US public faces bill for power upgrade

FT.com ^ | August 17 2003 20:10 | Neil Buckley in New York and Demetri Sevastopulo in Washington

[DannyTN]

US consumers were warned on Sunday they would bear the brunt of the cost of updating the nation's power grid - put by some observers at up to $50bn - following the biggest power failure ever to hit North America.

As investigators struggled to establish the chain of events that led to the power cut that affected 50m people in the US and Canada, there were calls for the US to increase investment. Spencer Abraham, US energy secretary, said utility companies would pay some of the cost of improving the system, but much of it would have to be passed on to consumers. "The rate-payer will bear the cost," he told CBS television.

His remarks were echoed by Michehl Gent, president of the North American Electric Reliability Council, responsible for monitoring power transmission.

"We need more transmission," Mr Gent warned. "We have a very good transmission system, but it's now being used in ways for which it was never designed."

The probe into what caused the blackout was homing in on the failure of three transmission lines in north Ohio.

Investigators were also struggling to determine why the failure led to such a massive breakdown of the transmission system.

The system will on Monday face its biggest test since power was restored over the weekend, as millions of people return to work.

Mr Abraham renewed calls for Congress to enact comprehensive energy legislation. The House and Senate have both passed energy bills, but there are significant differences between them.

But he said it would be a "huge mistake" to strip out controversial provisions, such as allowing oil drilling in the Arctic, to ease the passage of the legislation.

[DannyTN]

$50 BILLION????

Even if every plant cost $5 million. That's 10,000 plants. How is it possible that that much capital is necessary?

Looks more like the BIG LIE all the time. System fails with multiple plants down. Nobody knows why the systems in place to prevent it didn't work. And now power companies want $50 billion to fix it.

[Alberta's Child]

A power plant costs far more than $5 million. In fact, I would venture to guess that a typical large-scale power plant these days would cost at least $500 million to build from the ground up.

[FLCowboy,]

Five million for every plant? If you could build a plant for $5 million, every utility in the world would be knocking at your doorstep.

[mewzilla]

FWIW, here's a link to a story about a proposed plant in WI that puts the cost around 70 to 80 mil. This was a couple of years ago, though. The plant was supposed to be finished this year. It would be interesting to see if there were any overruns.

[DannyTN]

"Five million for every plant? If you could build a plant for $5 million, every utility in the world would be knocking at your doorstep. "

Agreed, but we aren't talking about having to completely rebuild plants are we? I don't think we are even talking about replacement lines. I think they are talking about additional lines and some new control equipment.

How much equipment is required to control the grid at each plant and prevent one line going down from taking them all down? My guess is it's a couple of relays, maybe a new computerized control system for each plant. But it sounds like they already have invested in such control systems, and they simply need to make sure everybody is up to the current state of the art.

[DannyTN]

See post 5

[DannyTN]

"FWIW, here's a link to a story about a proposed plant in WI that puts the cost around 70 to 80 mil."

But that's a whole plant. We don't need new plants do we? We just need better controls on the grid. How much can that posibly cost?

[Muleteam1]

>>A power plant costs far more than $5 million.<<

In all seriousness, the environmental impact statement for one new plant could run as much as several million, not including legal defense costs.

Muleteam1

[mewzilla]

Yeah, we need new plants, too. Demand for electricity in the next few years is expected to increase by double digit percentages. Can't transmit what you haven't generated.

[chris1]

Not to sound like a nut, but this is all seeming a bit coincidental that they now want to sack the slob taxpayer and already know how much they want to spend on it.

[DannyTN]

Ok, fine. I'm all for building new plants. But the cost of new plants shouldn't be tabulated in the cost of repairing the grid. That's something different altogether.

Rates already have built into them plant costs, so an increase in demand shouldn't automatically translate into an increase in rates.

[joanil]

Oh golly, they just about doubled my rates in the past four years.
Now they want to double them again!
Its going to be a looooooooooooong cold winter.

[mewzilla]

Thanks to partial deregulation, generation and transmission may be two different balls of wax. Not all generators supply, and not all suppliers generate. I think regulatory involvement is really going to raise hob with the cost, and that's a big reason why the price for updating the grid could go so high.

[yooper]

"The rate-payer will bear the cost," he told CBS television."

Here's a dose of truth for you all: All utility expenditures, every single one, are passed along to utility users.

[Alberta's Child]

Thanks for the post. I'd be curious to see just how big that plant is -- Superior, Wisconsin isn't a very big population base, so I don't know how typical this kind of plant would be in a major metropolitan area.

[Alberta's Child]

The problem in the Northeast is a combination of aging transmission infrastructure and political pressure to close plants near major cities. With the closing of the Shoreham nuclear plant in Long Island a few years ago, coupled with a political climate in which every proposed gas main through the area is met with stiff resistance, the New York City region is drawing its power from further and further away.

[mewzilla]

Check out this site when you get a chance, if you haven't come across it already. Lots of info at your fingertips.

[lawdude]

"Even if every plant cost $5 million."

Boy are you so, so 50's. Hell, the permits cost 5 Mill and I suspect the bottom line for a plant (non-nuke) is 100-150 mill.

Nukes like the one at Palo Verde, AZ are SAFE, reliable and produce clean, efficient power.

[ETERNAL WARMING]

I've got a better idea. Let's stop subsidizing foreigners, giving billions per year to the worthless UN, giving billions per year to hostiles like the Palestinians, and just maybe our bills won't go up.

[Revel]

The dirty part of this was on the radio this morning. The Feds want control of the grid. They don't want that left to the power company's. Personaly I trust the power company's to do a better job. But even if you don't feel this way...there is the cost. Now estimated at 100 billion. First we are going to pay that to the utility companys. Then for the rest of time there is going to be an ever increasing tax added to our unility bill to cover this. I expect at least $10.00 before you know it. On top of this we will be employing more government workers and growing government and taxes in that way also. How convienant. It was 40 years between blackouts on the east coast. I don't think that is such a bad record. I suspect changes are already being made by the utility companys to ensure that we have another 40 to go as far as the grid is concerned. I suspect that our main worry about power is going to come from loss of generating power due to shortages of fuel and such. One thing is for sure though. If the feds get control of this then it will turn into a monster. And one mistake on there part will effect a lot more than the east coast.