enhanced because of greater reliability and reduced vulnerability to major disruptions; greater capacity to accommodate renewables would improve the environment; and public safety would be enhanced. Although these benefits are even harder to estimate than are the costs (as described in the previous section), estimates of the benefits of a modern T&D system significantly outweigh the costs. For example, EPRI estimates these benefits to U.S. society to be about $640–800 billion over the next 20 years for a cost of implementation of $165 billion; that is a cost-benefit ratio of 1:4 (EPRI, 2004). On a more local scale, a recent study by the University of San Diego considered the value of a modern distribution system to the San Diego area. The investigators found about $1.4 billion in system benefits, plus another $1.4 billion in societal benefits, producing an internal rate of return of at least 26 percent (San Diego, 2006).

While the benefits of modernizing the T&D system in the United States are potentially very large—possibly several times the investment—this study had neither the time nor the resources to examine the assumptions and modeling needed for a reliable estimate. The following sections, however, provide some specific examples of potential benefits from modernizing the system.

Economic Benefits

A blackout in a single area can cost approximately $1 billion, and major regional blackouts can cost $10 billion. EPRI estimates the annual cost of power disturbances to the U.S. economy to be between $80 billion and $100 billion (EPRI, 2004). Disturbances to power quality add to the total, and inefficiency and congestion in the current T&D systems also have significant economic costs. These costs could be reduced significantly by a modernized T&D system. Thus improving grid reliability and efficiency could result in substantial economic benefits.

A modern T&D system will benefit the U.S. economy in less direct ways as well, such as by allowing cost information to be made available to buyers and sellers of electricity in real time. These energy price signals will allow customers to more effectively participate in the electricity market, based on current supply-and-demand influences. Overall, markets will be more efficient when consumer decisions are based on realistic prices. There will also be a reduction in grid congestion and forced power outages. A modernized grid will enable a wide array of new options for load management, distributed generation, energy storage, and

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