UNDERSTANDING ELECTRICPOWER SYSTEMSAn Overview of Technology, the Marketplace,and Government Regulation

Second Edition

JACK CASAZZAFRANK DELEA

IEEE Press Understanding Science & Technology Series

A JOHN WILEY & SONS, INC., PUBLICATION

IEEE Press

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UNDERSTANDING ELECTRIC POWER SYSTEMS

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IEEE PRESS Understanding Science & Technology Series

The IEEE PRESS Understanding Series treats important topics in science and tech-nology in a simple and easy-to-understand manner. Designed expressly for the non-specialist engineer, scientist, or technician as well as the technologically curious—each volume stresses practical information over mathematical theorems andcomplicated derivations.

Other books in the series include:

Understanding the Nervous SystemAn Engineering Perspectiveby Sid Deutsch, Visiting Professor, University of South Florida, Tampa and AliceDeutsch, President, Bioscreen, Inc., New York

1993 Softcover 408 pp ISBN 0-87942-296-3

Understanding Telecommunications and Lightwave SystemsAn Entry-Level Guideby John G. Nellist, Consultants, Sarita Enterprises Ltd.

1992 Softcover 200 pp ISBN 0-7803-0418-7

Tele-VisionariesThe People Behind the Invention of Televisionby Richard C. Webb

2005 184 pp ISBN 978-0471-71156

Understanding Lasers: An Entry-Level Guideby Jeff Hecht, Science Writer and Editor, Auburndale, Massachusetts

2008 494 pp ISBN 978-0470-08890-6

Understanding Electric Power Systems: An Overview of the Technology, theMarketplace, and Governmental Regulation, Second Editionby Jack Casazza and Frank Delea

2010 340 pp ISBN 978-0470-48418-0

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UNDERSTANDING ELECTRICPOWER SYSTEMSAn Overview of Technology, the Marketplace,and Government Regulation

Second Edition

JACK CASAZZAFRANK DELEA

IEEE Press Understanding Science & Technology Series

A JOHN WILEY & SONS, INC., PUBLICATION

IEEE Press

ffirs.qxd 4/14/2010 7:59 AM Page iii

Copyright © 2010 by the Institute of Electrical and Electronics Engineers, Inc.

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Casazza, John.Understanding electric power systems : an overview of the technology and the marketplace / Jack

Casazza, Frank Delea.—2nd ed.p. cm.

Includes bibliographical references.ISBN 978-0-470-48418-0 (pbk.)

1. Electric power systems. 2. Electric utilities. 3. Electric power. I. Delea, Frank. II. Title. TK1001.C386 2010621.319'1—dc22 2009045958

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Preface to the Second Edition xv

Acknowledgments xix

CHAPTER 1 Benefits of Electric Power and a History of the Electric 1Power Industry

1.1 Societal Benefits of Electricity 11.2 Origin of the Industry 21.3 The Development of the National Electric 5

Power Grid1.4 “The Golden Age” 8

Blackouts and the Reliability Crisis 9The Environmental Crises—The Shift to 10

Low-Sulfur OilThe Fuel Crisis—The Shift from Oil 10The Financial Crisis 11The Legislative and Regulatory Crisis 12

1.5 Global Warming Crisis and Concerns about 13Carbon Emissions

1.6 Restructuring, Competition, and the Industry 13Ownership Structure

CHAPTER 2 The Electric Power System 15

2.1 The Customers 162.2 Sources of the Electric Energy—Generation 172.3 The Delivery System 20

Interconnections 24The Grid 24

v

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CHAPTER 3 Basic Electric Power Concepts 27

3.1 Electric Energy 283.2 Concepts Relating to the Flow of Electricity 30

Direct Current (DC) 31Alternating Current (AC) 31Three Phases 33Synchronism 34

3.3 Characteristics of AC Systems 34Resistance 34Induction and Inductive Reactance 35Capacitance and Capacitive Reactance 36Impedance 38

