Business; Financial Desk 
Transmission Grid Funds Sapped by Power Crisis Energy: As major changes are 
pondered, not enough is being invested in upgrading lines that take 
electricity from producers to buyers, study says.
NANCY RIVERA BROOKS
  
10/11/2000 
Los Angeles Times 
Home Edition 
Page C-1 
Copyright 2000 / The Times Mirror Company 
With attention focused on building more power plants and using less energy to 
solve the country's electricity problems, the high-voltage transmission grid 
has become "gridlocked in a tangle of infrastructure problems and regulatory 
uncertainty," according to a study released Tuesday. 
The transmission business is at a crossroads: The operation of high-voltage 
electricity lines around the country is about to undergo major changes at the 
behest of the Federal Energy Regulatory Commission, which will soon accept 
electric company proposals on new structures for managing utility 
transmission facilities. 
But because of the resulting uncertainty--as well as community resistance to 
new construction--not enough money is being invested to expand and upgrade 
the high-voltage lines that take electricity from producers to consumers. 
This lack of investment could hinder the growth of competitive markets, 
Cambridge Energy Research Associates, a respected energy consulting firm, 
said in a study titled "High Tension: The Future of Power Transmission in 
North America." 
California's electricity crisis could be eased, for instance, if the state 
could get its hands on electrons from Texas, where there is a surplus, the 
Cambridge, Mass., consulting firm said. But the two states belong to regional 
transmission grids with little interconnection, a situation that provides 
safeguards should huge power failures occur but limits how much one region 
can help another. 
"These are the highways for electrons, and we need better roads," said Jan 
Smutny-Jones, chairman of the California Independent System Operator, which 
operates the long-distance transmission for most of the state. "What we're 
talking about here is fundamental infrastructure, and we need to make sure 
there is sufficient investment made to move the power around." 
Smutny-Jones, who also heads a trade group for power generators, agreed that 
the U.S. transmission system faces serious challenges, but he noted that 
Cal-ISO has approved $800 million in system upgrades and is looking at more. 
Said Larry Makovich, a CERA senior director specializing in the North 
American power industry: "Electric transmission and its future has become a 
central focus and strategic uncertainty for the North American electric power 
industry." 
The U.S. power grid is a patchwork operating under different rules and was 
not designed to send power across regions--"the job it is now being called 
upon to do," Makovich said. "This imbalance between system capacity and 
supply and demand has contributed to well-publicized problems in California 
and other parts of the country." 
Federal energy regulators have not specified what these so-called regional 
transmission organizations should look like, although FERC has said utilities 
should not control the long-distance transmission lines so new competitors 
can more easily enter the market. 
In California, the long-distance transmission grid owned by publicly traded 
utilities, which serves about 75% of the state, is run by Cal-ISO, a 
Folsom-based nonprofit corporation set up by the state's 1996 electricity 
deregulation law. California's serious electricity problems this year have 
whipped up strong criticism of the structure of Cal-ISO and a sister agency, 
the California Power Exchange, which runs the state's electricity market. 
The California Municipal Utilities Assn. on Thursday advocated replacing 
Cal-ISO with a new ratepayer-owned system that would own and operate 
electricity transmission lines in the state, including those of the municipal 
utilities. Cal-ISO's defenders said the system worked efficiently under 
extreme conditions this summer, which saw record wholesale power prices and 
threatened blackouts.