Disaster Forecast (Part 1 of 2) - U.S. `Wide Open’ to Another Crippling Power Blackout - Veteran Utility Analyst Scotto
Submitted by EnergyTechStocks.com
With reserve margins the lowest they’ve been in at least 40 years, and reliability problems being allowed to fester, the United States is “wide open” to a crippling power blackout, according to veteran electric utility and energy analyst Daniel Scotto.
A blackout lasting several days and affecting millions of people “could occur anywhere in the U.S.” this summer, Scotto said.
In the five years since the last major blackout wreaked havoc on the U.S., very little has been done to correct the underlying problems, Scotto told EnergyTechStocks.com in an interview. “People believe electricity will just be there when they need it,” Scotto said. “But we have undermined the reliability of the whole network. We are on thinner ice than we imagine.”
Scotto, who is president of Whitehall Financial Advisors LLC in Greenwich, CT, recalled that 40 years ago it was customary for utilities to operate with a 20% reserve margin. (A reserve margin is the amount of unused generating capacity available to be used during periods of peak demand.) That figure fell to 15% to 18% in the 1970s and stayed there for decades, but now has been allowed to fall to just 12% nationally, with parts of the east and Midwest operating at below 10%. At the same time, the reliability of transmission lines “is an issue that hasn’t really been addressed” since line problems in 2003 caused a widespread blackout, Scotto noted.
Scotto believes these problems are due largely to changes in the regulatory structure that have effectively enabled utilities to spend less on maintaining system reliability. Scotto used the analogy of someone who has an old oil burner in the basement that he doesn’t want to fix because it would cost too much money. He said the U.S.’s electrical grid is now an old oil burner that could go out at any time, and that there isn’t a government body that can force utilities to do upgrades. “There’s no incentive (for a utility to say) `I’ve got the most reliable transmission system around’.” Consequently, “People are putting as little money as possible into the system” in order to keep it functioning.
Coming tomorrow, March 25, Part 2 of Disaster Forecast - The potential for a disastrous hurricane hitting the U.S. this summer
