Posts Tagged ‘Blackout’

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ProPublica gets the establishment view on the Arizona-SoCal blackout, the establishment says it needs more money and authority

September 20, 2011

Michael Giberson

At ProPublica, Ariel Wittenburg assesses the meaning of the early September blackout affecting parts of Arizona, Southern California, and Northern Mexico. The proximate cause was substation maintenance in Yuma, Arizona and an apparent fault in protective systems that should have kept surrounding lines running during maintenance. As these systems failed, the disturbance reached generators in the regions, which protected themselves by switching offline and pushing the area into a blackout. (It is easier to restart a generator that has been tripped off, than rebuild a generator that has been fried.)

While Wittenburg more or less endorses the “aging infrastructure” argument that The Economist‘s Babbage column pursued (see Lynne’s reaction to it), Wittenburg differs from Babbage in rather uncritically accepting smart grid ideas as a partial solution. (On the other hand, Wittenburg acknowledges recent upticks in transmission spending, even if judging the increase as insufficient to growing needs; Babbage didn’t mention the recent increases.)

But this uncritical attitude is not limited to smart grids, the problem with Wittenburg’s piece is that it uncritically passes along the views of various authorities without much in the way of a data point or countering view. The article draws on an interview with FERC Chairman Jon Wellinghoff in which the Chairman suggests FERC should have more transmission-siting authority. The article passes along the position of the Edison Electric Institute on how much transmission spending consumers would want to bear. The article quotes former FERC Chairman Jim Hoecker in support of transmission spending – “everybody needs them” – without mentioning that Hoecker is now an attorney representing a coalition of transmission-owning utilities and other groups with clear economic interests in building transmission.

Among other points where a little testing may have been useful, EEI’s David Owens is quoted as saying that transmission costs represent 35 to 40 percent of the typical consumers electric bill. That range seems high to me – I would guess at most 20 percent – but a quick scan of both the Energy Information Administration website and the Edison Electric Institute website didn’t turn up information on that point. I hope that Wittenburg verified the claim before publishing, but the apparent uncritical attitude toward official pronouncements leaves me unsure. But much more importantly, I would have much rather heard from a consumer’s representative on the question of what consumers might be willing to put up with on transmission expense, rather than see a representative of investor-owned utilities cast as presenter of the consumer viewpoint.

My complaint isn’t that Wittenburg drew on federal regulators and spokesmen for private utilities and transmission line owners. In fact, these parties along with state regulators and a few other federal, state and local government agencies are largely the folks responsible for building, maintaining, and regulating the transmission system we have. If anyone is to blame for the current system, these are the main folks to be talking to. But rather than asking them what they did to get to the current state of things, Wittenburg is asking them for advice on how to fix it.

Isn’t it not much of a surprise that the takeaway from the article is, in effect, spend more money and centralize more authority in Washington, DC. EEI, put into the role of consumer advocate for this article, is the only voice of a little moderation.

Is it that hard for a reporter to turn up a knowledgeable representative for power consumers? A fundamental problem with our electric power system is that widespread monopoly service combined with state retail rate regulation severely constrains the ability of consumers to express their value for electric service through consumer choices in markets. This article mimics this fundamental problem by failing to allow consumers to represent their own views.

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FERC, NERC conclude “weather-related causes” explain most electric power and gas supply problems during February’s extreme cold in Southwest U.S.

August 17, 2011

Michael Giberson

The Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) have issued their report on the events surrounding electric power and natural gas supply interruptions around the Southwest United States in early February, 2001. The culprit? According to the press release: “the task force found a majority of the electric outages and gas shortages were due to weather-related causes.”

My initial snarky response was, “It took you six months to figure this out? I think ERCOT power system operators had reached the same conclusion by about 6 AM on February 2.” But, of course, at the time there was some uncertainty about contributing factors and it is useful to go back over the event carefully in order to see what can be learned from the experience.

In the case of this report, “go back over the event carefully” seems to dramatically underestimate the effort. The resulting document totals 357 pages from cover to cover, including eleven appendices on topics ranging from “Electricity: How it is generated and distributed” to “Impact of cold weather on gas production.”