3.4 Ohm’s Law for Alternating Current 383.5 Power in Alternating Current Circuits 39

Real Power 40Reactive Power 40Transformers 42

3.6 Power Flow 43Division of Power Flow 43Voltage Drop and Reactive Power Flow 44

3.7 Stability 44Automatic Generation Controls (AGC) 46Results of Instability 47

CHAPTER 4 Electric Energy Consumption 49

4.1 End Uses for Electricity 494.2 Customer Classes 504.3 Rate Classes 514.4 Demand and Energy 51

Energy 52Effects of Load Diversity 53

4.5 System Load 55Load Management 57

4.6 Reactive Load 594.7 Losses and Unaccounted-For Energy in the 59

Delivery System4.8 Forecasts 61

CHAPTER 5 Electric Power Generation and Concerns About 65Greenhouse Gases

5.1 Generation’s Role 655.2 Types of Generation 665.3 Thermal Conversion: Using Fuel as the Energy 69

Resource

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Steam Cycle—Steam Turbines 69Combustion (Gas) Turbines 70Combined Cycle 71Nuclear 72Reciprocating Engines 73Microturbines 74Combined Heat and Power (CHP) or 74

Cogeneration5.4 Thermal Conversion: Nonfuel Heat Sources 74

Geothermal 74Solar Thermal Generation 75

5.5 Mechanical Energy Conversion 75Hydroturbines and Hydropumped Storage 75Wind Turbines 77Distributed Generation and Other Sources 78

5.6 Renewable Technologies and Greenhouse Gas 79Emissions

Supply-Side Options to Reduce Greenhouse 79Gas Emissions

Financial Options to Reduce Carbon Emissions 835.7 Characteristics of Generating Plants 84

Size 85Efficiency 87Availability 88Schedulable and Unschedulable Units 90

5.8 Capital Cost of Generation 905.9 Generator Life Extension 915.10 The Technology of Generation 91

Synchronous Generators 91Variable Frequency and Direct Current 92

Generation5.11 System Needs and Evaluation of Intermittent 93

Resources

CHAPTER 6 The Technology of the Electric Transmission System 97

6.1 Components 976.2 HVAC 98

Overhead Lines 98Overhead Line Capability—Ratings 99Transmission Cable 101Cable Capacity 101Submarine Cables 102Superconducting Cables 102

6.3 Substations 102Substation Equipment 103

CONTENTS vii

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Substation Circuit Breaker Arrangements 108Transmission System Aging 108

6.4 HVDC 1086.5 Advantages of AC over DC Operation 110

Advantages of HVDC 111Disadvantages of HVDC 112

6.5 Knowledge Required of Transmission Systems 113

CHAPTER 7 Distribution 115

7.1 Function of Distribution 1157.2 Primary Distribution Feeders 116

Radial Systems 116Loop Systems 117Primary Network Systems 117Secondary Systems 117

7.3 Distribution Capacity 1187.4 Losses 1197.5 Distribution Facility Ratings 1197.6 Metering 1207.7 Control of Distribution Voltages 120

Distribution Transformers 121Voltage Regulators 122Capacitors 123

7.8 Distribution System Reliability 1237.10 Quality of Service 1247.11 Design of Distribution Systems 1257.12 Distributed Generation 1257.13 Operation of Distribution Systems 1267.14 Smart Grids and Microgrids 127

CHAPTER 8 Energy Storage and Other New Technologies 129

8.1 Energy Storage 131Benefits of Energy Storage to Generation 131Benefits of Energy Storage to Transmission 132

and Distribution8.2 Energy Storage Concepts and Technologies 133

Mechanical Systems 133Thermal Energy Storage 136Chemical Energy Storage 138Batteries 138Hydrogen Energy Storage Systems 139Electrical Storage 140Superconducting Magnetic Energy Storage 141Power Conversion Equipment 141

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The Future for Energy Storage 1428.3 Smart Grid 142

Microgrids 1468.4 New Nuclear Plant Designs 1468.5 Carbon Sequestration and Clean Coal 150

Technologies8.6 Superconductors 153

CHAPTER 9 Reliability 155

9.1 Causes of Outages 1559.2 Costs of Power Outages 1579.3 Ways to Measure Reliability 1589.4 Planning and Operating a Reliable and Adequate 159

Power SystemGeneration 164Transmission 165Distribution 166

9.5 Summary 166

CHAPTER 10 The Physical Network: The North American Electric 167Reliability Corporation (NERC) and Its Standards

