The Grid: Electrical Infrastructure for a New Era

by Gretchen Bakke

On July 2, 1938, Samuel Insull stumbled and then collapsed in a Paris subway station. He was dead upon arrival at the hospital half an hour later.

At the pinnacle of his power Samuel Insull sat on the directorates of 85 companies, was chairman of 65, president of 11, and through his holding companies controlled more than 6,000 power units, employing 72,000 workers in 324 steam, 196 hydro-electric generating plants, 89 gas plants, 328 ice plants. His companies served 1,700,000 customers, a population of 10,000,000. There were 600,000 security holders. The valuation of the system rose above the 3,000,000,000 dollar mark.

Commonwealth Edison, the final name of the Chicago utility built by Insull (and still its name today) was decimated by the stock market crash of 1929, taking the life savings of almost all those 600,000 securities holders with it. The Fisk Street Station, Chicago’s first large-scale AC generating plant, was closed by labor unrest in 1942 and again for failure to live up to environmental standards in 2012. Making it, too, part of the story of how America changed around an electric power infrastructure too hardened in its ways to keep up.

In other words, cardigans, fireplaces, thermostats, and later, solar panels (thirty-two of which Carter would mount on the White House roof in 1979 in the midst of yet another crippling oil embargo)—these were to become watchwords for us all.

What this clause said was simply that the utilities would need to buy, and move to market, electricity produced by any facility with an output of less than 80 MW (about a tenth of what might have been produced by an average nuclear power plant at the time). And, just as important, they would be obliged to pay a nonmiserly rate for it. This rate would be set according to what were called “avoided costs”—that is, the money it would have cost the utility to make that precise amount of electricity for themselves.

Given the litany of changes enacted by this single piece of legislation one can see why permitting “the feeding of locally generated electricity into utility grids” might initially have slipped past a radar tuned to the measure of significant things.

The government had gotten us ass over teakettle in Vietnam, and at home our prosperity was made fragile by our dependence on foreign oil, the steady supply of which we couldn’t control, while the material bounty that flowed from our industry had saddled us with a set of pressing environmental issues that regular folks had no power to correct.

One of the reasons that section 210 of PURPA made it through the legislative process and into the law was that it didn’t at first glance challenge any of this. It left the utilities as monopolies untouched and instead reformed an almost accidental right they had been given all the way back in the early 1900s; it stripped them of the right to control the market for electricity not as sellers but rather as buyers.

The utilities managed the grid, they made the power, they owned the wires, they distributed the electricity, and they collected the money. They were also regulated in such a way that anyone else with a notion to sell electricity couldn’t. The law prevented other electricity makers (by dint of not providing a license) from building their own distribution networks and entering into competition with the existing utility.

This was what PURPA reversed: The utilities could still be monopolies, but they couldn’t be monopsonies anymore.

As of 2015, there were more than 3,600 factories in the United States making 12 percent of our electricity as a by-product of their own industrial processes.

In 1983, when the Supreme Court confirmed the legality of PURPA and put an end to further legal dillydallying, California was ready. It had a host of small energy entrepreneurs with almost operational projects and it had local legislation in place to support electricity production that was verifiably environmentally friendly—what we would now call “green.” A surprising number of permits for small-power construction were filed almost immediately, 1,800 for dams alone, as well more than 16,000 wind turbines and even some for experimental solar projects. And all this new small-power generation was scattered to the four winds—in the river canyons and old mines of the Sierra Nevadas, in the desert outside L.A., in the passes between San Francisco Bay and the Central Valley, even in downtown Sacramento, and almost all of it was variable. It blew with the wind, fell with the water, and warmed with the sun.

The utilities quickly found themselves with a plethora of new problems. Never before had they had to deal with variable generation, never before had they had to deal with distributed generation, and never in the seventy years of their existence had they lost control over the production side of their business. At issue wasn’t that they suddenly had to integrate a massive amount of new power but that they weren’t getting to decide how much, where, or when relatively small amounts of electricity would come streaming onto their power lines. They just had to pay for it and distribute it when it got there. Their business model had no provisions for this new reality.

It demanded that they behave less ...

