots listed by the system operator.

The mishmash of ownership, overwhelming improvement expenses and strict environmental rules have conspired to put off needed repairs.

"There are many projects that were discussed for many years, but they were not undertaken," said Mark Ziering, an energy division manager at the California Public Utilities Commission.

Besides bailing out cash-poor utilities, the Davis program would for the first time place all the major spokes of the grid under government control. California would join 30 or so municipal districts in managing a statewide web of wires, substations and power poles.

Remaining under the ownership and management of private utilities, however, would be some 150,000 miles of distribution wires -- strings of smaller-voltage cables that shuttle power from transmission lines to individual customers.

That issue is important because regulators estimate that 90 percent of system failures occur within the distribution networks.

Making fixes Nonetheless, consumer advocates and most Democratic legislators lined up in favor of taking over the transmission grid. Public ownership would level the balance of power between electricity generators and consumers, they say. "It's the only solution that does the two things that need to be done," said Michael Shames of the Utility Consumers' Action Network. "It gets the utilities the cash they need and it goes a long way toward fixing some of the basic market problems."

Right now, billions of dollars worth of grid enhancements are either under way or listed on utilities' five-year capital programs.

But historically, as utility executives have wrestled with delivering more and more power to California consumers, they also have had to factor in the long-term costs of boosting grid capacity and efficiency.

For decades, improvements were put off because some investments did not pencil out, despite the guaranteed recovery costs and profits allowed by regulators. That is, projects may not last as long as loans needed to fund them.

Along Path 15 in the Central Valley, for example, a primary link between Edison and PG&E, upgrades were avoided for years as PG&E adopted a general strategy of building new power plants rather than adding to transmission capacity.

When thousands of volts of electricity needed to be sent to power-hungry Northern California this winter, Path 15 sagged under the pressure. Such bottlenecks are blamed in part for the rolling blackouts that struck the northern part of the state twice last month.

"Two or three years ago any congestion on that path was taken care of," said Steven Mavis, a regional transmission manager with the ISO. "It hadn't really turned into a reliability problem."

Only in recent weeks has the San Francisco-based utility begun plotting fixes. But any additions will take years -- and hundreds of millions of dollars -- to install.

Improving efficiency For example, video cameras placed along the network alert operators to sagging power lines -- a key indicator that electricity flow may be dangerously high. The same cameras measure thermal capacity in real time, telling managers whenever lines are close to overheating.

Electronic switching stations, meanwhile, instantly divert power streams according to demand -- another technological advance in which many utilities are only beginning to invest.

"These ideas are probably 10 years old, but going from research to implementation happened in the last five years," EPRI analyst Dejan Sobajic said. "Now price-wise, this equipment is becoming more and more affordable."

PUC manager Ziering said only in recent months has anyone at the state level paid serious attention to the power grid. Before that, the transmission system was largely overlooked.

"A lot of things were left unclear in restructuring. It took a while for that realization to set in."

http://www.uniontrib.com/news/uniontrib/mon/news/news_1n19trans.html

-- Martin Thompson (mthom1927@aol.com), February 19, 2001

Answers

I live in San Diego, and have read the print version of this news story, which goes into much more extensive detail. These details describe an "antiquated" electrical grid, beset with many "bottleneks" that are in need of "repair." Why did the grid become "antiquated" in just two years? And, what has broken down, to need so much "repair"? The State of California is about to buy an electrical grid that is beset with poorly understood Y2K-caused embedded system failure problems (in addition to the other publicly admitted problems.) Expertise to remediate these Y2K embedded system problems is very scarce and thus expensive. And, these skilled workers will have to spend much time (and thus State money) on Y2K remediation. It won't be called that publicly, but California taxpayers and/or ratepayers will be stuck with the tab. The forthcoming statewide economic impact and fallout will be severe and long lasting. The already high cost of living and doing business will become prohibitive. Residents will face higher costs, while employment and business spending dry up. The forced economically induced mass exodus will make the 1991- 1993 version look mild by comparison. The only preparation possible is to "beat the rush", and get out now!

-- Robert Riggs (rxr.999@worldnet.att.net), February 19, 2001.

I would like to know why California is having so much difficulty with their grid but other parts of the country apparently are running trouble free. I hear what you are saying but what did these other states do that California did not.

-- David Williams (DAVIDWILL@prodigy.net), February 19, 2001.

David, I am not intimately familar with California but I am with Washington. Here the system had an excess capacity and the system was functioning. Very suddenly the excess disappeared but with no stressors it continued to function. Now a stressor comes in the form of a drought and the state officals are predicting rolling blackouts this spring/summer.

-- Phil Maley (maley@cnw.com), February 20, 2001.