Much of the report, appendices included, is more or less a primer on current electric power and natural gas systems, focusing on the Texas, New Mexico and Arizona systems, and with an emphasis on reliability and weatherization issues. The report adds to that primer an account of what went wrong during the cold snap lasting February 1-5 and then reaches some conclusions and offers recommendations. The report appears to be a “one stop shop” for policymakers, power systems operators, and others interested in what went wrong.

The FERC press release highlighted a recommendation to Southwest states to consider whether to require winterization plans. In addition, the press release noted the following (from among the total of 26 electric power and 6 natural gas system recommendations):

  • Generation owners and operators should ensure adequate construction, maintenance and inspection of freeze protection elements such as insulation, heat tracing and wind breaks.
  • Reliability coordinators and balancing authorities should require generators to provide accurate data about the temperature limits of units so they know whether they can rely on those units during extreme weather.
  • Balancing authorities should review the distribution of reserves to ensure that they are useable and deliverable during contingencies.
  • State lawmakers and regulators in Texas and New Mexico, working with industry, should determine if weather-related production shortages can be mitigated through the adoption of minimum winterization standards for natural gas production and processing facilities.

Also of interest in the report, FERC/NERC reviewed the ERCOT Independent Market Monitor’s report on the rolling blackouts (which concluded no market manipulation was involved) and similarly found that there was no evidence of market manipulation.

While there is a great deal of additional detail in this report, the overall conclusions are more or less the same as reached in earlier reviews. This information, along with the economic incentives to put it to work, will likely keep the energy industry in the Southwest from experiencing rolling blackouts next winter.

RELATED: Tom Fowler offers a summary at FuelFix.com. The rolling blackouts in ERCOT were the topic of many posts earlier this year at Knowledge Problem, the interested reader can start with this KP search: ERCOT+blackout.

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Do anti-price gouging laws help the victims of natural disaster?

June 2, 2011

Michael Giberson

At the LegalMatch Law Blog, Sonya Ziaja editorializes in favor of laws against price gouging:

Natural forces are blind to what they destroy. People aren’t. In the past month, tornadoes and flooding in the South and Midwest left behind crippled lives, destroyed homes, and eviscerated infrastructure.

Now as the victims of the tornadoes try to rebuild, they are left vulnerable to another foe—people who use the disaster for economic gain by price-gouging.

Thankfully, there are legal protections against price-gouging in many states…. [The] price-gouging statutes allows the attorney’s general to investigate and prosecute instances of price-gouging once a state of emergency is declared.

After some discussion of the difficulty of defining price gouging precisely and the resulting differences in state laws, Ziaja asks a very good question: “How does any of this help the victims of natural disaster?”

Her answer sticks to the simple intended effect of the laws: “In theory, the threat of these consequences will deter potential price-gougers from profiting excessively from the misfortune of others.”

That line is a fine beginning to an answer, but unfortunately, is this case, it is also the end of the answer. The editorial moves on to other issues. What should come next is any evidence on whether the deterrence theory actually keeps people from profiting excessively, however that is defined. After all, first we should assess whether the law actual does the main thing it attempts to do. Following that one should look at whether the law has any unintended consequences, positive or negative, for victims of natural disasters.

On the issue of unintended consequences it seems clear that price gouging laws has negative effects for victims. The laws discourage efforts by merchants to bring useful goods into disaster-affected areas. Stores have been fined by the state after going to extraordinary efforts to bring electric generators into areas where an ice storm left millions of people without power. Gasoline retailers sometimes refuse to resupply at higher wholesale prices during declared emergencies, afraid they’ll be accused of price gouging. Victims of disasters are worse off if the laws reduce the resources available to them for recovery.

I’ll provide a few more details and analysis in a subsequent post on the consequences of price gouging laws. (The interested reader should also check out my price gouging article in Regulation magazine.)

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Power outages hot and cold

May 31, 2011

Michael Giberson

A FuelFix post by Tom Fowler relays ERCOT’s report that the Texas grid operator expects to have enough power to serve customers reliably this summer. At the end of Fowler’s post he casually mentioned, in connection with the rolling blackout in ERCOT last winter, “a report by federal reliability officials concluded power plant operators could have done more to prepare for the cold.”