Once the initial requirements of figuring “avoided costs” were met by state regulatory agencies, often in conversation with the utilities, went about “offering” contracts in very different ways. In some states, such as Vermont and New York, the same price per kilowatt-hour was offered to any and all new electricity providers regardless of the utility doing the buying; in New York this was called the “six-cent” law as it paid out a flat, invariable, 6¢ per kWh for all early PURPA era contracts. In other states, like Virginia, non-utility providers bid for contracts. For example, in 1986, when Virginia Power wanted to add 1,000 kilowatt hours of generation, for use by 1990, they held an open auction, received 5,000 kilowatt hours’ worth of bids from fifty-three different companies from which they selected seven that promised 1,178 new kWh. This system of competitive bidding would become the most revolutionary of the many variants tried out by different states as it allowed for something like free-market competition to actually, and at long last, enter the governance of the grid. Once awarded the contract, these new, small power entrepreneurs “built out” the promised generation facilities, and on the appointed date, they began contributing a predictable kilowattage to the grid.

A 25 percent tax credit provided by the Feds for investing in the electricity generation business was already a very enticing deal to investors. What Cashman did was double it. In California, any investment in renewable infrastructure (including solar and wind power, but also solar hot water heaters and other non-electricity producing uses of renewables) was rewarded with a tax break of nearly 50 percent. Money poured into the state, and most of it was transformed into the steel stalks and massive rotating blades of wind turbines. There were veritable forests of them.

And as oil and natural gas prices plummeted in the mid-1980s, California’s two big utilities were quite suddenly being required to purchase more power than they needed for far more money than they could recoup through their rates.

This sentiment of too much investment too fast is echoed by energy analyst Paul Gipe, who points out that the “tax credits were so lucrative that they attracted those who knew more about constructing a deal than about building wind turbines.” Unwittingly Ronald Reagan had created one of the weirdest marriages American business has ever seen, as Manhattan investment bankers scrambled to buy up wind turbines made by commune-living, Vietnam-era draft dodgers. The result was that California, by the mid-1980s, had a massive wind bubble, ripe for popping.

California might have been the planetary center of wind energy in the mid-1980s, but their turbines were more machines for churning out visions of greener futures than actual watts. The buy-yourself-a-wind-turbine plan had become so appealing that, in Cashman’s words, “an awful lot of machines were put up that were worthless.” Nobody, at least no one in America, had figured out how to build an industrial grade wind turbine. What we’d figured out instead was how to finance them. The state-of-the-art turbines during those early heady days were, in Cashman’s words, “prototypes” that, unfortunately for California, operated according to the wrong logic.

By 1989, a decade after the passage of PURPA, the average time a California wind turbine worked at capacity before breaking down and needing repair was seven hours. California had thousands upon thousands of these and none of them really worked.

In 1984, according to Cashman, even with the questionable life span of their machines, California’s nascent wind industry produced as much electricity as San Francisco used that year. They had proved that even with prototypes they could make enough energy out of thin air to power a major American city. This was a real victory.

They just threw up factories in Denmark and just kept shipping them over. Shipping them over, shipping them over.” California slowly filled up with Danish turbines, and even today if you drive over Altamont Pass, due east of the San Francisco Bay Bridge, you can still see some of those first Danish-made, movie-star-owned, S&L-financed turbines chugging away, with their stiff, heavy, inflexible blades. It’s been thirty-five years and they still work.

Today renewables comprise 13 percent of installed electricity generation in the United States, but that’s not news. What is news is that in 2014, 53.3 percent of new generation installed in the United States was either wind or solar, and this percentage is predicted to only grow. Texas is aiming for 75 percent renewable power generation by 2050. The United States as a whole has a more modest goal of 20 percent by 2030, though a recent report from NREL, the National Renewable Energy Laboratory that President Carter helped to establish, holds that we are already capable, with existing technology, of making 80 percent of American power from renewable sources.

Almost none are buying new coal-burning plants, though year by year the number of these plants in operation is also quietly shrinking. And none are building new large-scale hydroelectric dams. Those heady mid-twentieth-century days of massive, secured investment in big power projects are over. As a result, in 2005, a full fifth of America’s power plants were over half a century old and reliant upon technology that was state of the art in the 1950s.

A case in point: On August 14, 2003, eighteen months after Davis-Besse was shut down for repair, the largest blackout in our nation’s history, and the third-largest ever in the world, swept across the eastern half of the United States and parts of Canada, blacking out eight states and 50 million people for two days. So thorough and so vast was this cascading blackout that it shows as a visible dip on America’s GDP for that year. The blackout, which covered 93,000 square miles, accounted for $6 billion of lost business revenue. If ever it was in doubt, the 2003 blackout proved that at its core America’s economy is inexorably, indubitably electric. Though initial speculation as to cause placed the blame firmly on Canada it was quickly confirmed that this massive outage had been caused by three overgrown trees and a computer bug near Akron, in the territory of the selfsame utility that operated Davis-Besse—Ohio’s FirstEnergy.

