The US Blackout: Lessons For India

THE blackout in the US and Canada that took place on the 14th of last month cut a wide swathe across north-east America, leaving more than 50 million people without electricity, some even more than 24 hours. Major cities including New York went dark, with homes, shops being without power and even the underground shutting down. The economic losses are staggering, by rough calculations equal to billions of dollars. While the neo-conservative orthodoxy claim that this has nothing to do with deregulation and open access being introduced in the US electricity sector, serious questions are beginning to surface about the increasing vulnerability of the North American Grid as a result of these policies. The key question here is that with open access being pushed in the US, the amount of power being traded on the grid has increased substantially. The net result is that the Grid is now being driven closer to instability, in which partial or full blackouts are an inevitable consequence.


Blackouts are certainly not uncommon to grids. We have them in India once or twice a year, and even the US has seen such blackouts earlier, although much fewer in number than us. Any electrical system such as the electricity grid, has to be in continuous balance each second; the demand from consumers must be met by power supplied by the generators. Normally, blackouts happen when a generating plant trips, suddenly creating a large demand from consumers in that area which cannot be met from the immediate surroundings. It then sucks power out of nearby systems, which may survive if they have adequate reserve capacity. If not, the imbalance can create conditions, which lead to the connected generating plants also tripping and a cascading trip of plants across the grid. The collapse of the plants finally leads to the collapse of the system as a whole, in which parts may ride out if they disconnect from the grid early enough to work as isolated islands. Interestingly enough, the evidence indicates that this blackout, unlike earlier ones, did not start this way. It was more the system instability spreading across the grid rather than a particular region sucking out large amounts of power that lead to the blackout on August 14. The instability preceded the blackout rather than the other way around.

Why are systems not designed to work in isolation anyway? Would that not be safer than such cascading trips and huge blackouts? To answer this, we must understand that larger the system, the greater is the ability to survive disturbances. The system is less prone to failure, as the reserve of all the plants connected to the grid can be used to overcome the problem of a plant tripping or any other disturbance in one particular area. However, there is a cost to this. We now have a risk of a larger area being hit by the disturbance, which earlier would have been localised. The benefits — much greater stability, lower costs, more even supply and demand — far outweigh these risks.

The North American grid was held by the US National Academy of Engineering as the most important technical achievement of the 20th century; in the eyes of the engineers it was more important than the more glamorous performers such as the internet, sending man to the moon, etc. It underlies the way North American society works in which the availability of power 24 hours of the day is taken for granted. Its failure therefore has created concerns about what is happening in the electricity sector. It is no longer an area where experts debate esoteric concepts such as “open access”, “competition”, “electricity pool”, etc., but of vital concern to all the people.


The North American grid consists of 3 semi-autonomous grids — one to the east and northeast including large parts of Canada, one to the west (west of Rocky Mountains) and the third being the state of Texas.

The recent blackout that took place started from the Mid Western region of Ohio, which is essentially a part of the Eastern Grid.  Here, there was an existing shortage of power in Northern Ohio, leading to large withdrawals from South Ohio. The problems started when an additional power plant – the 680 MW East Lake Unit 5 — tripped. The additional power being drawn to compensate for this lead to some of the transmission lines overloading and snapping of the links between North and South Ohio.

North Ohio region has a large demand and it sought to compensate this loss of supply by drawing power from surrounding Michigan and Ontario area. This lead to a huge amount of power being transmitted to the Cleveland area via an indirect route — from New York-Ontario as also from Michigan. Such large flows across the 34,000 miles of High Tension cables of the Eastern grid lead to system oscillations and various transmission lines tripping. The connected instruments show frequency and voltage fluctuations across large parts of the system. Plants in various states — Michigan, Ontario, New York started also to trip. At this point, the Ontario system tried to isolate itself from the New York system. This resulted in huge power flows taking place to Ohio with now no power coming in from New York. The Ontario system went down as a result. On the New York side, suddenly there was a huge surplus of power with nowhere to go. The New York system also gave way. What was minor occurrence in Ohio had now become a major nationwide blackout.

There are certain points that emerge from this. The problem started with a loss of the 665 MW from one plant in Northern Ohio. This should not have had such major consequences. Systems are designed to take care of such problems and also protective measures should have automatically caused the systems to island themselves and ride out this disturbance. What happened is that the recent policies of deregulation have meant that the grid always sees large amounts of power flow due to power trade introduced in the last few years. The grid was already close to its margin in some parts, particularly in the mid West. The North American Energy Reliability Council had already identified this as a problem area. A disturbance, which would have been easy to ride out otherwise, finally blew up the system that was already in a state of extreme stress.


