Power Failure

GWEN IFILL:

We begin with the latest on the blackout: New questions, few answers, and a big price tag. For details, we turn to Lynne Church, president of the Electric Power Supply Association, a national trade group of major energy producers; Kurt Yeager, CEO of the Electric Power Research Institute, a non-profit alliance of power suppliers and their customers; and James Glanz, who is covering the blackout investigation for the New York Times.

James Glanz, I want to start with you. There was a meeting in Newark, New Jersey this week of the American and the Canadian investigators looking into the causes of this blackout. Did we learn anything?

JAMES GLANZ:

Well, that was a closed-door meeting. It was the kind of thing in which the investigators shared information, gathered information from all these disparate regional organizations that were implicit in one way or another in the blackout. There's data that goes from second to second on the surges of voltage and current throughout the Midwest, and the pattern that emerged as it went through Ontario apparently, came back to New York and then caused a blackout here, ultimately resulting in the biggest blackout in United States history.

GWEN IFILL:

You had a story in the paper in which you describe the effect literally of a tree hitting a power line, do we know whether it was a tree, whether it was switches that weren't switched, computer viruses? Do we have any idea, are we any closer to knowing what was the trigger?

JAMES GLANZ:

Well, what we have here is a whodunit, and in a whodunit at the beginning of the story you find out there's a key missing, there was a lock that was picked, there was a body that was found, you know, on the third floor anteroom.

Here we know all those things, we know that transmission lines went out at certain times, we know the transmission line you're referring to in Walton Hills outside Cleveland was knocked off when it sagged into a tree. And we know that this blackout then surged from Ohio through Michigan into Canada and then into New York, but we really don't have the butler yet. We don't know who exactly precipitated this event, we don't know the causes, we haven't solved the who done it, but we're getting there and that's why the investigators met on Newark Friday.

GWEN IFILL:

There seem to be two key connections that investigators and reporters are actually trying to keep track of and that is the power line connections between Ohio and New York, and also the electrical lines between Michigan and Ohio, and that if you figure out what happened in those two sets of lines or transmission grids, I guess, then you begin to get to the bottom of this, is that correct?

JAMES GLANZ:

I think that's right. You have to keep in mind this strange factor that the entire nation is connected by this power grid, so if something happens in one place, it can have effects at greatly distant points.

And what happened in Ohio was after that power line tripped out, when it sagged into the tree, the energy that was normally feeding Cleveland desperately tried to find a way to flow into Cleveland. It went around through this strange thing, this power grid through Indiana, through Michigan, and into Cleveland, and when that happened, it sort of sucked power down from Canada, and those effects were felt as far away as New York, because New York's bordering Canada at Niagara Falls, the St. Lawrence River. And it was sort of a domino effect at that point. Somehow this apparently this tree burning down in Walton Hills ended up in, as someone said today, ended up with the subway stopping in New York City.

GWEN IFILL:

Curt Yeager, let's talk about the report that your organization released today. You're putting this price tag at $100 billion. It was $56 billion we heard from another group last week. What's the big difference, what's the cost factor?

KURT YEAGER:

Well, I think the numbers actually are quite consistent at the level of detail that we can define them today. Our 100 billion dollar number relates to both the transmission and the local distribution systems, combined. Because if we're going to deal with the overall reliability and capacity of the system, we need to approach it as an integrated system.

GWEN IFILL:

Lynne Church, does that number sound right to you?

LYNNE CHURCH:

Well, I think it doesn't sound that far off, there is a lot of money that's needed. But I think what is important, and the report shows, is that there are a lot of benefits to consumers. In fact, right now consumers are spending a lot more for their power because of the congestion on the grid than they would have otherwise.

GWEN IFILL:

When you say benefits to consumers, you mean this is an investment which consumers, assuming that this money is coming out of their pockets, will make and they will get bigger benefits down the road?

LYNNE CHURCH:

Yes, absolutely.

GWEN IFILL:

Because?

LYNNE CHURCH:

And right now — well, where we have congestion as we have in the Midwest, as we have in many other parts of the country, it means that the power that has ended up being bought by their utility to serve them is in some cases more expensive than it would be if they could get access to cheaper power through the congested part of the grid. So there's a price to pay right now for the congestion. And plus to the extent that what happened ten days ago was due to the congestion, certainly that was a huge price that consumers paid.

GWEN IFILL:

Kurt Yeager, I have to ask you, how do you add this up, how do you get to $100 billion, what factors into that?