In FirstEnergy’s “Annual State of Power Report” for 2001, filed with the Public Utilities Commission of Ohio, or PUCO (a local regulatory body), they had what might be considered a reasonable if not exactly admirable track record of repairs and upkeep. They reported having fixed 75 percent of known “common” problems—like broken wires or poles, leaving 25 percent of these issues for the following year. But in 2002, the year of the near miss at Davis-Besse, they completed only 17 percent of the maintenance and repairs on their To Do list, leaving a backlog of almost eleven thousand items for 2003—the year of the blackout. During the same period, the utility laid off five hundred skilled workers whose jobs were to keep basic infrastructure, such as electrical lines and power plants, in good working order.

Many U.S. utilities “adjust” their tree-trimming and their fiscal budgets in similar ways. This despite the fact that there is something utilities know and that their customers (including most of Congress) remain ignorant of—in the United States today, as in 2003 (and as in 1994), the greatest threat to the security and reliability of our electrical infrastructure is foliage. Trees most especially, though kudzu and its ilk are troublesome creepers in their own right.

Politicians may talk a lot, and utility managers may worry a lot, about how terrorists might hack into, shoot up, or bomb various bits of our grid in order to bring the United States to her knees. And yet the trees constitute a far more significant threat to the security and reliability of our national electric infrastructure.

Every line has a rating, a voltage, a “quantity” of electricity that it can safely conduct from one place to another. Extra High Voltage lines, the ones threaded across open prairies and high mountain passes borne up by huge steel towers, carry from 275 kilovolts (kV) to 765 kV, while those that link the corner pole to the side of your house have a low voltage rating, usually around 50 kV. Lines are actually pretty remarkable technology even if they all look the same from ground level; its the shape of the poles that allow average folks to differentiate one voltage rating from the next, but up there the lines that are strung between these poles are a complex assortment of alloys and weaves and nested arrangements of metals, each designed to carry its assigned current safely from the point of production to the point of use.

The problem with the Swiss cheese model, which is otherwise remarkably robust (we have it to thank for the past thirty years in which flying has been consistently safer than driving; even frequent fliers are more likely to be killed in a lawn mower accident than an airplane crash), is that the grid, like any complex mechanical system, is not just a machine but also the regulatory, business, cultural, and natural environments within which this machine functions. The grid is the physics, mechanics, engineering, construction, management, upkeep, and use internal to itself. It is also the storms, earthquakes, laws, hatreds (and other personal opinions), and profit motives that surround the mechanism, that change over time, and that can differ drastically between one state, one city, one climactic zone and the next. In the case of the grid these “external to the cheese” circumstances are not necessarily conducive to the machine’s capacity to function well and strongly.

More poetically and of equal technical relevance is that different kinds of electric lines are not identified by long strings of numbers and letters but rather are named after birds. So, for example, a 765 kilovolt (kV) partridge line that runs one hundred miles has a maximum carrying capacity of 3.8 gigawatts (GW)—or 3.8 billion watts, roughly the electricity needed to light 10 million 100-watt bulbs or all the homes in Columbus, Ohio. Now take that same partridge conductor, stretch it to four hundred miles, and it can carry only 200 GW, about half as much power. Distance reduces the carrying capacity of lines, whereas long-distance wheeling increases the amount of electricity transported over precisely these same lines. The Energy Policy Act did nothing to upgrade the lines. The result was a simple one. The free trade of electricity meant that there was too much electricity traveling too far. Lines were getting overburdened, heating up, sagging, shorting out, arcing, and filling with harmonic resonances. All of which are both very bad for reliability and wasteful, and thus bad for efforts at conservation.

In May 2000, a mere two months after the order that utilities “wheel” electric power rather than make it went into force, the number of Transmission Loading Relief Procedures on the East Coast’s grid was six times what it had been a year earlier. These requests for help managing the load of particular lines are one very good way of measuring stress on the grid. Just before the act was made law, the number of these requests on the Eastern Interconnection was at right around ten per month. Six months later, in August 2000, there were almost 175 such requests, and by mid-2003, right around the time of the blackout, more than 250 such requests were coming in per month.