10.1 NERC as Electric Reliability Organization 16910.2 NERC Standards 171

Functional Model 17110.3 Development of Standards 176

Reliability Principles 177Market Interface Principles 177Compliance with NERC Standards 179Other NERC Responsibilities 179The Future 180

CHAPTER 11 The Physical Network: Operation of the Electric Bulk 181Power

11.1 Balancing Authorities 181Area Control 182Operating Reserves 184

11.2 Reliability Coordinators 18411.3 Transmission Operators 186

Power Transfer Limits 186Determination of Total Transfer Capability 187Parallel Path Flow and Loop Flow 188Reduction of Power Transfers—Congestion 189

ManagementAncillary Services 189

CONTENTS ix

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11.4 Voltage and Reactive Control 19111.5 Emergencies 192

Operating Emergencies 19311.6 Information Exchange 194

CHAPTER 12 The Physical Network: Planning of the Electric Bulk 197Power System

12.1 Planning Standards 19812.2 Generation Planning 19812.3 Transmission Planning 200

Transmission System Planning Studies 20312.4 Least Cost Planning 20512.5 The New Planning Environment 205

Recent Transmission Projects 211

CHAPTER 13 The Regulatory Network: Legislation 213

13.1 Pricing and Regulation 21313.2 Federal Legislation 21413.3 Federal Utility Holding Company Act (PUHCA) 21413.4 Federal Power Act 21613.5 Other 1930 Federal Laws 21913.6 Department of Energy Organization Act 21913.7 Public Utility Regulatory Policies Act (PURPA) 22013.8 Energy Policy Act of 1992 (EPAct02) 22213.9 The Energy Policy Act of 2005 (EPAct05) 22413.10 The Energy Independence and Security Act 227

of 200713.11 Environmental Laws 22713.12 2009 American Recovery and Reinvestment Act 230

CHAPTER 14 The Regulatory Network: The Regulators 231

14.1 The Regulators 231Federal Energy Regulatory Commission (FERC) 231Environmental Protection Agency (EPA) 233Department of Energy (DOE) 234Nuclear Regulatory Commission (NRC) 236Recent Federal Regulations 237FERC Actions after EPAct92 237FERC Actions Implementing EPAct05 242Market Manipulation 242Electricity Reliability and Infrastructure 242Expansion and Modernization of the 245

Nation’s Electricity GridSiting Major New Transmission Facilities 245

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PURPA Reforms 246Repeal of PUHCA—Mergers and Acquisitions 246Market-Based Rates 247Recent EPA Actions 248State Regulatory Authority 249State Utility Restructuring 250Overall Regulatory Problems 251

CHAPTER 15 The Information, Communication, and Control 253Network and Security

15.1 Smart Grid 25315.2 Financial and Business Operations 25415.3 System Operations 25515.4 Distribution Operations 25515.5 Cyber Security 25615.6 Nuclear Plant Security 259

CHAPTER 16 The Fuel and Energy Network 261

16.1 Resource Procurement 264Fuel Measurements 265

16.2 Fuel Transportation 26516.3 Fuel Diversity 26616.4 Fossil Fuels Used 26716.5 Renewable Energy 26916.6 Fuel Purchasing 27116.7 Emission Rights 271

CHAPTER 17 The Business Network: Market Participants 273

17.1 Investment and Cost Recovery 27317.2 The Changing Industry Structure 274

Functional Unbundling 274Additional Utility Responses 275ISO/RTO Formation 275Holding Company Formation 275Power Plant Divestitures 277

17.3 New Structures 279Power Producers 279Independent Transmission Companies and 279

OperatorsImpact of Restructuring on the Transmission 280

SystemDistributors 280Power Marketers 281

17.4 New Corporate Ownership 281

CONTENTS xi

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Utility Mergers and Acquisitions 282Acquisitions by Foreign Companies 282Financial Institutions 283

CHAPTER 18 The Money Network: Wholesale Markets 285

18.1 The Energy Markets 286Standard Market Design (SMD) 288Locational Marginal Pricing (LMP) 289

18.2 Transmission 291Transmission Rights 291Physical Transmission Rights (PTRs) 292Financial Transmission Rights (FTRs) 293Wheeling and Customer Choice 294Contracts and Agreements 294Average System versus Incremental Costs 295