Somehow I’d missed the release of the fed’s report. Since FERC and NERC were cooperating on the report, I headed to the FERC website to see if it had been posted. At www.ferc.gov, however, I find a notice saying that FERC would be closed on Wednesday “due to a power outage in the vicinity where FERC Headquarters is located.”

A Washington DC-area news report indicated that the power had been out in the area since around 4 PM, likely due to high summer temperatures. (98 F was nearly 20 degrees warmer than average for May 31 and just 1 degree short of the record.)

NERC – the nation’s FERC-certified electric reliability organization – also just issued its summer reliability assessment for the nation. NERC’s CEO said, “We expect the bulk power system will be able to meet the electricity demands this summer, though we are closely monitoring the effects of storms in the Midwest and Southeast, as well as potential drought conditions.” No mention of possible trouble in DC.

The coincidence of the DC power outage and the confident NERC summer report is mildly amusing (to those of us not sweating through DC’s unseasonably warm, humid night without power), but it appears the outage was a local distribution problem and not a resource adequacy or regional transmission system issue.

Still, maybe federal reliability officials and the local power distributor should have done more to prepare for the heat in the nation’s capital?

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ERCOT reliability monitor issues report on the February 2 rolling blackouts

May 20, 2011

Michael Giberson

The Texas Reliability Entity has issued its report on the ERCOT extreme cold weather events and rolling blackouts of February 2, 2011. Texas RE is the NERC regional entity for the ERCOT power system and contracted to the Public Utility Commission of Texas to serve as ERCOT reliability monitor for the state agency. In this latter role it was asked by the PUCT to report on compliance with ERCOT reliability rules during the cold weather event. (The ERCOT independent market monitor has already issued its report on market issues surrounding the February 2 event. See link to report, related KP post.)

In brief, Texas RE finds that ERCOT and ERCOT market participants took steps to prepare for the extreme cold, but the preparations were  not always adequate. For the most part it appears that parties complied with ERCOT protocols. In some cases, rules may have been violated and Texas RE is continuing to investigate. Texas RE notes it is working with NERC on further analyses of the events surrounding the rolling blackouts.

The report indicates that market participants were quick to learn from the failures of February 2. From the report at page 11:

Similar weather conditions occurred in the ERCOT Region on February 9-10; however, freezing equipment issues did not have the same impact as on February 2. ERCOT and many generation facilities implemented lessons learned from the February 2 event and prevented similar issues during the cold weather that followed on February 9-10. These lessons learned include improving winterization of the power plant equipment, starting combustion turbines further ahead in advance of severe temperatures to keep lube oil warm, and exercising moving equipment to ensure that the units will be available.

As previously noted here, powerful economic forces are already at work that will help avoid a repeat of February 2′s system emergency. Generator companies that did not deliver to the market the power they had committed day ahead suffered significant financial consequences (and similarly for retailers that had not contracted sufficient power in the day-ahead market to cover their customer loads, so ended up topping off at the extreme real-time market rate).

Here is the conclusion of the Texas RE report:

Texas RE’s investigation has revealed that, for the most part, ERCOT’s and Market Participants’ conduct during the Energy Emergency Alert that occurred on February 2, 2011, was consistent with requirements set out in the Protocols and Operating Guides. Loss of scheduled generation due to freezing pipes, valves, and instrumentation, and to a lesser extent issues associated with natural gas supplies, caused a shortage of generation reserves which ultimately required ERCOT to direct firm load shed in order to restore system reliability. Although ERCOT and Market Participants took steps to prepare for the expected cold weather, the actions taken proved to be inadequate or ineffective for the prolonged freezing weather which occurred February 1-4, 2011. However, ERCOT and many generation operators implemented lessons learned from the February 2 event and prevented similar issues during the cold weather that followed on February 9-10.

During the February 2 EEA Event, ERCOT Market Participants committed potential violations of the ERCOT Protocols and Operating Guides in connection with failures to meet Ancillary Services obligations, failures to meet Emergency Interruptible Load Service obligations, failures to execute manual load shed in accordance with requirements, and possibly with the performance of Black Start units. Texas RE will conduct additional investigations as necessary to determine the full extent and implications of non-compliance with the Protocols and Operating Guides, and will forward information to the PUCT for further action, as appropriate. Issues of possible noncompliance with NERC standards are being examined as part of Texas RE’s analysis in its capacity as the NERC Regional Entity for the Texas Region.