KURT YEAGER:

Well, there's really I think three factors, the first, the most important factor that we have to apply to the power system today is to make it a digitally controlled system. We have a digital economy and we're still trying to provide power to it through a mechanical design system that was designed over 50 years ago. It a marvelous system, but we've been effectively borrowing against the future to pay for the present, and the future has caught up with us, we need to build the system to serve the digital society of the 21st century. So that's the first step.

In so doing we can increase the efficiency and the capacity of the system we have. It will not eliminate the need for some new lines, but certainly we, if we do it technically, capacity expansion, we can reduce the amount of new lines that have to be put in place. So it really fundamentally improves the efficiency.

And it's then the controllability of that system. Once we have those digital controls in, we can instantaneously manage the power system so it is self healing, that is it can detect instantaneously a difficulty and correct for it locally so that cascading effects can be eliminated and fundamentally improve the reliability of the system so that computers and other sensitive equipment that has come in over the last decade is not upset by power disturbances.

GWEN IFILL:

Lynne Church, there were so many warnings, there were warnings that said there was an unacceptable risk involved here in 1998, was that warning, not whether, but when there would be a failure, that was in 2001 — 2003, the grid can't keep pace with innovation … and today the Ohio electric companies were involved in this, are saying they were also warning of this in advance.

Is it just the lack of technology that Mr. Yeager is referring to which fell down here? Or were there other safeguards that could have been taken that maybe weren't as expensive that were just ignored?

LYNNE CHURCH:

Well, what's happened over the last 10, 20 years is that the demand for power has increased substantially. And there has been a lot of new supply brought on as part of the restructuring, which means that consumers are not faced with supply shortages. But the transmission system's not kept up because there are a lot of factors that have really provided incentives not to do anything.

One is how difficult it is to site new transmission — the NIMBY, not in my back yard phenomena, where people really don't want to see those transmission lines. So it takes many years to get siting permits to build new transmission lines. The uncertainty in the restructuring about how utilities are going to be paid and whether or not they're going to continue to own their transmission lines has really provided incentives not to do anything. It's made it hard for utilities to invest, and in many states there are rate caps which means that if a utility does invest in new transmission they may not be able to collect.

GWEN IFILL:

If all of these problems were fixed, Lynne Church, the problems you talk about, rate caps and technology and all these other concerns, would it prevent another blackout?

LYNNE CHURCH:

I think so. But there need to be two more steps. We do need mandatory enforceable reliability standards under the aegis of the Federal Energy Regulatory Commission, and both bills before the Congress right now for the Conference Committee do contain language that would do that. Secondly, I think that we do need to move forward in setting up regional independent system operators.

The Midwest was basically under the control of individual utilities and if we had a independent operator, sort of a air traffic control man over that system, we may have seen a very different result.

GWEN IFILL:

Kurt Yeager, does that make sense to you?

KURT YEAGER:

Yes, basically, certainly having a regional control is very important. But again, in order to make that work, we have to have some technological transformation of the power system, and I think the operative word here is regional.

Different regions of the country are affected differently by this. So we must have rules that focus on the endpoint that we want to achieve but provide regional flexibility. And sort of building on one of Lynne's comments there, one of the real key issues today is the uncertainty in what are the rules of the game, if you will, for power delivery. We've pretty well clarified it for generation, but we have not done it for transmission.

And as a result, investment really is a disincentive, investors abhor uncertainty and that is exactly what they face in this area, and they faced that for over a decade. So we've, as I say, been borrowing from the future to pay for the present, and avoiding the investment that we absolutely must make in our system.

GWEN IFILL:

So James Glanz, from the reporting you've done so far on this subject, how much of this is investment that wasn't made, warnings that weren't heeded and how much of it was really bad luck, a perfect storm of bad things happening all at once?

JAMES GLANZ:

Well, there was a certain amount of bad luck. But I think the way that a lot of people on the ground see this is there was a system that was set up to do something different from what it's doing now.

It's sort of like the old city states that gathered together once to form Italy in the 19th century, they were once all separate and we once had a bunch of separate utility systems giving out power, generating power in regions and also using it in those same regions, they were connected together to make this grid, to make Italy as it were. But this Italy of power is just as chaotic as the real Italy and the connections are not as tight as they should be, the technology is not as good as it should be and I think that's the issue they're facing now as they try to take this into the balance of the century with as few blackouts as possible.

GWEN IFILL:

James Glanz, Kurt Yeager and Lynne Church, thank you all very much.