One Piece of Advice

Given the popularity of the Tonight show at that time, that appeal to its 19 million viewers likely saved thousands from flooding their bathrooms.

This got me to thinking about what simple and useful advice I could share in such a succinct manner with regards to our vital national electricity infrastructure. Given the recent warning from various Independent System Operators of the possibility of power outages in many regions of the country, a quick look at the similarity of facts  point to one consideration.

The nation’s power system operators have all taken steps to increase solar and wind energy generation, to reduce greenhouse gas emissions, while closing coal, gas and nuclear power plants. The fossil and nuclear plants could be operated to follow changing customer demands for electricity while solar and wind cannot. The solar and wind generation peak when sun and wind conditions are best not necessary when customer demand is highest. Sometimes, of course, the sun does not shine and the wind does not blow, meaning power production from solar and wind at that time is zero or negligible.

This new mix of power plants bid for sales in Federal Energy Regulatory Commission (FERC) regulated regional markets. The power is sold in the market by merchant power plant operators at market set prices and is bought be electricity marketers who resell either to electric utilities or directly to retail electricity customers.

The FERC regulated independent system operators (ISO) include: the California Independent System Operator (CAISO), Midcontinent (MISO), New England (ISO-NE), New York (NYISO), and the PJM Interconnection.  The Electric Reliability Council of Texas (ERCOT) is an independent power market not under FERC jurisdiction but under the Texas Public Service Commission.

While electricity is the same worldwide and across the United States, each of the US ISO markets has its own rules and definitions so that the kilowatt-hours of electricity priced in each ISO are different from every other ISO and Texas. There is an electricity market in England too and that is different from US markets even if the electricity is still, well, electricity.

Under the old and historic vertically-integrated total monopoly model the state regulated electric utilities provided generation, transmission and  distribution services. Most utilities owned all the generation capacity required including reserve capacity. On the rare occasion where one utility sold electricity to a neighboring electric utility that wholesale sale was regulated by the FERC at cost-of-service rates. Thus, the states were able to control the total installed capacity of generation including reserves. During the 1980/s nationally the reserve capacity was above 30% of installed capacity of generation. This was higher than minimal engineering risk requirements but it accommodated a growing economy. It was also determined then, and forgotten by some now, that an excess reserve was still cheaper than having power outages.

With the switch in ISO states to wholesale markets and merchant power plants, offering power  to the market at market prices, the old system of providing reserve in rate base was replaced by the notion that high market prices today would be all that was required to signal power plant developers to build new power plants needed for tomorrow.

However, in much of the US the reserve capacity  is too low because the new renewable and intermittent power sources of air and wind have added more uncertainty to the supply of power, not less. Thus, reserve capacity which were under political pressure to be lowered, as being to “costly” for consumers, have been lower than now required.

Thus, in tribute to Conrad Hilton’s recommendation with respect to “travel advice”, I would give as “electric infrastructure advice” the simple statement “Increase reserve capacity, outages are more expensive than extra reserve.”