New fines to be effective on power grids

New fines to be effective on power grids

	Published : Thu, 31 May 2007 21:41 By : Agencies Print this Story

WASHINGTON (AP) - For the first time ever, regulators of the North American power grid will in a few weeks have the authority to issue $1 million-a-day fines to companies that violate electric reliability rules.

Nearly four years after the country's biggest-ever blackout, 83 mandatory standards will become effective, governing everything from tree-trimming around power lines to emergency operations to balancing demand with power supplies. Experts, however, do not expect major fines to result -- at least not right away.

After the widespread outage on Aug. 14, 2003 left tens of millions of people in the dark for as much as a day, federal energy regulators criticized the electricity industry's then-voluntary efforts to ensure power grid reliability, saying the industry played down the grid's shortcomings and used ambiguous and often-ignored standards.

Congress, as part of an energy bill passed in 2005, required that grid operators meet mandatory reliability standards. The Federal Energy Regulatory Commission approved the new standards in March.

The regulations were originally scheduled to go into effect next Monday, but on Thursday were pushed back until June 18.

FERC said the delay was due to an interpretation of law that mandates that federal agencies' rules go into effect 60 days after they are published in the Federal Register.

The delay is 'not going to have any practical effect,' FERC spokeswoman Mary O'Driscoll said.

David Hilt, vice president and director of compliance at the North American Electric Reliability Corp., the Princeton, N.J.-based organization charged with overseeing the power grid, said that utilities and other power companies are well on their way toward complying.

Any violations at this point are likely to be administrative and not major risks to the power grid, he said.

'I'll never say everything is fixed but I'll certainly say that we are a long way toward improving the reliability of the grid,' Hilt said.

Gautam Mukherjee, director in the power group at Cambridge Energy Research Associates, said the industry went through a 'lot of soul searching' after the 2003 blackouts and is far more prepared to deal with heightened standards than it was a few years ago. Mukherjee said he expects the industry to adjust well.

'The financial penalties are likely to be imposed as a last resort,' he said.

Fines can range from $1,000 to $1 million per day. Federal regulators last summer gave NERC the power to develop and enforce the standards.

The final report of a U.S.-Canadian task force leveled much of the blame for the 2003 blackout on FirstEnergy Corp., which it said failed to adequately recognize or respond to problems on three of its lines in Ohio.

Ellen Raines, a FirstEnergy spokeswoman, said the company has since made infrastructure improvements including a new computer system for a control center that operates the company's transmission lines. FirstEnergy, she said, will be in compliance with the new NERC standards.

Vito Stagliano, research director at the National Commission on Energy Policy, said the standards have been a long time in the making.

Power plant owners that are not connected with utilities and smaller cooperatives and public power agencies are likely to have the most difficulty in complying, rather than big utility operators, he said.

Steve Brash, a spokesman for Charlotte, N.C.-based Duke Energy Corp., said his company has created a new computer system to analyze the company's compliance with the standards.

'What we are doing is paying much stricter attention to the standards to guarantee that we are in compliance,' Brash said. 'The potential of a million dollar fine does get one's attention'

NERC projects peak power demand in the U.S. this summer will be 1 percent lower than last year. Power grid officials say the system will be able to handle normal summer weather, but will be strained to capacity if there are unusually high temperatures.

Nationwide, electricity demand is projected to grow by 19 percent over the next decade, while transmission capacity is expected to only grow by 6 percent, according to NERC.