18.3 Customer Late Issues 294Construction Work in Progress (CWIP) 295Setting of Rates 296Rate Freezes 296Allocation of Costs and Economic Benefits 296Average Costs versus Incremental Costs 297

18.4 Market versus Operational Control 29818.5 Market Power Issues 298

Price Caps 29918.6 The Future 299

CHAPTER 19 The Professional and Industry Organizations 301

19.1 The Professional Organizations 301The Institute of Electrical and Electronics 301

Engineers (IEEE)The American Society of Civil Engineers 303

(ASCE)American Society of Mechanical Engineers 304

(ASME) and the American Institute of Chemical Engineers (AIChE)

CIGRE 30419.2 Industry Associations 304

NEMA 304The Association of Edison Illuminating 305

Companies (AEIC)The American Public Power Association 305

(APPA)The Edison Electric Institute (EEI) 306

xii CONTENTS

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The Electricity Consumer Resource Council 306(ELCON)

The National Rural Electric Cooperative 307Association (NRECA)

Electric Power Supply Association (EPSA) 307The Nuclear Energy Institute (NEI) 308

19.3 Public Interest Groups 308The National Association of Regulatory Utility 308

Commissioners (NARUC)Environmental Defense Fund (EDF) 308Public Citizen 309Public Interest Law Project 309

19.4 Research Organizations 309The Electric Power Research Institute (EPRI) 310Other Research 310The National Regulatory Research Institute 311

(NRRI)The Power Systems Engineering Research 311

Center (PSERC)

Index 313

CONTENTS xiii

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THIS VOLUME IS THE SECOND edition of a text originally pub-lished in 2003. Since its publication, significant changes have,and continue to, impact the electric utility industry including:

� The 2003 northeast U.S. blackout� New energy laws and a large number of FERC regulations im-

plementing these laws� A change in FERC’s role in overseeing the industry’s reliability

rules and practices� NERC’s role in establishing these rules and in monitoring com-

pliance� The 2009 Economic Stimulus package� Concerns about global warming and efforts to limit the utility

industry’s contribution to greenhouse gases

This edition addresses these issues. As Joseph C. Swidler, for-mer Chairman of the Federal Power Commission [predecessor ofthe Federal Energy Regulatory Commission (FERC)] often stated:“There are many disagreements about the best electric power poli-cy for the United States, but there is no disagreement [that] it isoften being established without adequate analyses.” Governmentand business decisions on electricity supplies often fail to recog-nize how power systems work and the uncertainties involved.Those involved do not always mean the same thing although theyuse identical words. Incorrect assumptions have been made aboutthe operation of the electric system and continue to be made basedon the operation of telephone systems, gas systems, and otherphysical systems that are not applicable to electric power systems.

xv

PREFACE TO THE SECOND EDITION

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The purpose of this book is to help those in government, busi-ness, educational institutions, and the general public, have a bet-ter understanding of electric power systems, institutions, and theelectric power business.

The first edition was used for instructional purposes in manycourses for electrical engineers who were not power systems engi-neers, for lawyers, accountants, economists, government officials,and public interest groups. Since its publication, technologicaland institutional changes have occurred. A major change has beenthe drastic increase in the government’s role in the electric powerindustry, changing from emphasis on price regulation to an em-phasis on increased control of planning, operation, design, andcontrol of the system and the new technologies being developed.This second edition reflects this and other changes.

In recent years, the U.S. Congress has enacted a series of om-nibus energy acts in response to three national imperatives:

1. Establishing a wholesale market for electricity while maintain-ing a reliable electric supply system

2. Reducing the country’s reliance on imported oil 3. Reducing the country’s contribution to global warming by re-

ducing reliance on carbon-based fuels

The following chapters lay the background for each of the threeimperatives in order that the various initiatives might be moreclearly seen. We then describe various aspects of these acts anddiscuss their impacts on the electric power industry, including itsregulatory framework, the entities involved, and the technologiesused and under development. The difficulty lies in bringing somefocus to a moving target. For example, reliability and market is-sues are being addressed, whereas the underlying structure of theindustry remains in flux. Many of the changes relating to the enti-ties involved in the industry are also addressed, including:

� New roles for FERC, DOE, and NERC � Consolidations of old-line utilities, the newer power marketing

companies, RTOs/ISOs, and regional reliability councils� New ownership interests including investment bankers, foreign

investors, venture capitalists, and entrants seeking new busi-ness opportunities in generation, transmission, distribution,and customer service

xvi PREFACE TO THE SECOND EDITION

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� Trade organizations/lobbying arms that have been started toseek public support of the various entities

The book covers electric power systems, their components(generation, transmission, and distribution) electricity use, elec-tric system operation, control and planning, power system relia-bility, government regulation, utility rate making, and financialconsiderations. It is based on the following “seven networks”:

1. Physical2. Fuel/energy 3. Money4. Information, 5. Communication and control6. Regulatory7. Business

These are all interconnected in the provision of electric power. Itprovides the reader with an understanding of the equipment in-volved in providing electric power, the functioning of the electricpower system, the factors determining the reliability of service,the factors involved in determining the costs of electric power,and many other technical subjects. It provides the engineer withbackground on the institutions under which power systems func-tion. It can be used as a classroom text, as well as a reference forconsultation. Although a book of this length cannot provide in-depth discussions of many key factors, it is hoped that it providesthe broad understanding that is needed.

The Internet has made available many new and valuable pub-lications and information sources that were used in the prepara-tion of this edition. References are provided for those who wish topursue important points further. The index facilitates the locationof background material as needed. We welcome comments, sug-gestions, additional information, and corrections, and hope you,your company, and all consumers benefit from the book.

JACK CASAZZAFRANK DELEA

Springfield, VirginiaRoswell, GeorgiaSeptember 2009

PREFACE TO THE SECOND EDITION xvii

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WHEN REVISING A TEXT COVERING the wide range of topics as wehave in this book, the assistance of a number of individuals cannotbe overstated. We especially want to thank Tom Schneider for hisvaluable suggestions concerning the organization of this complexand varied material, and for his input relating to generation andstorage. Helpful comments and suggestions were also provided onNERC matters by David Nevius of NERC, on FERC matters byLynn Hargis, on fuel issues by Jim Francher, on T&D issues byCharles L. Rudasill, Jr. (retired from Dominion Virginia Power),and for comments on information technology by Stan Klein. Anyerrors that may have crept into the text in these areas are solely theresponsibility of the authors. We also want to thank Irene Cun-nane for her help in assembling the final manuscript.

Above all, we want to acknowledge our wives, Madeline andIrene. Their support, encouragement, and, yes, understanding aswe locked ourselves away writing for hours on end was immea-surable.

J. C.F. D.

xix

ACKNOWLEDGMENTS

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Understanding Electric Power Systems. By Jack Casazza and Frank Delea 1Copyright © 2010 the Institute of Electrical and Electronics Engineers, Inc.

1.1 SOCIETAL BENEFITS OF ELECTRICITY

Electric power is one of the mainstays of our lives and the life ofour nation. It differentiates advanced societies from third worldnations. It touches almost every facet of our lives: our homes, ourbusinesses, our schools, our transportation, and our leisure time.It is there when we are born, and it is there when we die. Think ofthe impact on our lives if we were not able to watch our favoriteTV shows, use our home computers, heat and cool our homes, re-frigerate our food, wash our clothes or our dishes, or read at night.Yet most people take it for granted, except during those relativelyrare times when it is unavailable or when we receive our electricbills and note that the charges have suddenly and unexplainedlyincreased.

We know we have power outlets in our homes and businessesand we may notice the distribution wires running along ourstreets or if we pass high-voltage transmission towers, but many ofus do not know how the whole system works. Some of us are af-fected because we live close to new or proposed electric power fa-cilities, generating plants, or transmission lines and substations.Some may have concerns about the economic or environmental ef-fects of producing electricity.