The recent power sector reforms, even in India, are aimed at facilitating power trade. The whole idea is that if energy can be traded easily, the prices will come down through competition. Therefore, the task of the policy makers — according to the current neo-conservative ideology — is to put in place a system that allows markets to operate and removes the regulators (in the US) or the public sector/government. Such a policy encourages power flows across large distances for reducing the price, even by a few cents. What nobody is talking about is that such additional power flows means that the grid (the high voltage transmission system) must be augmented to allow for such flows to take place safely. If we do not, increased blackouts are the likely consequence

What are the likely savings of such power trade in the US against the costs of augmenting the grid? By most optimistic computations, the savings are likely to be of the order of 5 per cent at most, and only 1 to 2 per cent in probability; a maximum saving of about 3 to 5 billion dollars. If the markets fail, as they did in California, the consumers could fork out even more than $50 billion that the California consumers lost. In addition, the cost of improving the grid — according to the Federal Electricity Regulatory Commission — is of the order of $50-100 billion.

In the US, various criticisms are now surfacing over increased de-regulation and rise of outages. The utilities are cutting back on maintenance and the systems are becoming more and more unreliable.

However, one central fact stands out in all this. Increasingly, there is nobody responsible for the system as a whole. With regulators losing their teeth, a fragmented system in which generators and utilities are being separated, reliability and stability is nobody’s baby. The most important technical achievement of 20th century American engineers is now being jeoparadised for the supposed gains of open access and power trade.

The US example is important for us in India. The Electricity Act 2003 follows the US fascination of deregulation. It has asked that all SEBs have to ensure open access. This means that all SEBs have to allow its network to be used for transmitting power from any generator (even a captive generator) to any bulk consumer. The Act also specifies that electricity should be a tradable commodity, and this indeed its entire raison d’etre.


In our earlier criticism of this concept of “open access”, welcomed by both the BJP and the Congress, we had raised two issues. One is if there is a scarcity of electricity as there is in India today, encouraging competition and power trade will only lead to profiteering and push up the prices. The other is that insisting on “open access” is asking the SEBs to sink huge amounts in transmission for which commensurate benefits are few. In effect, the government wants to subsidise power traders and private generators by asking already bankrupt SEBs to spend huge amounts for augmenting the existing transmission system.

The problem with the electricity reforms, both here and in large parts of the world, is that the attempt is to convert electricity to any other commodity. Unfortunately, the electrical system obeys laws of physics. We may decide that A will buy power from B, but the power flow does not happen this way. The flow will occur based on the entire set of grid conditions existing then.

Can the transmission system or the grid be made in such a way that large power flows are not a problem? The answer probably is that even if very large sums are spent on the grid, the electrical system with large power flows operating with the logic of the market, will always be more unstable then a system that allows local systems to be largely self-sufficient with only surplus and deficit being traded through links. This was how the grid was developed and still remains the most sensible way to operate the grid.

The entire development of power grids was based on power flows only as a back-up from other plants in case one fails and meeting shortages or distributing surplus from one area to another. It can be made to take in additional power flows if the direction and the quantum can be pre determined. One can then design these into the system. But building a system that can take any amount of power flow in any direction is both prohibitively expensive and inherently unstable.

Why are then such reforms being pushed? The answer lies in that increasingly, speculative capital and trade is taking control of the capitalist economies of advanced countries. It was Enron, which decided that the new economy meant power trade as business and not generation/transmission business. To help these traders, the government should chip in, not only in dismantling the existing regulatory controls but also funding the transmission network. The people would pay for these, pressurised by the lack of reliability of the system and finally increased power costs. So instead of lower electricity rates, the prices would actually rise. While the people would pay larger amounts, the power traders will make more and more money.

While advanced capitalism is seeing growth of the speculative economy, why is India following suit? Is it that speculative capital is becoming more entrenched here too or is it the neo-colonial belief whatever is good for US must be good for India today? The US blackout is only a precursor to what will happen here too and obviously much more often. With a fragmented network, increased power flows and a government that does not understand the difference between electrical power and soap as commodities, we are likely to see even higher costs of electricity accompanied by a lack of reliability as the Indian government follows the US style reforms.