New FERC Rules to Impose Voltage Stability Obligations on Local Utilities

The Energy Policy Act of 2005 added a new Section 215 to the Federal Power Act to establish mandatory reliability rules for the bulk power system. This was a recommendation of the joint U.S. - Canada task force report on the blackout of August 2003. The new law requires FERC to approve an "electric reliability organization" (ERO) to develop and enforce detailed reliability rules to be adopted by FERC. The North American Electric Reliability Council, which for years had developed voluntary reliability standards and monitored utility compliance with them, created a new entity, the North American Electric Reliability Corporation (NERC), which was then approved as the new ERO.

After a NERC stakeholder process to develop detailed draft rules, NERC petitioned FERC for their approval. On October 20, 2006 FERC issued a Notice of Proposed Rulemaking (NOPR) in FERC docket RM06-16,largely adopting NERC’s proposals, but stating:

although we believe it is in the public interest to make these Reliability Standards mandatory and enforceable by June 2007, we also find that much work remains to be done. Specifically, we believe that many of these Reliability Standards require significant improvement to address, among other things, the recommendations of the Blackout Report.

Significantly, FERC modified the proposed rule on reactive power, VAR001-1. An imbalance of reactive power can cause voltage instability, equipment failure and blackouts even if the overall supply of real or active energy is sufficient. Reactive power demand increases particularly in hot weather when large numbers of utilitiy customers use air conditioners. With the breakup of New York's utilities, responsibility for providing reactive power is shared by local distribution utilities, who use static VAR capacitors in their systems, and merchant power generators, who can provide dynamic VAR supply.

According to a FERC Staff Report on Reactive Power, other restructured jurisdictions impose a duty upon generators to provide MVARS without additional compensation, while market mechanisms are being devised - and revised - in the United States. Assuring adequate reactive power (MVAR) supply at times when generators can make far more by selling energy (MW) is an issue in restructured markets in the United States, according to the FERC report at p. 7:

A generator’s cost of producing reactive power can sometimes include opportunity costs associated with forgone real power production. Opportunity costs arise because there can be a trade-off between the amount of reactive power and real power that a generator can produce. When a generator is operating at certain limits, a generator can increase its production or consumption of reactive power only by reducing its production of real power. As a result, producing additional reactive power results in reduced revenues associated with reduced real-power production.

Inadequate supply of reactive power was cited as one of the factors in the blackout of 2003, and this, in turn, has been linked with restructuring of the electric industry and fragmentation of responsibilities for reactive power in the states that experienced the blackout:

Finally, the separation into generation and transmission companies resulted in an inadequate amount of reactive power, which is current 90 deg out of phase with the voltage. Reactive power is needed to maintain voltage, and longer-distance transmission increases the need for it. However, only generating companies can produce reactive power, and with the new rules, they do not benefit from it. In fact, reactive-power production reduces the amount of deliverable power produced. So transmission companies, under the new rules, cannot require generating companies to produce enough reactive power to stabilize voltages and increase system stability.

FERC's proposed modification to the NERC proposal would explicitly impose a new federal law duty upon load serving entities, e.g., local utilities such as Con Edison, to acquire sufficient reactive power, to monitor the power factor and voltage stability in real time at distribution substations connected to the higher voltage transmission lines, and to maintain voltage stability in its interconnected distribution system. This could require load shedding to bring reactive power demand into line with the available supply, or other reactive power load management tools.

The proposed new duties of distribution utilities are a recognition by FERC that principles of physics, electricity, and Maxwell’s Equations do not follow regulatory and jurisdictional delineations between federally regulated transmission services and state regulated distribution system services. If adopted, the FERC rules will clarify future responsibilities of local utilities regarding voltage stability within their portion of the grid, acquisition of sufficient reactive power, and management of reactive power loads through load shedding or other means to balance reactive power resources and with reactive power demand.

The New York PSC filed comments objecting to the proposed definition of "bulk power system" which underlies the basis for the proposed FERC standard that would place new reactive power duties upon distribution utilities such as Con Edison. Comments of New York's transmission owners, including Con Edison, also question FERC's expansive definition of the bulk power system that would impose new duties upon Con Edison.

Was an Unscheduled Outage of a Power Plant Providing Reactive Power a Factor in Con Edison's July 2006 Queens Outages?
Con Edison has not addressed reactive power loads and voltage stability in its October 12, 2006 report on the July 2006 Queens outage. Also, Con Edison resisted PULP's discovery requests regarding communications with FERC and the ISO just prior to and during the outage that began on July 17. In the week prior to the Queens outage, FERC and NYISO officials issued broad warnings in testimony to Congress of the possibility of load shedding and blackouts in New York City in hot weather. We do not yet know if the grid officials were concerned only about a possible shortfall in active power due to transmission outages, or if there were additional concerns, for example, possible insufficiency of reactive power, or voltage instability that could directly or indirectly be due to another outage, for example, a generator tripping off line. NYISO reports indicate there was a "reserve pickup" due to a "large event" that occurred 25 minutes before a fire burned into a feeder line that began the Queens outage event. A "Reserve pickup may occur if energy becomes deficient due to the loss of a large generator...," according to the NYISO Transmission and Dispatching Operations Manual, Section 4, p. 12 - 13.

For further information, see PULP's web page on the 2006 Queens outage.