The federal agency that ensures the stability of the electricity system has been shut down for two days due to a power outage in Washington.
The Federal Energy Regulatory Commission’s mission statement is to “assist consumers in obtaining reliable, efficient and sustainable energy services.” But Pepco, the utility serving FERC, is known as one of the most unreliable power providers in the U.S., according to a 2010 investigation by the Washington Post:
Pepco’s reliability problems are more pervasive. Some of Pepco’s most disturbing failures come quietly on days with no violent weather, according to The Post’s analysis of industry data, interviews with experts and a review of thousands of pages of documents.
For the second day in a row, FERC employees have been told not to come into work because Pepco has been unable to restore power.
FERC oversees the interstate transmission system, not the distribution system – so this problem is not something the agency would directly deal with. But this juicy bit of irony does highlight a glaring deficiency in the U.S. grid: The antiquated electricity system is costing America a lot in money, time and patience – even while utilities continue to profit from poor service. From the Washington Post:
Pepco has not determined the economic impact of the outages on the local economy. But Pepco and its investors have enjoyed attractive earnings and share prices that have nearly doubled since 2009. Pepco Holdings has about $8 billion in revenue, Rigby said, including what he called pass-throughs to other companies that generate and transmit the power that Pepco delivers.
Kurt Yeager, former executive director of the Electric Power Research Institute knows the real cost: He says grid outages cost about $1 trillion per year in lost productivity. According to Yeager, Americans experience about 4 hours of outages each year. But in Japan, a country that has integrated more sophisticated monitoring electricity monitoring systems, consumers only see about 7 minutes of outages each year. “Utilities are rewarded for the amount of power they deliver, not the quality of service,” he says.
There is a growing awareness among consumers that our power grid is in need of an upgrade. Accompanying this awareness has been increasing concern that the costs to do so are prohibitive and will be borne largely by consumers. The untold story is that the hidden costs associated with doing nothing — enduring the outages, wasted energy, antiquated technology and other limitations inherent in our current system — far outweigh the investment needed to make it stable and efficient for the future. These costs are reflected in our utility bills as well as in the costs of goods and services.
Modernizing the electricity system will cost billions of dollars – about $475 billion through 2030, according to a recent smart-grid study from EPRI. But compared with the $1 trillion in lost productivity each year, that figure doesn’t seem so daunting. EPRI also found that with a smarter, more efficient grid, the net economic benefits could be about $2 trillion by 2030.
For its part, FERC has embraced the concept of a smarter grid – looking data security, communications standards, better use of transmission infrastructure and how to integrate large penetrations of variable renewables.
But the agency won’t be able to tackle those issues until the power gets turned back on.