The Changing Face Of Electric Power Systems: Teaching For A Challenging Future

When will the next big blackout be? How secure is our electric power system? Will we be reregulating the electric power industry? Will we each have a fuel cell in our backyard to generate the power we consume? The generation and delivery of electric power has changed significantly in the last decade, and will continue to change in the next decade. The deregulation of electric utilities, the continuing need for environmentally friendly systems, the increasing use of limited natural resources, the technical innovations in the design and simulation of power systems, the need for “quality” power, and the potential of very small generating plants (micro-turbines, fuel cells, etc.) in or near load centers have begun to effect the generation and delivery of electric power in ways previously not envisioned. The California crisis of the last few years, the blackouts in the northeast in the summer of 2003 and the continuing blackouts across the world have brought the electric generation, transmission and distribution network back into world engineering and political thought and debate. This paper will summarize the yearlong study undertaken during a sabbatical leave for the purpose of determining the future of electric power systems and how this will impact the courses in electric power systems at the Rochester Institute of Technology. Why all the changes? The current backbone of the electric power system was constructed in the first 80 years of the twentieth century to provide power through vertically integrated regulated electric utilities. After many mergers and some bankruptcies, the federal government passed the Federal Power Act in the 1930’s. This established the basic groundwork for investor owned utilities for many years. The United States federal government mandated a move to a deregulated environment in the late 1980’s, followed soon after by specific laws to this effect by most states. This was a major change from the previous arrangement of vertically integrated electric utilities, with implementation frequently not well planned or executed. This is a classic example of competition by mandate, and not market driven competition. P ge 9.240.1 “Proceedings of the 2003 American Society for Engineering Education Annual Conference & Exposition Copyright ©2003, American Society for Engineering Education” The result of deregulation is a five tier system of electric power supply. The power is now generated mostly by a group of independent power producers, trying to maximize the return on their investments. The power is distributed to individual residences and businesses by a regulated distribution utility. Power is sold to the user either by the regulated utility or by a sales organization which purchases the power for the needs of a large group of customers. The coordination of daily electric power needs on the grid is done by an ISO (independent system operator). Lost in this shuffle is an approach to the means of transmitting the power from the generators to the regulated distribution utilities with real power and authority, which may soon be undertaken by an RTO (regional transmission organization). De-regulation has come to an industry which is still growing. The national compound growth rate has gone down slightly from its pre-1974-energy-crisis rate of 7% per year, but is still growing even in uncertain economic times. At the same time, without traditional investment relief (rate cases, etc.), less capital has been invested in the system from the time when deregulation was being enacted until now, with some segments spending more than others. Why invest when the rules of the game are still changing? Uncertainty of investment recovery is a very big issue. At the same time, sensitivity to power quality has become a big item among customers, due to the proliferation of electronic equipment both within the home and throughout business. The national agenda has called for “green” power, that which comes from renewable resources and / or does not pollute as much as many of the existing power plants. Development of wind power, tidal power, solar power, and enhancements in fossil fuel plants has been both encouraged and required. A side effect of de-regulation has been the reliance on natural gas fired power plants. As independent power producers built merchant plants, they turned to the fuel that was plentiful and had the least environmental problems – natural gas. Gas turbine research has yielded units that are far more efficient than older ones had been, plus could be built near loads so that the exhaust heat could be used and further increase the thermal efficiency of the plants. Unfortunately domestic natural gas is no longer cheap, as the easy reserves have already been tapped. Now international supplies must be imported, raising environmental concerns and costs. Is there long range planning and who does it? Consumers and engineers desire a sure source of electric power, with a plan for anticipated growth and the flexibility to change the plans as needed for changes in the demand for electric service. Customers are frequently more concerned with continuity and quality of electric power than with a few cents difference in their electric bill. A corresponding demand by the financiers is to have a quick return on investment (3-5 years as opposed to the traditional 30 year investor owned utility pay back period) and a continued anticipation of profits in the future, in that order. This is a mentality which decries the periodic need to forego a dividend so that a needed expansion or upgrading of the system can be undertaken. P ge 9.240.2 “Proceedings of the 2003 American Society for Engineering Education Annual Conference & Exposition Copyright ©2003, American Society for Engineering Education” The underlying laws of electrical engineering (ohm’s and kirchoff’s) still dictate where electric currents will flow. Planning for generation, transmission and distribution must use these electrical laws, in addition to the financial needs of a particular utility. During the era of regulated vertically integrated utilities, planning for the entire system was done by the utility, power pools and regional organizations. In the initial implementation of deregulation, the assumption was made that the system was robust enough to stand the several years necessary to sort out who would be responsible for the shortand long-range planning for growth. Recent blackouts have shown that this was probably not the case. Today, government authorities and utilities at every level are still trying to determine who is responsible for the planning of generation and transmission systems. Currently investment incentives are unclear or lacking. Since the distribution of electric power is still a regulated activity, distribution utilities are quickly coming to use the tools necessary to undertake distribution planning activity. Deregulation A new way of doing business. The division of electric supply to regulated distribution utilities and unregulated merchant generation facilities has made the business of supplying power much more complicated. Adding the third layer of transmission and the fourth layer of control of the system to this division was slow in coming, although some areas of the country have made significant progress already. Initially, deregulation resulted in a significant decrease in the capital expenditures for electric utilities at all levels. With few definitions of the responsibilities of each level, no one was sure who could recoup the investment in any addition to the system. Regulated utilities would be able to reclaim investment over a 30 or 40 year time period, merchant generators would need a payback in a few years. A decade later, many definitions have been made. The distribution utilities are still regulated, with a defined payback. Merchant generators have been able to provide a payback in a reasonable time period. Little definition has been provided to suppliers of transmission or control systems, so investment in transmission is still lagging where it should be. The constrained transmission system typically represents a bottleneck to energy delivery. An example of definition for the new, deregulated energy market system is a concept called Standard Market Design (SMD). SMD would provide a fixed definition for rates which could be charged for the generation and transmission of electric power, so that all who would consider investing in this area would be able to anticipate the expenses and reimbursements afforded to their investment. SMD has been slow in coming, with almost all parties arguing over the various aspects of the definition. One such argument is whether the states should have a final say in a particular transaction, or whether a federal or regional body would have the final say. An example of the current difficulty in determining the need for updates in a system is in New York State. The New York Power Pool used to be composed of the 7 regulated utilities and the New York Power Authority representing themselves and all of the local municipal utilities and P ge 9.240.3 “Proceedings of the 2003 American Society for Engineering Education Annual Conference & Exposition Copyright ©2003, American Society for Engineering Education” rural-electric-cooperatives. These 8 parties could decide the need for an addition to the system and who should pay for that need. The new body, the New York Independent System Operator (ISO) has 125 representatives of each of the 8 above bodies, plus individual representation from the municipal utilities and co-op’s, plus representatives of each of the merchant generators or independent power producers, plus its own control-function personnel. Decisions by 8 parties are hard, decisions by125 parties seem almost impossible. Changes in generator ownership and future generation planning Most generators are now owned by a few large conglomerates of generation utilities or are owned by much s