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Bank Of America Investment Three months before the biggest blackout in North American history, the industry group charged with protecting the nation's electrical grid put utilities on notice that the section of the grid covering Ohio and other parts of the Midwest was particularly vulnerable to the kind of "cascading events" that unfolded last Thursday.

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Investment Opportunity Officials with the group, the North American Electric Reliability Council, in a report that singled out the Midwest as the only part of the country at risk of such a devastating event, said the region could face "large, unanticipated power flows" this summer and would have to be prepared to handle the challenges with care.

When the Flow Won't Go Until recently, significant transfers of electric power between regions were much less common. About 20, 000 such transactions occurred a year, range swaps between neighboring utilities. Now, 20, 000 transfers may occur on a single day of heavy traffic, said Michehl R. Gent, president of the North American Electric Reliability Council (NERC), an industry group responsible for the national grid's performance. And the transfers typically involve longer distances than ever.

Banc Of America Investment Officials at the reliability council, an industry group, lacked the authority to order the utilities to take additional steps to prevent a small local failure from snowballing into a catastrophic one. And they concede that they did not even informally suggest anything more be done to protect that section of the nation's fragile grid. But the report makes it clear that the industry had been notified of the threat in the region and the fine margin for error that existed.

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Banking Investment That margin for error, many experts now say they believe, disappeared last Thursday afternoon after several power lines went down in Ohio. That was the beginning of a blackout that ultimately extended from Detroit to Toronto to New York, they say. While investigators say they have weeks of work to do before understanding the precise causes and chronology of the electrical collapse, the failures of Midwestern transmission lines and power plants and the warning system meant to limit the spread of trouble are considered pivotal.

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Investment Solution Strategic Officials at the FirstEnergy Corporation, the company responsible for the lines that started failing before any widespread blackout, declined yesterday to comment on the report and to say whether the company had taken any steps in response to the warning.

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Investment Banking Services Energy officials and other experts say the existence of the report makes it all the more critical for investigators to determine whether the region's utilities, having received such an explicit reminder about their obligations, followed the proper protocols and met those challenges on that day.

Bank Investment Officials with the reliability council confirmed that the mention of potential cascading power failures in the region was a significant warning. "Our reliability assessments don't mention problems lightly," said Ellen Vancko, a spokeswoman for the group, created after the 1965 blackout to prevent such calamities.

Alternative Investment Since the deregulation of the energy industry, the section of the Midwest grid identified in the report has become one of the great crossroads in the transmission of power across the nation a kind of Times Square in the flow of electrical traffic. Power produced as far away as Denver flows through the Midwestern grid on its way to users in New York and elsewhere.

Online Investment Services The assessment by the reliability council, issued in May, would have been seen by virtually all controllers of the grid nationwide, said Mary Lynn Webster, a spokeswoman for the Midwest Independent System Operator.

Accompany Essential Investment "Anyone in grid management in the United States would be looking at it," Ms. Webster said.

Investment Company The Midwest Independent System Operator is charged with helping oversee the safe generation and transmission of power in the Ohio area, although responsibility for taking action in a crisis rests with individual utilities.

Investment Management Solution Ms. Webster said that as the report suggested, this part of the grid was susceptible to "unanticipated flows because of something that is happening somewhere else on the system," like commercial transactions between companies outside the region that nevertheless pour electricity through its boundaries.

Investment Management Services Those conditions can also be caused by an unexpected power failure or a generating unit that breaks down on the local grid, she said. But she cautioned against assuming that this was the only part of the national grid that was prone to those conditions. "There are areas in all parts of the country that are constrained," Ms. Webster said.

Guide Investment Stock The May report, "2003 Summer Assessment: Reliability of the Bulk Electricity Supply in North America," assessed the potential for shortages of energy, constrained transmission and other problems across the continent.

Investment Manual Solution It mentioned various risks of shortages and other issues, noting, for instance, that New York City, southwestern Connecticut and Long Island were areas of concern because of a lack of power plants and choke points in transmission lines.

Investment Stock But nowhere did the report describe conditions as being primed for a rapid-fire sequence of failures except in the region of the East Central Area Reliability Council, whose territory runs from Michigan through Ohio toward Maryland and includes the lines that failed.

Essential Investment Solution "There is a continuing need for the reliability coordinators, transmission planners and operators to communicate and coordinate their actions to preserve the continued reliability of the E.C.A.R. system," the report said. It said that conditions in the region meant operators there had to remain vigilant.

Citicorp Investment Services "As long as transmission limitations are identified and available operating procedures are implemented when required, no cascading events are anticipated," the report said.

Fool Guide Investment Motley FirstEnergy said a failed alarm system might explain why there had been delays in its response. Company spokesmen insist that it is too early to speculate whether the line failures played a role in shutting down a broad swath of the Eastern grid.

Fidelity Investment Services The apparent warnings sounded by the reliability council have elicited little surprise among the people who are most familiar with the workings and potential failings of the Midwestern grid.

Investment Management "We're not surprised, because we provide information that contributes to the summer assessment," Melissa McHenry, a spokeswoman for American Electric Power, a utility on that regional grid, said of the report. Ms. McHenry declined to elaborate further.

Francisco Investment San But Hoff Stauffer, a senior consultant at Cambridge Energy Research Associates, said the concerns seemed to be focused at least as much on the possibility of human error as on any physical shortcomings of the Midwestern grid.

Mellon Investment Services "It appears they found evidence to be concerned that the utilities within E.C.A.R. were not going to be properly coordinated," Mr. Stauffer said. Two separate entities coordinate power flow on that part of the grid, the Midwest Independent System operator for some areas and PJM Interconnection for others, creating a "fragmented situation," Mr. Stauffer said.

Finance Investment "Apparently, they were concerned about it," he said.

Investment Manual Science Clark Gellings, vice president of power delivery and markets at the Electric Power Research Institute, said that the warnings from the reliability group seemed to mesh with those of a study of the national power grid undertaken by the Energy Department in May 2002. That study showed frequent conditions of congestion on the Midwestern transmission lines, especially where they connect to the power-hungry eastern United States.

Investment Advisory Services "You're acknowledging a constraint," Mr. Gellings said. "And a constraint is at least a barometer for me that conditions are such that they have to be carefully managed. It's not impossible, it's not an emergency, but they have to be carefully managed."

Advice Investment Congressman Seeks Penalty

Guide Investment CHICAGO, Aug. 20 (Reuters) Representative Dennis J. Kucinich of Ohio, who is seeking the Democratic presidential nomination, has asked officials in his state to revoke the operating license of the FirstEnergy Corporation, saying its mismanagement appeared to have played a major role in last week's blackout.

Chase Investment Services "It is clear that FirstEnergy is a monopoly that has not effectively served the residents of Northeast Ohio," said Mr. Kucinich, who represents a Cleveland-area district hit by the power outage.

Firm Investment Mr. Kucinich said a "long history of mismanagement and neglect" prompted him to ask the Public Utilities Commission of Ohio to revoke the company's license to operate in northeast Ohio.

Financial Investment Services By Andrew C. Revkin and James Glanz
New York Times - 8/21/2003

Topic: Energy

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