Enron’s market-manipulating machinations to the side, almost all contemporary electricity traders engage in forms of electricity arbitrage (buying cheap here, selling dear there) made possible by the critical combination of the Internet and the Energy Policy Act. This way of making money on power may have been first exploited by Enron—in the late 1990s, 25 percent of all energy trading in the United States was being conducted via EnronOnline—but it also brought competition to the market in a way never before seen. The unfortunate side effect of this was to make the flow of information less free as the flow of electricity has become simultaneously more complex.

Money doesn’t go to the upkeep of the fleet of old, lumbering power plants trudging toward retirement that nevertheless still form the backbone of America’s electrical generation facilities. In the case of nuclear this lack of desire to make significant investments in upkeep is the most worrying because the results of plant failure can be the most catastrophic. This isn’t to say there is no capital invested in this domain—far from it—it’s just not where the utilities want to spend their diminishing returns. FirstEnergy is currently spending another $600 million to upgrade Davis-Besse’s steam generators, this after having spent an equal amount in 2004 to replace the perforated reactor head. Given the cost, one can easily imagine why they diverted inspectors’ gazes elsewhere and requested, on multiple occasions, to have inspections delayed or canceled as rust slowly ate into the nuclear containment vessel; for this they were fined $5 million by the Nuclear Regulatory Commission, the largest fine the NRC has ever levied, and they paid another $28 million to the U.S. Department of Justice for deliberate obfuscation of the facts.

One result of this is that, according to a 2014 White House report, roughly 90 percent of power outages in the United States now start on distribution systems that have not been the object of the same care or recipient of cash.

This is what vars do: they help ensure a constant voltage in times of stress. As such they are essential to the well-being, reliability, and efficiency of the grid. They are, however, also a very hard sell, because strictly speaking they don’t exist.

Vars are even more problematic non-things to understand (if not to make) than are watts. Nevertheless, before the act brought economies of profit to the grid, every utility ran some generating plants that made watts and fewer, far fewer, that made vars, because vars are what keep voltage and current in sync. With the separation of money made by generating electricity and that made by wheeling it everybody who used to make vars was, after 2000, trying to get into the watt market. Var production grew exceedingly slack. This lack of vars on the grid has been called “a key factor in the great Northeast blackout of August 2003” as well as in a series of blackouts on the Western Interconnection in the summer of 1996.

The Eastern Interconnection careened out of control that hot August day not just because of what FirstEnergy did or failed to do. A bigger factor than those too-tall trees, that computer bug, is how the Energy Policy Act drastically changed the ways in which we now use the grid. The physics and the economics of the system today have no choice but to work at cross-purposes.

Meanwhile, we all also love what the act has made possible, if for different reasons. Lefty clean green energy types love it because at long last they have the right to buy power from less polluting, often more proximate sources, or even better, to make it themselves. The moneymen love it because they can finally make a profit off of the trade in electricity. The conservative right love it because it brings the free market, deregulation, and competition to what was a highly controlled noncompetitive industry riven through by the meddling tentacles of big government. Multinational corporations and multimillionaires love it because at long last they can invest in the energy sector with relatively little risk of loss. Building electrical generation, betting on electricity markets, making solar and wind mainstream technologies—it seems that whatever (social) way you look at it, the Energy Policy Act is a winning gig.

What constitutes a “better world” is of course always up for grabs. But that’s America too. If some people want to get rich while others want to put an end to global warming, well, let them duke it out in the marketplace. That’s effectively what the Energy Policy Act has made possible. It’s not a pretty fight. Nor is it a clean one. But where there was stagnation there is now innovation. And where there was a stable, if aging system—our grid—there is now a fantastically unstable, old one with new bits and more modern logics soldered into the joints and around the edges. Be that as it may, at least the chips are in the air; the fight from here on out is all about how, where, and into whose pockets they will fall when they come back to ground.

To run these otherwise hibernating electricity factories the utilities need to make sure there is enough fuel sitting around ready to combust, to turn turbines that turn crankshafts that spin inside electromagnets that pulse vast quantities of electricity out into systems built to move less of it. They need enough trained staff on call and ready to go to fire it up and keep it running, and they need to ensure that it is in good working order despite sitting idle most of the time. This is massively expensive for them, and it is a simple and constant drain on their bottom line.

