By Peter Coy
Think of the power grid as a network of crisscrossing canals, shared by all. Generators pour power into the canals. Customers siphon it off. Electricity, like water, flows "downhill": It follows the path of least resistance, regardless of state borders or contractual arrangements. Customers do pay to use the transmission grid, of course. But because of the way power sloshes around, their transactions may trigger congestion on circuits hundreds of miles away -- causing problems that they will never pay for.
The tragedy of the commons has intensified since 1996, when FERC triggered an explosion in wholesale power trading by requiring utilities to let other companies send power over their lines for a fee. This lowered the cost of electricity by increasing the usage of the cheapest generators available. But it complicated grid management.
CITIZEN OVERRIDE. To keep generation and consumption in balance, control-room operators are constantly negotiating with neighboring control areas, while asking utilities in their own areas to crank certain plants up or down, or even to "shed load" -- lingo for turning off the juice to some customers. But the U.S. grid is fragmented into some 120 control areas, and even inside most of the areas, operators can make only requests of utilities, not demands.
The nonprofit regional transmission organizations that FERC wants would operate -- but not own -- the wires in their areas. Making the regions large and few in number would give regional operators a broader view of the consequences of their actions, while reducing the need for negotiations between control areas. And the regional operators would have full command over all the plants in their territories, including the power to order construction of new power lines where needed -- meaning no more vulnerability to utilities that are incompetent or won't play nice. FERC is also seeking permission from Congress to order the siti