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US power grid costs rise, but service slips

Tuesday - 3/5/2013, 5:20pm  ET

FILE- In this Wednesday, Sept. 10, 2003, file photo, the setting sun silhouettes electric transmission lines crossing Berea, Ohio. Americans are paying more to maintain the nation's electrical grid than a decade ago, but they appear to be getting little for their money from utility services that are no more reliable and in some cases seem to be getting worse. An Associated Press analysis of utility spending and reliability nationwide found that electric customers are spending 43 percent more than they did in 2002 to build and maintain local electric infrastructure. Since then, power outages have remained infrequent; but when the lights do go out, it now takes longer to get them back on. (AP Photo/Mark Duncan)

JONATHAN FAHEY
Associated Press

NEW YORK (AP) -- America's power grid is like an old car.

It gets the job done, even if its performance is slipping. But the repair bills go up every year and experts say only a major overhaul will reverse its decline.

An Associated Press analysis of utility spending and reliability nationwide found that electric customers are spending 43 percent more than they did in 2002 to build and maintain local electric infrastructure. Since then, power outages have remained infrequent; but when the lights do go out, it now takes longer to get them back on.

Neither the spending nor the reliability trends are dramatic on their own. But experts say the combination is revealing: it suggests that the extra money from electric customers isn't being spent wisely -- or that utilities aren't investing nearly enough to upgrade fragile equipment that is increasingly threatened by major storms.

"The electric system is the critical linchpin of our society, and we are operating the overall system closer to the edge," said Massoud Amin, a grid security expert and professor of electrical and computer engineering at the University of Minnesota.

The diminishing returns on investment reflect several trends: The grid is getting old, making it more expensive to maintain service at current levels of reliability; day-to-day weather and major storms have become more extreme, meaning wires, poles and transformers have to be replaced more frequently; and when utilities replace aging or broken equipment, they are not always upgrading to modern technologies common in other industrialized nations.

When utilities spend on equipment, regulators allow the companies to pass those expenses on to customers. In recent years, this portion of customer bills -- the cost of delivering power -- has been rising and pushing bills higher even though the cost of the power itself has fallen dramatically.

With the help of Ventyx, a software and data services firm that works with electric utilities, and the utility consulting firm PA Consulting Group, the AP compared reliability statistics with the spending of 210 utilities across 24 categories of local distribution equipment.

In 2011, the most recent year for which annual data is available, the average U.S. electric customer was without power for 112 minutes, according to PA Consulting. That's a 15 percent increase since 2002 and the highest level in 10 years. The number of outages decreased slightly, from an average of 1.2 per year to an average of 1.1, but that statistic has shown no improvement since 2004.

Over that same period, annual spending per customer on local distribution equipment and maintenance rose about twice as fast as the rate of inflation, from $163 to $232, according to Ventyx. That does not include spending on power plants or major transmission lines.

The number of outages and longer amount of time needed to restore power doesn't take into account major blackouts such as last month's Northeast blizzard or last year's Superstorm Sandy. Those types of outages aren't included in reliability statistics because they are so dramatic and irregular that they would make it impossible to draw a clear picture of the grid's performance from year to year. But outages caused by extreme weather are occurring with greater frequency -- a rising threat that cannot be ignored, experts say.

The grid -- an interconnected web of power plants, substations, transformers and wires spanning the continent -- is often described as the world's biggest machine. Within it, there are three major regional grids -- Eastern, Western, and Texas. And within those are thousands of local grids controlled by hundreds of different companies.

Because of this, and because U.S. geography is so diverse, reliability varies wildly.

In parts of the West, where vegetation is sparse and thunderstorms are rare, outages can be extremely rare, too. In dense urban environments, where power lines are underground, customers can go years without losing power. In much of the Northeast and Southeast, where storms are common and vegetation is dense, customers often must survive without power for a few days every year.

Overall, the nation's reliability improved steadily from the 1950s through the middle of the 1990s as utilities installed automatic switches that prevented small failures from affecting large numbers of customers, according to Mark McGranaghan, vice president of power delivery at the Electric Power Research Institute.

Then reliability leveled off. Utilities and regulators, having reached a relatively high level of service, turned their attention away from the grid. From 1994 through 1998, spending on local grid equipment shrank. It then started to rise slowly.

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