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American electricity blackouts: a wakeup call for utilities

MOSCOW. (RIA Novosti economic commentator Vladislav Grinkevich) - New Yorkers still remember the "night of terror" provoked by a blackout on a hot summer's night in 1977, when stores were ransacked, looted and destroyed, buildings were set ablaze, and the police, for the most part, stood helpless.

In the 30 years since then, electricity experts have not found a foolproof way of developing electricity systems which would rule out a repetition of such disasters. The same goes for Russia.

On the night of July 13, 1977, events unfolded in a manner not unfamiliar to fans of Hollywood disaster movies. About 9 p.m., lightning struck two trunk transmission lines, and the lights went out in New York. Intersections were clogged with traffic, and the city came to a standstill as thousands took to the streets in an orgiastic spree of looting and vandalism. More than 2,000 stores were plundered, and hundreds were wounded, mostly in Harlem, Brooklyn and the South Bronx. Police made 3,776 arrests, although from all accounts, thousands of others escaped before being caught. Total damages (or production costs for this particular little movie) were estimated at about $1 billion.

Almost immediately, experts started discussing ways to reform the electricity system in order to prevent such disasters happening again. The debate lasted 15 years, until Congress passed the Electricity Policy Act in 1992. It divided the electricity system into groups of companies responsible for generation, transmission and distribution. The idea was to create competition between the new players, thereby reducing energy prices and attracting investment. Unfortunately, major consumers sought to buy cheaper electricity from outlying stations. This increased the burden on trunk grid lines and complicated the scheme of electricity transfer from producer to consumer. One side-effect of that policy was so-called "islanding": an isolated section of a distribution network continues to operate with its own generation, e.g. a PV system, when utility power is out, precluding energy exchange with other such "islands."

A spate of blackouts caused by cascading power failure in the northwest of the United States in 1994-1996, and electricity prices soaring by 300 times after a major blackout in 1998 served to further underline the holes in this policy.

But all of the above was child's play compared to what happened on August 14, 2003, when First Energy's EastLake plant unexpectedly shut down, triggering a series of problems on its transmission line. This provoked a cascade effect that caused the cross-border blackout, shutting down 508 generating units at 265 power plants across the north east. Fifty million people in the US and Canada were left without electricity. Financial losses were reckoned at $6 billion.

The main cause of the outage was the over-complicated electricity transmission system. Analysts called for the reintroduction of a centralized vertically integrated system, and countries that had plans to reform their electricity systems along American lines put them off indefinitely. Later that year, blackout epidemics hit Europe, notably London, Scandinavia, Switzerland and Georgia.

Soviet style bureaucrats were jubilant, claiming that a centralized electricity system allowing a quick transfer of electricity between regions was the best guarantee against power cuts.

In Moscow, Arkady Yevstafyev, director general of Mosenergo, said the capital's electricity system was failsafe, with parallel cables designed to take over in case of accident. Yevstafyev said about the 2003 blackout in North America: "Muscovites can fear being flooded by neighbors or stuck in the snow. But they will never experience an American-style blackout."

Moscow was hit by a severe blackout, described as Doomsday, on May 25, 2005. The southern, southeastern and southwestern districts, and partially the central district of the city, were left without electricity within minutes. Power failure then cascaded into suburbs and the Tula, Kaluga and Ryazan regions, leaving a total of 6 million people in the dark.

At first the accident was blamed on a faulty transformer at the Chagino substation. Then the blame was shifted to the substation's personnel, who allegedly failed to turn on the reserve system on time. Eventually, experts agreed that the fault lay in old and outdated equipment whose depreciation had reached 60%.

By that time, electricity reform had been underway for four years.

The government outlined the main directions for the reform of electricity monopoly RAO UES in July 2001. The goal was to preserve state control of trunk transmission lines and the dispatcher service, whereas generating companies (power plants) were to become independent.

Like their colleagues in the United States, Russian officials believed that competition would encourage cuts in electricity rates and outlays, attract investment, and stimulate the use of innovative methods. The state also expected to raise substantial funds for investment by selling stakes in generating companies.

The reform has reached its final stage now. A year ago, UES promised to complete it by July 1, 2008 by spinning off 19 subsidiaries.

The completion of the reform is not a guarantee against new blackouts. But their cause will be different. The 2005 blackout was provoked by old and outdated equipment, the same as it happened in New York in 1977. Now that generating facilities are being privatized, Russian consumers will try to find the cheapest suppliers, therefore complicating the scheme and technology of electricity transfer and increasing the burden on transmission.

I will not be surprised if Russia has its own series of blackouts in future, similar to those what shook the world in 2003.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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