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August 2013 Brief: Volume 20, Number 22

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Electricity – The Grid Must Be Maintained

 

by Deborah D. Thornton

 

 

American infrastructure is critical to our economic success, and our standards are emulated worldwide. Recent visitors from China were amazed by our electricity 24 hours a day. However, as recent tornados, hurricanes, and floods have shown, there are weaknesses. The American Society of Civil Engineers’ (ASCE) most recent “Report Card for America’s Infrastructure” gave the energy infrastructure of the United States a D+.[1] The Report Card provides detailed information on eight criteria – capacity, condition, funding, future needs, operations and maintenance, public safety, resilience, and innovation.

 

The “grid” consists of electricity generation, transmission, and end-user distribution. We require all three aspects of the system to function 24/7/365. Unfortunately much of the grid dates back to the 1880s, with major upgrades and connections made during the 1920s. Operations and upgrades are significantly impacted by “permitting issues, weather events, and limited maintenance.”[2]

 

There are three major grid areas – the Eastern, Western, and Texas grids,[3] with “almost 400,000 miles of electric transmission lines.”[4] Significant technology improvements were completed in the mid-1900s through the installation of automatic switches, which better control outages. But no major systemic improvements have been completed since then. Electricity demand is expected to increase by 8 to 9 percent by 2020, while projections show an increase of over 100 gigawatts in generation ability. This reflects a system basically in balance on the generation end. The problems are on the delivery side.

 

The Midcontinent Independent System Operator (MISO) is one of the largest non-profit transmission groups in the U.S. with almost 66,000 miles of high-voltage lines throughout an 11-state – plus Manitoba, Canada – region. Power generating companies in Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, North and South Dakota, Ohio, and Wisconsin are members.[5] Additionally, MISO manages reliability programs as far west as Montana, and down the Mississippi River to Arkansas, Kentucky, Louisiana, and Mississippi.

 

The most recent data shows that on average all U.S. customers were without power for 112 minutes in 2011. This is less than two hours over an 8,760-hour year, a miniscule amount of time. However, this is up 15 percent since 2002 (97 minutes) and the “highest level in 10 years.”[6] Nationally, approximately 500,000 people lose power for an hour or more every day. The estimates of economic impact of this power loss range from $80 to $188 billion per year.[7] According to the ASCE, a power outage costs the average commercial business $1,000 per hour. Industrial costs increase to $4,000 per hour.[8] These figures do not include extreme outage situations caused by major storms such as the Oklahoma tornadoes. Some areas have little weather damage, because the lines are newer or buried. Other major blackouts have been caused by trees touching lines, technician errors, or computer malfunctions. Potential solutions include both overall system upgrades, including “smart grid” technologies, and individual customer backup systems.

 

The electric grid functions uniquely compared to most other infrastructure (water/roads), because it is mostly privately owned. The wide variety of energy sources, including nuclear power, coal, natural gas, hydro, solar, and wind energy (plus the increasing growth of personal ownership) allows for great flexibility in generation and control of base load, peak load, and backup electricity. However, estimating demand with any accuracy is difficult. When you add in subsidies and tax breaks for “green” energy, the picture becomes even more complex.

 

The growth in generation capacity over the next 30 years is expected to be in natural gas, diesel, and renewable sources. Though many older coal plants are being phased out, coal will remain a critical source. According to the ASCE, growth in renewables will not significantly impact the overall grid except in the west and southwest. Many consumers are not aware of the “planning reserve margin,” requiring that companies are not only able to meet “peak demand” but have backup capacity 15 percent beyond peak demand.[9] This means that much of the electricity generation and transmission capacity is underused for huge periods of time, but must always be ready, 24/7/365. This results in large financial investments and tied up capital, with costs which are passed onto consumers whether or not they are used.

 

According to the Iowa Utilities Board (IUB), coal provides 72 percent of Iowans’ electricity, wind 16 percent, and nuclear 8 percent. The other sources (natural gas, fuel oil/petroleum, and hydro) were all below 5 percent of the actual electricity provided. In total 57.5 million megawatts of electricity were generated in Iowa in 2010.[10]

 

The recent announcement of a $1.9 billion investment in wind energy by MidAmerican Energy will add “as much as 1,050 megawatts” of new power-generating capacity and be “as much as 40 percent” of the company’s overall generating capacity.[11] Nationwide we rank 10th in production of renewable energy, at 10.3 gigawatt hours, according to ASCE. The main problem with wind energy is the intermittent and uncontrollable nature of wind power, combined with transmission, distribution, and storage issues.

 

Electrical infrastructure losses will be in the hundreds of billions of dollars by 2020 and impact over 500,000 jobs nationwide.[12] The cost to individual households is estimated at $3,100 per year in disposable personal income, totaling over $2.4 trillion by 2020. Costs include more expensive power, damages from unreliability or power surges, and the use of older technologies and processes. Commercial or retail sectors are often directly impacted by outages and most do not have backup generators. Many of these workers are hourly and their incomes can be most affected.

 

While conserving energy and using renewable energy is important, it does not matter how much electricity you generate if it does not get to end-use consumers – 24/7/365. Transmission and distribution issues should not be ignored in order to rush into renewables. Hardworking Iowans and their families cannot afford to lose $3,100 per year.

 

Public Interest Institute’s POLICY STUDY, “Electricity – Make It, Use It – 24/7/365,” can be viewed at http://www.LimitedGovernment.org/ps-13-5.html.

 

(Endnotes)
[1] Robert Victor, “Executive Summary,” 2013 Report Card for America’s Infrastructure, American Society of Civil Engineers, 2013, <http://www.infrastructurereportcard.org/a/#p/about-the-report-card/advisory-council> accessed on May 15, 2013.
[2] Victor.
[3] Jonathan Fahey, “US Power Grid Costs Rise but Service Slips,” The Associated Press, March 5, 2013, <http://www.philly.com/philly/business/20130305_ap_uspowergridcostsrisebutserviceslips.html> accessed on May 14, 2013.
[4] Robert Victor, “The Electric Grid,” 2013 Report Card for America’s Infrastructure, American Society of Civil Engineers, 2013, <http://www.infrastructurereportcard.org/a/#p/about-the-report-card/advisory-council> accessed on May 15, 2013.
[5] “Corporate Information,” Midcontinent Independent Transmission System Operator, <https://www.midwestiso.org/Library/Repository/Communication%20Material/Corporate/Corporate%20Fact%20Sheet.pdf> accessed on June 10, 2013.
[6] Fahey.
[7] Fahey.
[8] Robert Victor, “Average Cost of a Power Interruption in the U.S.,” 2013 Report Card for America’s Infrastructure, American Society of Civil Engineers, 2013, <http://www.infrastructurereportcard.org/a/#e/power-interruptions> accessed on June 6, 2013.
[9] “Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure,” American Society of Civil Engineers, 2012, p. 28, <http://www.asce.org/uploadedFiles/Infrastructure/Failure_to_Act/SCE41%20report_Final-lores.pdf> accessed on May 20, 2013.
[10] “Iowa’s Electric Profile,” Iowa Utilities Board, May 2013, <http://www.state.ia.us/government/com/util/energy/electric_profile.html> accessed on May 13, 2013.
[11] “Iowa utility announces $1.9 billion wind energy investment,” Dubuque Telegraph-Herald, May 9, 2013, <https://www.asme.org/kb/yellowbrix-article?topic=a3e27009-ea5a-4b48-b89e-0182a6e7f7b4&storyid=185465037> accessed on May 14, 2013.
[l2] “Failure to Act,” p. 44.

 

Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.

 

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