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Independent monitor finds no market abuse during ERCOT rolling blackouts on February 2

April 28, 2011

Michael Giberson

The ERCOT independent market monitor (IMM) has released its report on the February 2, 2011 rolling blackouts. Excerpts from the report introduction are below, but let’s get to the meat of the matter. The IMM was asked (1) whether there was any evidence that market participants tried to manipulate the market for financial gains during the period, and (2) whether markets operated efficiently and as expected during the period.

The short answers are (1) no evidence of manipulation was found, and (2) the markets operated efficiently and outcomes were consistent with the market design.

While these may seem like excessively upbeat conclusions given the failings in the ERCOT region that day, the key is to distinguish between the physical systems – which did fail and created significant hardships that day – and the market systems – which appeared to work as intended. The market review concluded market participants faced increasing incentives to have generation available before the event, companies responded to incentives by taking many preparatory steps (nonetheless, inadequate as we see in hindsight), during the emergency companies faced substantial incentives to bring generation to the market, and companies responded to those substantial incentives by engaging in extraordinary efforts to bring offline generators back online.

A key image on the manipulation question is Figure 5, which shows the relationship between generation outages and net market position for February 2. In brief, every generation company that was able to keep their forced outages below 10 percent (i.e. 90 percent or higher generator availability) netted a positive revenue flow from the market that day. Those generation companies with forced outages of 20 percent or higher ended up owing money to the market for February 2. It is highly unlikely that a firm profited by withholding generation capability from the market that day. (See the report, pp. 12-14, for additional details on the figure.)

Figure 5: Generation Availability and Net Financial Position on Feb. 2, 2011

Figure 5: Generation Availability and Net Financial Position on Feb. 2, 2011

The Texas Reliability Entity, reliability monitor for ERCOT, will also be issuing a report on the event directed at generator compliance with ERCOT reliability protocols and related rules. The North American Electric Reliability Corporation (NERC) and the Federal Energy Regulatory Commission (FERC) are also investigating outages in Texas and elsewhere in the Southwest and may publish reports.

For background, here is the introductory section of the IMM’s “Investigation of the ERCOT Energy Emergency Alert Level 3 on February 2, 2011“:

In the early morning hours of February 2, 2011, the Electric Reliability Council of Texas (“ERCOT”) region experienced extreme cold weather conditions, record electricity demand levels, and the loss of numerous electric generating facilities across the ERCOT region. These events combined to result in the declaration of Energy Emergency Alert (“EEA”) Level 3 at 5:43 a.m., with the initial interruption of 1,000 MW of firm load at that time, and reaching 4,000 MW of firm load shed by 6:30 a.m. Subsequently, firm load was restored in 500 MW increments beginning shortly prior to 8:00 a.m., with all firm load restored shortly after 1:00 p.m. on February 2nd . Prior to the declaration of EEA Level 3, load resources contracted to provide responsive reserve service were deployed at approximately 5:20 a.m., and Emergency Interruptible Load Service (“EILS”), another contractual demand response service, was deployed concurrent with the declaration of EEA Level 3, at approximately 5:46 a.m.

On February 4, 2011, the Executive Director of the Public Utility Commission of Texas (“PUCT” or “Commission”) directed Potomac Economics as the Commission’s Independent Market Monitor (“IMM”), and the Texas Reliability Entity (“TRE”) as the Commission’s Reliability Monitor, to investigate the ERCOT EEA Level 3 that occurred on February 2, 2011, and subsequent related events and developments on February 3-4, 2011, including all preparations leading to the emergency event, as well as action taken once the event occurred, and focusing on the actions of ERCOT and the ERCOT market participants to determine whether all appropriate laws, rules, requirements and processes were followed.

The primary role of the IMM as the Commission’s market monitor is to: (1) detect and prevent market manipulation strategies and market power abuses; and (2) evaluate the operations of the wholesale market and the current market rules and proposed changes to the market rules, and recommend measures to enhance market efficiency.

The primary role of the TRE as the Commission’s reliability monitor is to monitor and investigate material occurrences of non-compliance with ERCOT procedures that have the potential to impede ERCOT operations, or represent a risk to system reliability.

