The North American Electric Reliability Council (NERC) last week said that if all entities comply with NERC reliability standards there should be no uncontrolled blackouts this summer. Generation and transmission resources are expected to be adequate to meet projected demand.

The explicit link of compliance with NERC’s reliability standards to the odds of a blackout occurring included in the organization’s summer 2004 reliability assessment was not made in NERC’s summer 2003 assessment. The 2003 report was issued in May 2003 — a couple of months prior to the historic Aug. 14, 2003 blackout.

Investigators probing the causes of last year’s blackout have concluded that Ohio-based FirstEnergy and the Midwest Independent Transmission System Operator (MISO) violated certain voluntary NERC reliability standards.

In a conference call with reporters following the report’s release, David Nevius, senior vice president at NERC, noted that NERC “is urgently seeking enactment of the reliability legislation that’s contained in the comprehensive energy bill.” That legislation calls for making power reliability standards mandatory.

“Having said that, there is a heightened awareness following the blackout on the need to comply” with NERC’s currently voluntary reliability rules, Nevius said. “The industry is under a microscope, if you will, right now and we’re confident that folks are giving special attention to compliance.”

He also noted that NERC is conducting a series of reliability readiness audits examining the 20 largest control areas in North America prior to June 30, 2004 “for their ability and readiness to manage their system reliability and follow our standards.”

George Bartlett, chairman of NERC’s reliability assessment subcommittee (RAS), noted that while NERC did not alter the process it uses to execute the summer assessment in the wake of the blackout, NERC “did try to include in here and will include in future assessments, reports of any actions that regions are taking as a result of the blackout to try to improve their reliability.”

In its 2004 summer assessment, NERC said that even in areas where resources are expected to be adequate to serve all customer demand, unanticipated equipment problems and extremely hot weather can combine to produce situations in which demand temporarily exceeds available generation and transmission capacity.

NERC said that in some local areas system operators may need to implement controlled demand reductions — interruptible demands, voltage reductions, public appeals and even disconnecting firm customers — to maintain the constant balance between supply and demand needed to ensure overall bulk electric system reliability.

The 2004 peak demand for electricity in North America is projected to increase 2.5% compared to the actual 2003 noncoincident summer peak. To put this growth rate in perspective, the historical average annual peak demand growth for the last 10 years has been about 2.44%.

It is more meaningful to compare the projected 2004 and projected 2003 demands because actual demands reflect weather effects, while projections are based on average historical weather conditions. On that basis, the projected 2004 summer peak demand increases 1.5% as compared to the projected peak demand for summer 2003. Demand growth varies widely among the regions — some expect significant increases in their peak demand for the summer, while others project declines.

Generating resources are projected to be adequate in all NERC regions. Capacity margins used to judge reliability in the report only include capacity committed to serve demand for most regions. Those capacity values do not necessarily reflect all of the generation located within each region. Most units planned to be in service this summer are still on schedule and are expected to be available to serve peak demand, NERC noted.

NERC also said that although some portions of the continent are continuing to experience drought or below average rainfall conditions, those conditions are not expected to lead to capacity or electric energy shortages this summer. The respective reservoirs are designed for multi-year storage for water resources.

Addressing transmission adequacy, the assessment said that regional and interregional transfer capability study results indicate that the North American transmission system is adequate to serve firm customer demand this summer. “However, experience shows that at times, volatile and unpredictable flow patterns can pose significant challenges for transmission system operators.”

NERC said that the increasing volume of physical transactions adds to the unpredictability of the flow patterns in certain areas. When transmission congestion occurs, congestion management procedures must be implemented to avoid violating system operating security limits, NERC added.

Existing transmission lines are expected to be adequate for the summer, the report said, “although new transmission line additions continue at a slow pace.” NERC said that the RAS of NERC’s planning committee will include a more comprehensive review of transmission margins during its next long-term assessment.

Meanwhile, the assessment offers a listing of regional areas of interest for this summer. Bartlett said that this year’s list is more comprehensive than in years past.

“I think it’s mostly due to heightened awareness following the blackout and just the desire on the part of the regions to make known the fact that there are extreme circumstances that could lead to local area problems that would have to be dealt with,” he said.

NERC singles out the regions of interest for the report, not the regional reliability councils. “The regions will make recommendations and some of them will request that they be included in areas of interest, but it’s ultimately up to the reliability assessment subcommittee members as to what gets placed within the areas of interest,” Bartlett said.

Regional areas of interest for this summer are as follows:

In the WECC, the California Independent System Operator (CAISO) control area, in its summer 2004 assessment, said that this WECC subregion expects to have adequate resources to meet base peak demand, but that narrow operating margins exist and there might be problems if adverse conditions affecting supply arise during the summer.

CAISO has acknowledged that its operating reserves might not be sufficient to avoid emergency alerts if peak demand is higher than anticipated or if supplies tighten for other reasons. These alerts occur when operating reserves fall below certain threshold levels.

With an expected peak demand increase of 1,733 MW over 2003 and a net resource decrease of about 67 MW, the CAISO control area’s reliance on external resources to cover possible unexpected peak demand or unit forced outage has increased about 1,800 MW as compared to last summer.

NERC noted that due to maintenance, the transfer capability of the Pacific DC Intertie (PDCI) will be reduced from 3,100 MW to 2,000 MW until September. Thereafter, PDCI will be removed from service until the end of the year. The reduced PDCI transfer capability may result in increased energy flows on other transmission paths, including the Path 26 transmission tie between northern and southern California, NERC said.

A couple of reporters participating in the conference call noted that FERC Chairman Patrick Wood recently expressed concern about “very troublesome conditions” in the power system of California.

NERC officials were asked whether they have any particular concerns over California in light of the FERC chairman’s recent comments.

“California was flagged as an area of interest because hot weather — extremely hot weather — combined with equipment outages, could lead them into situations where the demand would exceed the supply somewhat,” Bartlett said. “But they have plans in place to handle that — they have several alert levels ranging everywhere from just a public notification to an actual interruption of load,” he noted.

“We believe that they will be able to manage the loads,” Bartlett said. When asked whether he thinks interruptibles may be called upon a few times this summer in California, he noted that overall, the region’s showing about a 23% capacity margin. “I can’t say whether interruptibles would be called on a few times or not — it wouldn’t be a surprise if they were, and I think that’s what the region is trying to indicate — that there could possibly be times when they’ll have to go to a Stage Two alert.”

With an unexpected combination of unseasonably hot weather and unforeseen power plant outages, CAISO in March declared a Stage One power alert because reserves hovered a little below 7%. This was the grid operator’s first alert of the year. Under a Stage Two alert, large power users who pay a cheaper interruptible rate are asked to curtail their loads.

NERC’s 2004 summer assessment provides an independent assessment of the reliability of the bulk electricity supply and demand in North America for the period of June through September 2004. The report was prepared based upon data submitted by the 10 NERC regional reliability councils as of April 30, 2004.

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