The final report of the Canada-U.S. Power System Outage Task Force was recently released, and while the report has not shed additional light on the cause of the historic outage, described in detail in the interim report released last fall, it highlighted the importance of the interconnected bulk power system in North America, and the need to strengthen it.
The August 14, 2003 blackout in Ontario and much of the U.S. Midwest and Northeast heightened awareness of the electricity system, as 50 million people simultaneously experienced first hand how vital electricity is in our day-to-day lives. The blackout added a sense of urgency to the discussion already underway on the need for measures to ensure reliability in the electricity industry – one of which is mandatory reliability standards. In the U.S., action on such standards may be taken as soon as this summer. In Canada, enforcement frameworks are well-developed and continue to evolve throughout the country.
The irony of the 2003 blackout is that it took this extraordinary incident to make us realize just how reliable the system actually is. The interconnected network that exists across Canada and the U.S. is so reliable that:
Some suggested that the scope of the blackout could have been significantly lessened if the Canadian and American grids were not so highly integrated. Such comments fail to recognize the fact that the North American grid allows interconnected systems to absorb perturbations which occur routinely, such as the loss of a transmission line or generator, with no impact to customers.
The benefits of integration go beyond greater stability by absorbing loss. Cross-border electricity trade provides the opportunity to optimize the use of generating resources to the benefit of U.S. and Canadian market participants. For example, when linked across borders, the diversity of our systems, our climates, and our demand profiles allow for efficient power flows north or south at various times depending on market circumstances.
The resulting regional market efficiency gain reduces the need for generating facilities and results in lower generation costs to consumers. Moreover, electricity companies can derive environmental benefits through such efficiencies, for instance, coordinating on exchanges between “must-run” fossil-fuel fired gene-ration facilities and hydroelectric facilities. This involves a generator selling off-peak power to a hydro generator, allowing the latter to “bank” energy (in the form of stored water) in its reservoirs. During periods of high demand, the hydro generator releases enough water to meet its own needs and to assist in meeting the peak demand of its partner in this diversity exchange, thereby avoiding both emissions and higher costs from fossil peaking units. Such opportunities exist to a greater or lesser extent in each of the regional markets across the continent.
Efficiencies in regional systems management can also be achieved through participation in or coordination with regional transmission organizations (RTOs). In many cases, RTOs present an opportunity for the effective utilization of existing transmission infrastructure. In fact, some Canadian utilities are actively exploring participation in bi-national RTOs as an approach for optimizing the management of their respective transmission systems.
Moreover, the integration of the U.S./Canadian electricity markets allows for the coordination of approaches to more effectively achieve reductions in the environmental impact of electricity facilities. No one technology is universally applicable across a national marketplace; resource availability, geography, and a host of other factors help determine the generation mix. The objectives of reliable, affordable, environmentally preferable power require that all technologies be available. In fact, increased integration enables the larger, combined U.S. and Canadian regional electricity markets to take full advantage of various emerging technologies, like wind power, whose intermittent nature requires backup capacity, to meet our future energy needs on a larger scale
International Solutions
By its very nature, the bulk power system is an international concern, and any effort to address its continued efficient and reliable operation requires the full engagement of and cooperation between the U.S. and Canada. CEA recently put forward a series of recommendations aimed at strengthening the integrated North American Bulk Electricity System. We identified seven measures for all stakeholders in the market to consider:
These measures reach beyond mandatory reliability standards because addressing reliability means doing more than establishing mandatory standards – it requires a thorough effort in respect to all aspects of electricity supply in North America. There is a need for stakeholders in government and industry in Canada and the U.S. to come together to pursue these measures in a manner that is of benefit to all of us.
The Case for an ERO
The seventh and final measure identified above is the creation of an “Electricity Reliability Organization” (ERO) to establish North American reliability standards. The Joint Canada/U.S. Task Force Report pointed to the failure of some parties to follow NERC’s voluntary reliability standards. Clearly, the present system of voluntary reliability standards must change, particularly as electricity markets continue to evolve. However, because the transmission grid is international in scope, the focus must be on solutions that are international as well.
The ERO model ensures a balance of interests that protects the organization from being unduly subject to any one stakeholder or government, while respecting the sovereign right of regulators in each country to assure the interests of their citizens are provided for through oversight and remand functions. And because only the ERO, as opposed to individual regulatory or legislative bodies, can develop reliability standards, the reliability system can be run effectively on an international basis.
Until such time as legislation passes in the U.S. Congress, the Federal Energy Regulatory Commission may consider other options to address reliability. In either case, the underlying reality remains the same: the reliability of the bulk-power system is by its very nature an international concern, and cannot therefore be properly addressed without full engagement of and cooperation with Canada. Anything less could impede future cross-border trade and, more significantly, undermine the very reliability we all seek to see guaranteed. We are currently developing specific suggestions for the operation of an ERO to ensure that it is truly international in nature. The exact nature of enforcement will vary from province to province.
The industry is committed to ensuring customers continue to receive affordable, environmentally sound, reliable power to meet their needs day in and day out. Identified in the Outage Report, effective enforcement of reliability standards is increasingly seen as a necessary prerequisite for that commitment to be fulfilled, and authorities across Canada have been acting on them for some time. As we move towards an international mandate-based regime, Canadian entities are well-prepared to participate in a manner that will ensure the continued provision of reliable electricity supply across the continent.
The August 14, 2003 blackout in Ontario and much of the U.S. Midwest and Northeast heightened awareness of the electricity system, as 50 million people simultaneously experienced first hand how vital electricity is in our day-to-day lives. The blackout added a sense of urgency to the discussion already underway on the need for measures to ensure reliability in the electricity industry – one of which is mandatory reliability standards. In the U.S., action on such standards may be taken as soon as this summer. In Canada, enforcement frameworks are well-developed and continue to evolve throughout the country.
