The rapid transition to a competitive power industry wasresponsible for last summer’s outages and brownouts, and a repeatcould be in store for this year, according to the results of theDepartment of Energy’s (DOE) final report on reliability issues.

The report, which was issued Monday, said that while acompetitive structure for the electricity industry should reduceoutages and brownout, “the transition to that new structurepresents a risk to reliability.” Consequently, it called on thefederal government, states and the power industry to “proceedexpeditiously through this period of transition,” which it says hasconstrained transmission capacity and caused some power providersto be more interested in competing for markets than reliability ofservice.

The states are moving quickly towards a competitive powerindustry, as 24 states and the District of Columbia already havepassed legislation or regulatory orders that permit customers tochoose their electric providers. Congress, on the other hand, hasbeen debating electricity restructuring for the past three years,and is nowhere near a final bill.

In a speech to the National League of Cities earlier this week,Energy Secretary Bill Richardson said “it [was] high time forCongress to act” on a comprehensive restructuring bill, or face”more long, hot summers of outages” across the nation.

“Making the electric grid more reliable is a main reason Ibelieve Congress needs to enact comprehensive electricityrestructuring legislation — and do it soon. The question is notif, but when,” he told the group of mayors.

The report was conducted by a team of experts from inside andoutside DOE, who reviewed extensively eight power outages anddisturbances that occurred last summer. They discovered that the”necessary operating practices, regulatory policies andtechnological tools for assuring an acceptable level of reliabilitywere not in place yet.” The experts proposed 12 recommendations tobe considered by Richardson to avoid future power outages.

Foremost, the report concluded the current system of voluntarycompliance with reliability standards was “inadequate.” Instead, itfavored mandatory compliance by all electricity providers.Specifically, the report recommended that Congress create aself-regulated reliability organization with federal oversight todevelop and enforce the standards for bulk power systems as part ofa comprehensive bill.

It also stressed that federal guidance over the restructuringeffort was needed to improve reliability. “Many states have madesignificant progress in developing competitive electricitymarkets,” according to the report, but their efforts in developing”market-based mechanisms for promoting electricreliability…..have been less aggressive.”

Additionally, the DOE-sponsored study suggested the federalgovernment eliminate barriers to distributed energy resources bysupporting the development of interconnection standards for thesenew technologies. This would enable utilities to respond morequickly to surges in power demand in areas where consumptionalready is high, Richardson said. “The federal government shouldtarget this area for special attention,” the report noted.

It further believes more reliability-related research anddevelopment is warranted, particularly during this transitionperiod. “Industry investments in reliability-related R&D havedeclined steadily over the past few years” partly because “the’clients’ for next-generation investments, such as regionaltransmission organizations, are still in their formative stage,”the report said. Moreover, “the independent system operatorscurrently do not own the transmission assets and are non-profitinstitutions.”

The study also proposed the creation of regional siting boardsfor new generation and transmission facilities. Such boards “candischarge their responsibilities in a timely and coordinatedfashion,” which would boost system reliability.

Energy-efficient measures should be promoted as a way to improvereliability as well, according to the report. “Such programs mightbe especially helpful in areas where growth in electric demand ishigh, yet markets for new generation are in their infancy orexisting incentives for investments in transmission anddistribution are in transition.”

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