The National Academy of Engineering has described the de-velopment of the national electric power system as the greatest en-

CHAPTER 1BENEFITS OF ELECTRICPOWER AND A HISTORY OF THE ELECTRIC POWER INDUSTRY

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gineering achievement of the 20th century. It has involved legionsof electrical, civil, mechanical, nuclear, software, and environ-mental engineers working for utilities and manufacturers. It alsorequired individuals involved in everything from meter reading,to construction, operation, and maintenance of the power plantsand the transmission and distribution lines, and to specialists inaccounting, finance, customer relations, public affairs, and evenlaw. Unfortunately, electric power is not a topic covered in ourschools and is barely covered in our media. Even individuals whowork for utilities may not know the “big picture” outside of theirspecialties. Decisions are often made about electric power issueswith little or no input from the general public and little or no un-derstanding of the technical and economic issues by lawmakers.

The electric industry is large and complex, involving techni-cal, business, and governmental aspects. It cannot be viewed orunderstood unless one is also familiar with the regulatory envi-ronment in which it operates. This book attempts to inform itsreaders so that they may understand the continuing discussionsand debates about the industry and its future and may be able toparticipate and have their own views heard.

1.2 ORIGIN OF THE INDUSTRY

The electric utility industry can trace its beginnings to the early1880s. During that period, several companies were formed and in-stalled water-power-driven generation for the operation of arclights for street lighting, which was the first real application forelectricity in the United States. In 1882, Thomas Edison placedinto operation the historic Pearl Street steam-electric plant and thepioneer direct current distribution system by which electricitywas supplied to the business offices of downtown New York. Bythe end of 1882, Edison’s company was serving 500 customersthat were using more than 10,000 electric lamps. The early Edisonsystems delivered the electricity by using low-voltage direct cur-rent (DC).

Satisfied with the financial and technical results of the NewYork City operation, licenses were issued by Edison to local busi-nessmen in various communities to organize and operate electriclighting companies.1 By 1884, twenty companies were scattered incommunities in Massachusetts, Pennsylvania, and Ohio; in 1885,

2 BENEFITS OF ELECTRIC POWER AND A HISTORY OF THE ELECTRIC POWER INDUSTRY

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thirty-one; in 1886, forty-eight; and in 1887, sixty-two. These com-panies furnished energy for lighting incandescent lamps, and alloperated under Edison patents.

Two other achievements occurred in 1882: a water-wheel-driven generator was installed in Appleton, Wisconsin; and thefirst transmission line was built in Germany to operate at 2400volts direct current over a distance of 37 miles (59 km).2 Motorswere introduced and the use of incandescent lamps continued toincrease. By 1886, the DC systems were experiencing limitationsbecause they could deliver energy only a short distance from theirstations since their voltage could not be increased or decreased asnecessary. In the United States, the use of alternating current (AC)was championed by George Westinghouse and Nikola Tesla. In1885, a commercially practical transformer was developed, whichallowed the development of an AC system. A 4000 volt AC trans-mission line was installed between Oregon City and Portland, 13miles away. A 112 mile, 12,000 volt, three-phase line went intooperation in 1891 in Germany. The first three-phase line in theUnited States (2300 volts and 7.5 miles) was installed in 1893 inCalifornia.3 In 1897, a 44,000-volt transmission line was built inUtah. In 1903, a 60,000-volt transmission line was energized inMexico.4

In this early AC period, frequency had not been standardized.In 1891, the desirability of a standard frequency was recognizedand 60 Hertz (Hz)5 was proposed. For many years 25, 50, and 60Hz were standard frequencies in the United States. Much of the 25Hz was used for railway electrification and has been retired overthe years. The City of Los Angeles Department of Water and Powerand the Southern California Edison Company both operated at 50Hz, but converted to 60 Hz at the time that Hoover Dam power be-came available, with conversion completed in 1949. The SaltRiver Project was originally a 25 Hz system; most of it was con-verted to 60 Hz by the end of 1954 and the balance by the end of1973.6

1.2 ORIGIN OF THE INDUSTRY 3

1Homer M. Rustebakke, 1983, Electric Utility Systems and Practices, 4th ed.,Wiley.2Ibid.3Ibid.4Ibid.5One hertz is equal to one cycle per second.6Rustebakke, op. cit.