The irony of the 2003 blackout is that it took this extraordinary incident to make us realize just how reliable the system actually is. The interconnected network that exists across Canada and the U.S. is so reliable that:
- An event of this scale rarely occurs, despite remarkable economic and population growth, and relatively little grid expansion.
- In less than 12 hours, over 2/3 of power generation was restored to service and within 48 hours, virtually all of those who lost power were once again connected.
- The many equipment outages that occur in cities and regions across North America each year – due to weather, scheduled maintenance, or for safety reasons – are rarely even noticed by customers, as other points on the integrated system supply power to meet customers’ needs.
Some suggested that the scope of the blackout could have been significantly lessened if the Canadian and American grids were not so highly integrated. Such comments fail to recognize the fact that the North American grid allows interconnected systems to absorb perturbations which occur routinely, such as the loss of a transmission line or generator, with no impact to customers.
The benefits of integration go beyond greater stability by absorbing loss. Cross-border electricity trade provides the opportunity to optimize the use of generating resources to the benefit of U.S. and Canadian market participants. For example, when linked across borders, the diversity of our systems, our climates, and our demand profiles allow for efficient power flows north or south at various times depending on market circumstances.
The resulting regional market efficiency gain reduces the need for generating facilities and results in lower generation costs to consumers. Moreover, electricity companies can derive environmental benefits through such efficiencies, for instance, coordinating on exchanges between “must-run” fossil-fuel fired gene-ration facilities and hydroelectric facilities. This involves a generator selling off-peak power to a hydro generator, allowing the latter to “bank” energy (in the form of stored water) in its reservoirs. During periods of high demand, the hydro generator releases enough water to meet its own needs and to assist in meeting the peak demand of its partner in this diversity exchange, thereby avoiding both emissions and higher costs from fossil peaking units. Such opportunities exist to a greater or lesser extent in each of the regional markets across the continent.
Efficiencies in regional systems management can also be achieved through participation in or coordination with regional transmission organizations (RTOs). In many cases, RTOs present an opportunity for the effective utilization of existing transmission infrastructure. In fact, some Canadian utilities are actively exploring participation in bi-national RTOs as an approach for optimizing the management of their respective transmission systems.
Moreover, the integration of the U.S./Canadian electricity markets allows for the coordination of approaches to more effectively achieve reductions in the environmental impact of electricity facilities. No one technology is universally applicable across a national marketplace; resource availability, geography, and a host of other factors help determine the generation mix. The objectives of reliable, affordable, environmentally preferable power require that all technologies be available. In fact, increased integration enables the larger, combined U.S. and Canadian regional electricity markets to take full advantage of various emerging technologies, like wind power, whose intermittent nature requires backup capacity, to meet our future energy needs on a larger scale
International Solutions
By its very nature, the bulk power system is an international concern, and any effort to address its continued efficient and reliable operation requires the full engagement of and cooperation between the U.S. and Canada. CEA recently put forward a series of recommendations aimed at strengthening the integrated North American Bulk Electricity System. We identified seven measures for all stakeholders in the market to consider:
- Support an open debate on all of the supply options available to meet the growing demand for electricity.
- Encourage bi-national cooperation on the construction of new transmission capacity to ensure a reliable continental electricity system.
- Explore opportunities for bi-national cooperation for both investment in advanced transmission technologies and transmission R&D.
- Promote new generation technology and demand-side measures to relieve existing transmission constraints and reduce the need for new transmission facilities.
- Coordinate measures to promote critical infrastructure protection.
- Harmonize U.S. and Canadian efforts to streamline or clarify regulation of electricity markets.
- Endorse a self-governing international organization for developing and enforcing mandatory reliability standards for the evolving electricity industry.
These measures reach beyond mandatory reliability standards because addressing reliability means doing more than establishing mandatory standards – it requires a thorough effort in respect to all aspects of electricity supply in North America. There is a need for stakeholders in government and industry in Canada and the U.S. to come together to pursue these measures in a manner that is of benefit to all of us.
The Case for an ERO
The seventh and final measure identified above is the creation of an “Electricity Reliability Organization” (ERO) to establish North American reliability standards. The Joint Canada/U.S. Task Force Report pointed to the failure of some parties to follow NERC’s voluntary reliability standards. Clearly, the present system of voluntary reliability standards must change, particularly as electricity markets continue to evolve. However, because the transmission grid is international in scope, the focus must be on solutions that are international as well.
The ERO model ensures a balance of interests that protects the organization from being unduly subject to any one stakeholder or government, while respecting the sovereign right of regulators in each country to assure the interests of their citizens are provided for through oversight and remand functions. And because only the ERO, as opposed to individual regulatory or legislative bodies, can develop reliability standards, the reliability system can be run effectively on an international basis.
Until such time as legislation passes in the U.S. Congress, the Federal Energy Regulatory Commission may consider other options to address reliability. In either case, the underlying reality remains the same: the reliability of the bulk-power system is by its very nature an international concern, and cannot therefore be properly addressed without full engagement of and cooperation with Canada. Anything less could impede future cross-border trade and, more significantly, undermine the very reliability we all seek to see guaranteed. We are currently developing specific suggestions for the operation of an ERO to ensure that it is truly international in nature. The exact nature of enforcement will vary from province to province.
The industry is committed to ensuring customers continue to receive affordable, environmentally sound, reliable power to meet their needs day in and day out. Identified in the Outage Report, effective enforcement of reliability standards is increasingly seen as a necessary prerequisite for that commitment to be fulfilled, and authorities across Canada have been acting on them for some time. As we move towards an international mandate-based regime, Canadian entities are well-prepared to participate in a manner that will ensure the continued provision of reliable electricity supply across the continent.
