Grid overhaul urged to avoid new blackout  By Marianne Brun-Rovet in   Washington   FT.com site;  Aug 25, 2003  

US government and business will have to invest billions of dollars in a complete overhaul of the national power grid in order to avoid another massive blackout, according to a non-profit research group that studies the US  electricity industry. In a study issued on Monday - but written before the August 14 blackout, which left 50m North Americans without power for a day or more - the Electric Power Research Institute (EPRI) has called for the industry to pull together to bring about a complete transformation of the electrical grid. 

Without a drastic improvement in efficiency and technology, the current approach of ad hoc fixes will result in continued blackouts costing businesses about $100bn (?92.1bn, £63.6bn) a year, according to the non-profit group, which supplies industry research to more than a thousand companies.

The group's five-part plan to reform the power supply grid also recommended that the cost of new service responsibilities be passed wherever possible to the consumer, not the taxpayer. 

But the government must also stimulate greater capital investment by giving businesses incentives such as investment tax credits and infrastructure lending programmes, the EPRI said. 

The report predicted that the US  transmission system would probably be the "first point of meltdown", a premise proved by the blackout 12 days ago. 

EPRI estimates US power demand has surged 30 per cent over the past decade, while capacity of high-voltage transmission lines grew just 15 percent. Meanwhile, resources have declined. Investment in the nation's three power grids declined by $20bn a year during that period, compared with trends in the 1970s. 

To create a new, less vulnerable network, EPRI urged the adoption of state-of-the-art technology, and various technical innovations, including digital control of the power delivery network.  

The new network would need digital controls on power flows and computerised monitoring to bring about a "self-healing" grid. It would also require the ability to isolate areas, so a one power failure could no longer cascade through the rest of the system. 

A full transformation will be costly, adding 10 per cent - or about $100 a year - to the average consumer's electric bill. But improvements in productivity from more reliable transmission could save the consumer $500 a year, the report notes. 

The report drew its conclusions from a cross-section of stakeholders, including utilities, federal and state regulators, businesses, consumer groups and labour unions. 

Mark Gabriel, the institute's vice-president of marketing, said that with the transformed system, "the electricity sector will be encouraged and able to invest in new innovative technology that ensures operational effectiveness and supports the evolving needs of the US economy and society." 

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