Sunday, September 14, 2003

Can company improve power grid?

Since blackout, reliability is priority

By Joe Milicia
The Associated Press

CLEVELAND - If it weren't for the blackout of 2003, GridAmerica would still be operating in the shadows.

But questions that the blackout raised about the Midwest electrical grid's reliability have put a spotlight on the company.

GridAmerica is an independent transmission company formed last year to take over the interstate transmission systems of FirstEnergy Corp. and two other utilities.

Cleveland-based GridAmerica is being looked upon to help improve electricity transmission as it invests $500 million in the grid.

It will be responsible for 4 million customers, 14,000 miles of transmission lines and a 46,000 square-mile service territory in five states.

"One of the larger goals is to make the whole system more reliable," said Paul Halas, chief executive officer of GridAmerica. "Nobody knows what aspect of the system didn't go right on Aug. 14."

The Aug. 14 outage darkened homes and businesses in eight states and parts of Canada. The nation's worst blackout affected 50 million people, shut down more than 100 power plants and knocked Cleveland's water supply off line.

U.S. and Canadian investigators are focusing on failures of a power plant and lines owned by Akron-based FirstEnergy.

GridAmerica's presence won't change the electricity rates for First-Energy customers, FirstEnergy spokeswoman Ellen Raines said.

"It is probably going to be transparent to most electricity users," Raines said. "It is intended to support the retail electricity market ... to help make transactions of wholesale electricity more seamless."

GridAmerica will have three main duties: calculate the capacity of the transmission system to deliver electricity, plan and coordinate scheduled maintenance on the system and plan for long-term investments.

For-profit GridAmerica is set to take over transmission lines on Oct. 1 based on an agreement reached last year by FirstEnergy, Missouri-based Ameren and Northern Indiana Public Service Company. The utilities' service area covers parts of Ohio, Indiana, Illinois, Missouri and Pennsylvania.

FirstEnergy, Ameren and NIPSCO will continue to own the transmission system, but GridAmerica could eventually seek to buy it.

Most of GridAmerica's 45 employees are electrical engineers, many with experience working for parent company National Grid, which runs and owns the transmission system for England and Wales.

Halas has a background in law and finance, which he said is necessary because the company is so heavily governed by regulatory agencies.

GridAmerica and other ITCs emerged after the Federal Energy Regulatory Commission encouraged independent organizations to control transmission assets, rather than utilities.

GridAmerica will operate under the supervision of a regional transmission organization - the Midwest Independent Transmission System Operator. The nonprofit Midwest ISO covers a wider area and is responsible for regional impacts on the grid.

"We're encouraged that ITCs are forming and believe with them on the landscape it may encourage transmission infrastructure improvements," said Midwest ISO spokeswoman Mary Lynn Webster.

GridAmerica's only sources of revenue will be cost reimbursement from Midwest ISO and management fees from the utilities, unless it eventually buys the transmission system.

"We hope to become the owner of the transmission assets and receive the revenue that goes along with that," Halas said.

GridAmerica will earn $3.5 million a year in its first three years. Halas could not provide an estimate of what the company would make if it buys the transmission assets.

David Hughes, executive director of Citizen Power, a Pittsburgh-based utility watchdog group, said open access of transmission lines is good for the industry.

"We don't believe deregulation can work, but if there's any chance for it to work you cannot have one competitor owning the arteries of competition," Hughes said. "You need all these utilities to put transmission under independent operation."

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