No quick upgrades in sight for power grid

WASHINGTON -- The nation's worst blackout is prompting demands to upgrade the country's power grid, but regional conflicts and fear about electricity deregulation could prevent quick action on improving an antiquated and fragile transmission system.

The Bush administration Sunday called on Congress to require utilities to comply with rules aimed at assuring a stable flow of electricity, or face sanctions. The administration also made clear that it will cost consumers more money to fix the problem.

"The people who benefit from the system have to be part of the solution here," Energy Secretary Spencer Abraham said on NBC's "Meet the Press." "That means the rate-payers are going to have to contribute. We think the rates need to be sufficient to incentivize the building of new transmission."

The grid needs mandatory reliability standards, Abraham said as he made the rounds of the television talk shows.

A leading Democrat, Rep. John Dingell of Michigan, said there need to be "some teeth" to enforce reliability requirements instead of simply letting industry essentially police itself, as it now does.

"We've been trying for the last couple of years to get help from Congress to allow us to enforce reliability rules," said Michehl Gent, president of the North American Electric Reliability Councils, appearing on ABC. His group was created after a major blackout hit the Northeast in 1965.

Many energy experts suggest mandatory compliance would solve only part of the problem.

Management of the transmission system needs to be improved and streamlined, more lines need to be built, and -- some say -- the whole idea of a competitive market in a commodity such as electricity ought to be re-examined.

These issues are unlikely to be resolved soon.

'Kill the closest snake first'

Acknowledging the pitfalls, Dingell suggested Congress push some essential things such as mandating reliability rules and deal with the other issues later. "My old daddy used to say, 'kill the closest snake first,"' Dingell said on Fox News Sunday.

The Bush administration said it wants Congress to stop one of the most controversial ideas: Creating a network of regional power grid managers, which the Federal Energy Regulatory Commission views as important to improve the smooth flow of power nationwide.

Many states have opposed the plan, arguing it would lead to higher electricity prices. It "would mandate and force down the throats of regional areas of the country a federal approach to deregulation of the marketplace," Abraham said in explaining why the Bush administration wants it delayed for at least three years.

While everyone agrees on the need to modernize the transmission system, how to do it is another question. When it comes to specific proposals and finding ways to finance improvements that some estimate will cost tens of billions of dollars, the consensus begins to melt away.

For three years, Congress has been grappling with a broad energy bill and its electricity provisions have been among the most contentious. Last year the House solved the problem by passing a bill that included virtually nothing on electricity. Disputes over power issues were a major reason agreement on an energy bill fell apart in the closing days of the last congressional session, and one reason why it faced so much trouble this year.

While lawmakers raged about power market abuses by Enron and soaring electricity costs in California, the debate became muddled over conflicting regional interests, a reluctance of states to surrender power to the federal government, and conflicts between warring factions within the electric power industry itself.

All those conflicts remain.

Right-of-way problems

While there are calls for more transmission lines, Congress has been reluctant to give the Federal Energy Regulatory Commission authority to force approval of the siting of such lines by confiscating property.

"We've got to do something about the right-of-way problem. Nobody wants a transmission facility in their back yard," said Rep. Billy Tauzin, R-La., chairman of the committee that deals with energy issues.

But a proposal to give FERC "eminent domain" authority to site transmission lines has been strongly opposed by many lawmakers, including most Western Republicans, who view it as an infringement on state's rights. Even a watered-down version that would allow FERC to intercede in the most urgent siting issues has run into strong opposition. More than two years ago Vice President Dick Cheney's energy task force recommended the federal government be given such authority.

As for the proposal by FERC chairman Pat Wood, a Republican appointed by Bush, that would create a system of regional organizations, its future is as dim as much of the Northeast has been recently.

The cascading blackout last Thursday showed the need for better management of the system, argues Wood. He said the cascading nature of the blackout provides "an object lesson" that the power grid needs regional coordination and planning and national standards.

Abraham said the federal government shouldn't tell regions how to run their electrical systems. The proposal faced strong opposition in Congress even before last week's power outage.

Opponents have noted the blackout occurred in a region where just such a type of grid management is being used.

State regulators in the Northeast have strongly supported the concept, known as "standard market design."

"Deregulation has left us without adequate consumer protection and safeguards like reliable service and protection from market manipulation," said Sen. Maria Cantwell, D-Wash. Her state is still reeling from the failure of FERC to intervene when electricity prices soared as a result of the California power crisis. The less interference by FERC, the better, say many state energy regulators.

States across most of the South have strongly opposed the FERC proposal, arguing their largely regulated electricity system -- which has brought some of the lowest electricity prices in the country -- shouldn't be meddled with by regulators in Washington.