August 14 was one of the hottest days of 2003 in the Northeast United States. Late in the afternoon people were beginning to leave work in anticipation of a cool evening in their air-conditioned homes.
But at 4:10 P.M. a wide scale electric blackout shut off power to over 50 million people from Detroit, Michigan to Toronto, Canada. Homes and businesses were left in the dark without air conditioning. Workers were stuck on elevators and on subways that suddenly came to a stop. Commuters were caught in gridlock as street-lights stopped working. And, eventually, water supply was at risk as electric pumps used to transport the water had no power to operate.
The 9/11 attack on the World Trade Center was still fresh in the public’s mind in 2003 and, initially, there were fears that this was another terrorist attack. But terrorists had nothing to do with the 2003 Blackout. It was, instead, a failure of an aging electric grid.
This was not supposed to have happened. After a similar blackout in 1965, the electric utility industry had promised that they would take action to prevent future wide scale outages. They committed to creating regional organizations to coordinate transmission planning among multiple utility systems. And they promised to create a National Electric Reliability Council whose role would be to develop reliability standards and practices for adoption by the utilities and the regional organizations.
There may have been some discussion of government oversight of implementation of the utilities’ promises. But the utilities convinced all regulators that they understood their responsibility to keep the lights on and that there should be no concern regarding their commitment to do whatever it took to prevent future wide scale outages. They promised voluntary compliance with the standards being promulgated by the National Electric Reliability Council.
Fast forward 38 years and it turned out that not all of the utilities shared the same commitment to do whatever it took to enhance the reliability of the transmission grid. Instead, many of the utilities focused their efforts on maximizing profits in a rapidly deregulating electric industry.
A prime example was FirstEnergy Corp. FirstEnergy is the current corporate name of what was initially Ohio Edison Company, a local electric utility headquartered in Akron, Ohio. Ohio Edison grew during the late 1990s and early 2000s when it acquired the Centerior Energy Corporation (consisting of the old Cleveland Electric Illuminating Company and the old Toledo Edison Company) and General Public Utilities (consisting of the old Jersey Central Power and Light, Pennsylvania Electric Company and Metropolitan Edison).
During the years that it was focusing on its growth strategy FirstEnergy grew lax in its reliability obligations. The 2003 Blackout started when a FirstEnergy-owned high voltage line went out of service when coming into contact with a tree. Had FirstEnergy complied with the North American Reliability Council’s standards the tree in question would have been trimmed so that the contact never occurred.
However, the failure to trim the tree was not the only issue. A computer system required by the reliability standards should have notified FirstEnergy operators when the line went out of service so that they could take action to prevent the spread of the outage. However, at the time of the outage the computer system was out of service. And even if the system had properly been in service there have been suggestions that the FirstEnergy operators were not adequately trained to know how to react upon receipt of the computer signal.
The 2003 Blackout was the result of a failure of voluntary compliance. Congress decided that, if we are going to be assured of the reliability of the transmission grid, compliance with reliability standards are going to have to be mandatory.
In the Energy Policy Act of 2005 Congress gave the Federal Energy Regulatory Commission (FERC) authority to enforce mandatory reliability standards and to assess penalties of up to $1.0 million per day for failure to comply. Since that time FERC has established nine Regional Entities who are responsible for enforcing the reliability standards adopted by the NERC (now renamed the North American Reliability Corporation). Those reliability standards include practices required to defend the system again cyber-attacks.
It is never easy for businesses to conform their operations to a new regulatory scheme. However, one would have thought that, when faced with potential penalties in the millions of dollars, the industry would have done its best to comply. NERC gave the industry a phase in period of several years during which it assessed primarily nominal penalties. After the phase in period was over the utilities should have been up to speed and compliance with the reliability standards should have been part of their day-to-day business. So industry watchers were surprises when, in February, 2019, Duke Energy, a utility owning and operating transmission facilities from Florida to Ohio, was fined $10 million for as many as 125 violations of the NERC standards going back over a period of three years.
After the 1965 Blackout the utilities showed that they could not be trusted to comply with voluntary reliability standards where there was no risk of penalty for non-compliance. Unfortunately, it is not yet clear that the utilities are any better with complying with mandatory reliability standards where the risk of penalty for non-compliance is significantly higher.
David Rosenstein worked as an attorney and consulting engineer in the electric utility industry for 40 years. When he retired he wrote a book entitled Electrifying America: From Thomas Edison to Climate Changewhich describes the evolution of the electric industry from the time Edison invented the light bulb until today. Each of his posts in this Blog describe a different aspect of electricity, the electric industry or the issues currently faced by the electric industry.