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Over the first 90 years of its existence, until about 1970, elec-tric consumption doubled about every ten years, a growth of about7% per year. In the mid-1970s, due to increasing costs and seriousnational attention to energy conservation, the growth in the use ofelectricity dropped to almost zero. Today, growth is forecasted atabout 1% per year until 2030.7

The growth in the utility industry has been related to techno-logical improvements that have permitted larger generating unitsand larger transmission facilities to be built. In 1900, the largestturbine was rated at 1.5 MW. By 1930, the maximum size unit was208 MW. This remained the largest size during the Depression andwar years. By 1958, a unit as large as 335 MW was installed, andtwo years later in 1960, a unit of 450 MW was installed. In 1963,the maximum size unit was 650 MW and in 1965 the first 1000MW unit was under construction. Unit sizes continued to grow,with generating units now as large as 1425 mW.8

Improved manufacturing techniques, better engineering, andimproved materials allowed for an increase in transmission volt-ages in the United States to accompany the increases in generatorsize. The highest voltage operating in 1900 was 60 kV. In 1923, thefirst 220 kV facilities were installed. The industry started the con-struction of facilities at 345 kV in 1954, in 1964 500 kV was intro-duced, and 765 kV was put in operation in 1969 and remains asthe highest transmission voltage in the United States.9 Larger gen-erator systems required higher transmission voltage; higher trans-mission voltage made possible larger generators.

These technological improvements increased transmissionand generation capacity at decreasing unit costs, accelerating thehigh degree of use of electricity in the United States. At the sametime, the concentration of more capacity in single generatingunits, plants, and transmission lines had considerably increasedthe total investment required for such large projects, even thoughthe cost per unit of electricity had come down.

4 BENEFITS OF ELECTRIC POWER AND A HISTORY OF THE ELECTRIC POWER INDUSTRY

7Energy Information Agency (EIA), Annual Energy Outlook, 2009.8The vast majority of the approximately 65 units larger than 1000 mW are nu-clear units constructed in the 1970s and 1980s. Since then, the largest of the newcapacity additions have been significantly smaller. For example, the Energy In-formation Agency’s list of new capacity for the period September 2007–August2008 indicates the largest unit was 558 mW.9Work on UHV (voltages 1000 kV or higher) is underway in China, India, andBrazil. The State Grid Corporation of China is working on a 1000 kV UHV trans-mission project connecting North and Central China.

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Not all of the pioneering units at the next level of size and ef-ficiency were successful. Sometimes, modifications had to bemade after they were placed in operation; units had to be deratedbecause the technology was not adequate to provide reliable ser-vice at the level intended. Each of these steps involved a risk ofconsiderable magnitude to the utility, first to install a facility of anew type or a larger size or a higher transmission voltage. Creatingnew technologies required the investment of considerable capitalthat in some cases ended up being a penalty to the utility in-volved. To diversify these risks, companies began to jointly ownpower plants and transmission lines so that each company wouldhave a smaller share and, thus, a smaller risk, in any one project.The sizes of generators and transmission voltage levels evolved to-gether, as shown in Figure 1-1.10

A need for improved technology continues. New materials arebeing sought in order that new facilities can be more reliable andless costly. New technologies are required in order to minimizeland use, water use, and the impact of the industry on the environ-ment. The manufacturers of electrical equipment continue to ex-pend considerable sums to improve the quality and cost of theirproducts. Unfortunately, funding for such research by electricutilities through the Electric Power Research Institute (EPRI)11

continues to decline.

1.3 THE DEVELOPMENT OF THE NATIONAL ELECTRICPOWER GRID12

Electric power must be produced at the instant it is used. Neededsupplies cannot be produced in advance and stored for future use.At an early date, those providing electric power recognized thatpeak use for one system often occurred at a different time from peakuse in other systems. They also recognized that equipment failuresoccurred at different times in various systems. Analyses showedsignificant economic benefits from interconnecting systems to pro-

1.3 THE DEVELOPMENT OF THE NATIONAL ELECTRIC POWER GRID 5

10J. A. Casazza, 1993, The Development of Electric Power Transmission—TheRole Played by Technology, Institutions, and People, IEEE Case Histories ofAchievement in Science and Technology, Institute of Electrical and ElectronicEngineers.11See Chapter 19 for a discussion of EPRI, the industry’s research organization.12Casazza, op. cit.