In the UK, where electric kettles are common, they have a problem with something called TV pickup—a surge in demand during the ads of widely watched TV shows as television viewers head to the kitchen to boil up a spot of tea.

With smart meters, however, they finally also have the chance to pass this cost on to us, transforming peak demand from a moment of crisis for them, and for the grid, into a moment of peak revenue.

What the Taorminas (like so many other protesters) miss, however, is that at least for the moment these communication and control capabilities have very little to do with any sort of utility interest in the behavior of any individual customer. We matter to them as a manipulable aggregate, rarely as individual units, and almost never as particular people. This disinterest in customers as human beings with ideas, wants, beliefs, and proclivities that matter to them has been at the heart of almost all popular resistance to the mass rollout of digital smart meters, not just in Texas. Everywhere in the United States people were, to varying degrees, angry about this particular combination of forced intervention and personal disregard.

A century of ignoring customers has translated into all kinds of flat-footed and tone-deaf interactions in the present. In Bakersfield, these were everywhere in evidence. From the customer surprised to discover that his electricity usage actually increased during a six-hour blackout to apartment dwellers who found themselves quite suddenly in the position of paying more for their electric bill than for their rent, smart meters looked like and felt like a cash grab. And though there has been a lot of quibbling as to why, nobody argues with the fact that with the new technology’s arrival, monthly electric bills doubled, at times trebled. This happened in 2010, when Bakersfield had an unemployment rate of 16 percent and an underemployment rate double that. Nobody had $1,000 to pay a July electric bill that had cost $300 in June (not to mention $300 the previous July) with no appreciable change in consumer behavior. If both the old meters and the new meters were accurate, as the utility claimed, then the only viable explanation for the people of Bakersfield was highway robbery. PG&E offered different interpretations: July 2010 had been much hotter, they claimed, than July 2009, resulting in more intensive air conditioner use; time-of-day rates meant that customers, not yet used to the idea that a kilowatt-hour of electricity might cost more at four in the afternoon than at six in the morning, were continuing to use power, and lots of it, at the most expensive times of day; and...

The utility may have wanted to disconnect their capacity to do business from things like telephones and dumb, greedy air conditioners, but what they also enabled with these new meters is “net metering” by means of which homemade electricity, from rooftop solar panels, for example, can be fed back into the grid. The utility has to pay you for this power and the smart meter helps them keep track of how much they owe you at the end of each billing cycle. As of 2015, all the states except South Dakota, Mississippi, Alabama, and Tennessee had active net meter policies in place. In 2012, however, when smart meter ire was reaching its peak, these changes were not yet on many people’s radar. All they saw was their utility once again doing things they didn’t understand and about which they had no say.

The first critical difference is that with a perfect, future smart grid, electricity might be made everywhere. Flows of power would be multidirectional as rooftop solar met backyard wind met big nuclear or hydro, and the output of all these types of generators would intermingle “intelligently” on the wires. Second, information would also travel freely between utility, customers, and the various machines that populate the grid, including both those that used electricity and those that produced it. The movement of both information and electricity would be monitored because meters could run both forward and backward, keeping perfect track of electricity outputs and inputs from even the smallest sources. Smart thermostats would form the hub of home-based networks of smart appliances that altered their behaviors without direct human intervention to take into account real-time, variable pricing of electricity. Since the lines necessary to carry radically distributed, uncoordinated, and small-scale generation to market also needed to be smart (which is to say to have some basic digital computing capacities), it made sense to build the two functionalities into the same set of wires. Information and electricity finally, in Boulder, becoming one.

This, then, is exactly the problem. The utilities don’t know how to upgrade existing technology without putting themselves out of business. Nor do they know how to continue with the existing infrastructure without going out of business.

Despite all the chatter to the contrary, when it comes to being too hot or too cold, people tend not to act in economically rational ways. They follow a physiological rationality instead. This dictates turning the air-conditioning way up on the summer’s hottest days and the heat way up to fight off the winter’s fiercest cold.

The smart meter is the only part of the SmartGridHouseCarNanoGridComboPack that is actually necessary to the utilities, because, to borrow the words of the technology journalist Glenn Fleishman, “shedding 5 to 10 percent of their load at peak times on demand could reduce or eliminate turning to the expensive spot power market or powering up dirty old power plants. Shaving that usage can have enormously disproportionate cost and environmental savings.”