the paths of least resistance. These alternative circuits may in turn become overloaded and either fail or be taken out of service by the protection system. This repeated, possibly uncontrolled, cycle of overload and equipment removal/failure is a dynamic, frequently oscillating phenomenon that can lead to a cascading outage. A local failure can escalate into a cascading failure in a matter of a few minutes, potentially leading to a wide-area blackout.

Operationally, the electric system of the United States and Canada is divided into four sections, known as “interconnections,” linked mainly by direct current (DC) transmission, with transmission within each section using largely AC transmission. The DC ties between interconnection areas allow each interconnection to operate assets independently of the other sections. Within each interconnection, electricity is produced the instant it is used and flows over the path of least resistance (using virtually all transmission lines within each interconnection) from generators to loads (i.e., customers). Figure 2.1 shows the four basic North American interconnections with the underlying regional reliability councils responsible for operational coordination in the sub-areas within the interconnections. Generation and loads are constantly being balanced within each interconnection.


ERCOT: Electric Reliability Council of Texas (RRO)
FRCC: Florida Reliability Coordinating Council (RRO)
MRO: Midwest Reliability Organization (RRO)
NERC: North American Electric Reliability Council NPCC: Northwest Power Coordinating Council (RRO)
RFC: Reliability First Corporation RRO: Regional Reliability Organization (regional member of NERC)
SERC: Southeastern Electric Reliability Council (RRO)
SPP: Southwest Power Pool Inc. (RRO)
WECC: Western Electricity Coordinating Council (RRO)

FIGURE 2.1 The NERC regions, along with the interconnection areas. (Note that the Quebec Interconnection within Canada and the Eastern U.S. Interconnection are shown here as the Eastern Interconnection.) SOURCE: NERC Interconnections, available at, accessed June, 11, 2007.

The advent of competition in the wholesale electricity market in North America has increased the operational complexity of the power delivery system. Power generators in one area are able to sell power in another area so long as adequate transmission interconnections are available. Initiatives by the U.S. Congress and FERC to unleash a competitive wholesale electricity market have led to an enormous increase in the number of power transactions that are carried over the electric power transmission system.

The existing power system, however, was designed to handle the needs of individual integrated utilities, with transfers between utilities mainly to improve the reliability of supply. It was not originally designed for handling common-carriage interconnections, which require different controls and regulation. Merchant generators want to sell their electricity to buyers who are willing to pay the highest price. These generally are in high-priced regions, which may be distant from the generation facility. Control areas for the power system, which previously may have had a few dozen transactions between buyers and sellers before the advent of wholesale markets, now attempt to settle hundreds, if not thousands, of transactions per day. This has led to a system already under stress, even in the absence of any homeland security concerns.

An additional challenge to the power delivery systems is the evolving nature of electricity demand due to digital technology. Billions of microprocessors have been incorporated into industrial sensors, home appliances, and other devices. These digital devices are highly sensitive to even the slightest disruption (an outage of a small fraction of a single cycle can disrupt performance), as well as to variations in power quality due to transients, harmonics, and voltage surges and sags. Today about 10 percent of total electrical demand in the United States feeds or is controlled by microprocessors. By 2020 this level is expected to reach 30 percent or more (EPRI, 2003).

The electric power system was designed to serve analog electric loads—those without microprocessors—and is largely unable to consistently provide the level of digital quality power required by digital manufacturing assembly lines and information systems, and, soon, even our home appliances. Achieving higher power quality places an additional burden on the power system even before homeland security issues are considered.

A more positive aspect regarding the development of power markets and microprocessor technology derives from the advent of publishing widely varying prices when market or associated system capability conditions change. This provides some natural damping in the system as more and more customers are provided with electronic sensors and real-time pricing. This natural modulation of extreme

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