Power grid costs rise, service slips
By JONATHAN FAHEY
The Associated Press | March 07,2013
NEW YORK — America’s power grid is like an old car.
It gets the job done, even if its performance is slipping. But the repair bills go up every year and experts say only a major overhaul will reverse its decline.
An Associated Press analysis of utility spending and reliability nationwide found that electric customers are spending 43 percent more than they did in 2002 to build and maintain local electric infrastructure. Since then, power outages have remained infrequent; but when the lights do go out, it now takes longer to get them back on.
Neither the spending nor the reliability trends are dramatic on their own. But experts say the combination is revealing: it suggests that the extra money from electric customers isn’t being spent wisely — or that utilities aren’t investing nearly enough to upgrade fragile equipment that is increasingly threatened by major storms.
“The electric system is the critical linchpin of our society, and we are operating the overall system closer to the edge,” said Massoud Amin, a grid security expert and professor of electrical and computer engineering at the University of Minnesota.
The diminishing returns on investment reflect several trends: The grid is getting old, making it more expensive to maintain service at current levels of reliability; day-to-day weather and major storms have become more extreme, meaning wires, poles and transformers have to be replaced more frequently; and when utilities replace aging or broken equipment, they are not always upgrading to modern technologies common in other industrialized nations.
When utilities spend on equipment, regulators allow the companies to pass those expenses on to customers. In recent years, this portion of customer bills — the cost of delivering power — has been rising and pushing bills higher even though the cost of the power itself has fallen dramatically.
With the help of Ventyx, a software and data services firm that works with electric utilities, and the utility consulting firm PA Consulting Group, the AP compared reliability statistics with the spending of 210 utilities across 24 categories of local distribution equipment.
In 2011, the most recent year for which annual data is available, the average U.S. electric customer was without power for 112 minutes, according to PA Consulting. That’s a 15 percent increase since 2002 and the highest level in 10 years. The number of outages decreased slightly, from an average of 1.2 per year to an average of 1.1, but that statistic has shown no improvement since 2004.
Over that same period, annual spending per customer on local distribution equipment and maintenance rose about twice as fast as the rate of inflation, from $163 to $232, according to Ventyx. That does not include spending on power plants or major transmission lines.