Given this division of responsibilities, this IMM report addresses the following two issues related to the ERCOT EEA Level 3 on February 2, 2011 and subsequent related events and developments on February 3-4, 2011: (1) whether market manipulation strategies or market power abuses were a cause or played a role in these events; and (2) whether the operations of the wholesale market and the existing market rules produced efficient market outcomes.

The review and analysis performed by the IMM and described in this report yields the following findings related to the events in the ERCOT wholesale market on and around February 2, 2011:

  • Based on our review of the cause of each generating unit outage and/or capacity de-ration, as well as the financial positions of market participants, we do not find any evidence of market manipulation or market power abuse in relation to the widespread generating unit outages that resulted in the EEA3 event on February 2nd .
  • Given the system conditions that materialized on February 2nd and 3rd, we find that the ERCOT real-time and day-ahead wholesale markets operated efficiently and the outcomes are consistent with the ERCOT energy-only wholesale market design.

Finally, because the review of the EEA3 event on February 2, 2011 is the subject of review by multiple entities and the IMM report is but one facet of this review, we have not at this time provided recommendations that may be beneficial in preventing a reoccurrence of the events experienced on and around February 2nd . We anticipate and are looking forward to participating in the development of a comprehensive set of actions that will serve to significantly improve the future reliable operation of the ERCOT grid in manners consistent with the competitive ERCOT market structure.

Previous Knowledge Problem posts on the ERCOT’s rolling blackout:

Cold snap brings rolling power outages to Texas; is ERCOT policy of isolation at fault? (February 4, 2011)

Texas Observer: Some Companies Made Millions Off the Texas Blackouts (February 4, 2011)

The natural gas that didn’t come in from the cold (February 7, 2011)

Transmitting power from Mexico to Texas (February 8, 2011)

More cold for Texas and a test of my conjecture on preparedness (February 9, 2011)

Roundup of news and commentary on the Texas rolling blackouts (February 11, 2011)

Good news and bad news from price-spike induced failure of retail power company in Texas (February 12, 2011)

ERCOT blackout hearings underway in Texas State Senate (February 15, 2011)

ERCOT rolling blackout news: Powerful market forces already at work (February 16, 2011)

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Blackouts in Brazil: Two views

November 11, 2009

Michael Giberson

Without additional comment, I present two articles online at Transmission and Distribution World, both addressing Brazil and blackouts:

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What model for the financial system breakdown? Falling dominoes? Cascading outages?

January 9, 2009

Michael Giberson

Simon Johnson reviews and provides a summary of a paper by Daron Acemoglu on the current financial crisis.  Johnson summarizes one of Acemoglu’s points as follows:

The seeds of the crisis were sown in the Great Moderation (the low inflation, relatively stable last 20 years or so).  Everyone who patted themselves or others on the back during that time was really missing the point (p.3).  The same interconnections that reduced the effects of small shocks created vulnerability to massive system-wide domino effects.  No one saw this clearly.

This kind of model – in which greater resistance to small shocks can create vulnerability to large system-wide effects – has been employed to understand the relationship between reliability in electric power systems.  It seems to be the case that at least many of the things that a local electric transmission system does to improve reliability work to push the larger system of interconnected local systems to a state in which it becomes more vulnerable to severe reliability failures – cascading blackouts.  There seems to be a kind of frontier, given the current state of the transmission system, where we can choose to have more frequent small blackouts and a very low risk of a huge blackout, or we can choose to have infrequent small blackouts with a slightly higher risk of a huge blackout.  (See, for example, work on cascading blackouts by Ian Dobson, Benjamin Carreras, David Newman and others, collected here, especially this paper.)

Of course, not every system shows this kind of interrelationship – making individual automobiles more reliable doesn’t increase the probability of a widespread automotive system failure, making telecom components more reliable doesn’t increase the probability of a cascading outage of phone services – and it is an open question whether this kind of model can be well employed to describe risks in the financial system.

To be fair, it is also an open question whether more conventional kinds of economic models can be well employed to describe the recent turns in the financial system.

(Johnson on Acemoglu found via Marginal Revolution and Economist’s View.)

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