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A Grid That Could Outsmart Sandy

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Nov. 1 (Bloomberg) -- The more than 8 million people without power this week may not be reassured to hear it, but power failures in the wake of superstorm Sandy could have been much more widespread.

For a sense of scale, consider that in 2003 the failure to detect a tree branch falling on a high-voltage line in Ohio led to a megablackout that turned off the lights for 55 million people over a wide swath of the Northeast, the Midwest and into Canada. Sandy, though one of the worst storms to hit the East Coast in a century, was far more limited in its disruption of power supplies, reflecting the undeniable progress that has been made over the past decade in bringing the nation’s creaking power grid into the 21st century.

U.S. power companies, with federal help, have begun laying the groundwork to make the U.S. electrical supply more resilient. The havoc caused by Sandy, a storm big enough, by one estimate, to cut U.S. output by $25 billion in the fourth quarter and slow the pace of growth, should be the catalyst to redouble this effort.

In particular, the Obama administration, using funds in the 2009 stimulus package, has made an $11 billion down payment on a more efficient grid. This included $4.5 billion in grants to private companies to develop a so-called smart grid, which applies the speed and power of the Internet to the generation, transmission and distribution of electricity.

Smarter Grids

Among other things, smart-grid technology enables utilities to pinpoint disruptions on their lines from a central monitoring post. Rather than shut down power along an entire transmission line, an outage can be isolated and power can be rerouted. More than 400 of these monitoring posts have been installed across the U.S, and more than 1,000 are expected to be in operation by the end of 2013. During Sandy, Pepco Holdings Inc., the utility serving Washington and parts of Maryland, was able to rely on feedback from some of the 425,000 smart meters in customers’ homes to respond far more quickly and effectively to power failures.

The program, which is being led by the power companies, has the added benefit of lowering costs for consumers in the long term. The smart grid also marks the creation of microgrids, smaller systems -- in some cases reliant on wind and solar power -- that operate independently and continue to generate energy even when the broader network experiences difficulties.

This effort has been driven by the recognition that critical elements of the present grid’s equipment and technology are nearing the end of their lifespan. About 70 percent of power lines and transformers are more than 25 years old, and 60 percent of circuit breakers are more than 30 years old, a study by the American Society of Civil Engineers has found. By 2020, the study projects, about $673 billion will need to be invested to avert severe breakdowns.

Last month, the Federal Energy Regulatory Commission began preparing for the new grid by enforcing Order 1000, which will require grid operators to collaborate on regional planning and allow independent developers to compete with traditional utilities in building new power lines.

Severe storms such as Sandy -- and worse -- are expected to occur with increasing frequency. Yet federal funds for smart-grid development included in the Recovery Act -- credits, loans and matching funds -- will soon be depleted. Making the U.S. electricity supply more reliable is within our grasp. The next president and Congress should extend the life of this valuable public-private partnership.

Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View editorials, columns and op-ed articles.

Today’s highlights: Susan Antilla on the hustler who bilked investors in a Broadway show; Caroline Baum on what women really want from a president; Michael Kinsley on why Stuart Taylor is wrong about affirmative action; Virginia Postrel on how new findings will revolutionize cancer drugs; part four of A. Gary Shilling’s series on how low interest rates are creating a buildup of risk and leverage; Alex Marshall on the future of publishing.

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