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vide mutual assistance; the investment required for generating ca-pacity could be reduced and reliability could be improved. Thislead to the development of local, then regional, and, subsequently,three transmission grids that covered the United States and parts ofCanada. In addition, differences in the costs of producing electrici-ty in the individual companies and regions often resulted in onecompany or geographic area producing some of the electric powersold by another company in another area. In such cases, the savingsfrom the delivery of this “economy energy” were usually splitequally among the participants. Figure 1-2 shows the key stages ofthe evolution of this grid. Figure 1-3 shows the five synchronouspower supply areas currently existing in North America.

The development of these huge areas in each of which all gen-eration is connected directly and indirectly by a network of trans-mission lines (the grid) that allows the generators to operate insynchronism presents some unique problems because of the spe-cial nature of electric power systems. Whatever any generator ortransmission line in one area does or does not do affects all othergenerators and transmission lines in the same area, those nearby

6 BENEFITS OF ELECTRIC POWER AND A HISTORY OF THE ELECTRIC POWER INDUSTRY

800750700650600550500450400350300250200150100500 0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

Maximumsize units

Meg

awat

ts

Kilo

volts Maximum

transmissionvoltages

Year

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980

Figure 1-1. Evolution of generator sizes and transmission voltages.

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more significantly and those distant to a lesser degree. In the East-ern Grid (or Interconnection), the loss of a large generator inChicago can affect generators in Florida, Louisiana, and NorthDakota. Decisions on transmission additions can affect other sys-tems many hundreds of miles away. This has required the exten-sive coordination in planning and operation between participantsin the past. New procedures will be needed in the future.

1.3 THE DEVELOPMENT OF THE NATIONAL ELECTRIC POWER GRID 7

CentralCanada

Quebec

Eastern CanadaWesternCanada

Westernsystems

Easternsystems

Texas

DC

DC

DC

DCDC

Mexico

BajaMexico

Figure 1-3. Synchronous power grids in North America.

Isolated plant

1885

Isolated system

1910

Regional

1935

Interregional

1960 1985

Figure 1-2. Key stages in the evolution of the grid in the United States.

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As stated by Thomas P. Hughes of the University of Pennsyl-vania in the September 1986 issue of CIGRE Electra:13

Modern systems are of many kinds. There are social systems,institutional systems, technical systems, and systems that com-bine components from these plus many more. . . . An exampleof such a technological system . . . is an electric power systemconsisting not only of power plants, transmission lines, andvarious loads, but also utility corporations, government agen-cies, and other institutions. . . . [P]roblems cannot be neatly cat-egorized as financial, technical, or managerial; instead theyconstitute a seamless web. . . . [E]ngineering or technical im-provements also require financial assistance to fund these im-provement(s) and managerial competence to implement them.

1.4 “THE GOLDEN AGE”

The golden age of electric utilities was the period from 1945 to1965. During this period, there was exponential load growth ac-companied by continual cost reductions. New and larger plantswere being installed at a continuously lower cost per kilowatt, re-flecting economics of scale. Improvements in power plant effi-ciency were being obtained through higher temperatures and pres-sures for the steam cycle, which lowered the amount of fuelrequired to produce a kilowatt hour of electric energy. New gener-ating plants were being located at the mine mouth, where coal wascheap, and power was transmitted to the load centers. This re-quired new, higher voltage transmission lines since it had beenfound that transmitting electric energy, called “coal by wire,” wascheaper than the existing railroad rates.

The coordination between utilities was at a maximum. Theleaders of the industry involved in planning the power systemssaw the great advantage of interconnecting utilities to reduce capi-tal investments and fuel costs. Regional and interregional plan-ning organizations were established. The utilities began to see theadvantage of sharing risk by having jointly owned units.

On the analytical side, improved tools were rapidly being de-veloped. Greatly improved tools for technical analysis, such as

8 BENEFITS OF ELECTRIC POWER AND A HISTORY OF THE ELECTRIC POWER INDUSTRY

13J. A. Casazza, 1993, The Development of Electric Power Transmission—TheRole Played by Technology, Institutions, and People, IEEE Case Histories ofAchievement in Science and Technology, Institute of Electrical and ElectronicEngineers.

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