Such interconnectedness entails certain dangers, however, including the possibility that a shutdown in one sector could rapidly propagate to others. A huge 1965 blackout in the Northeast prompted utilities to create the North American Electric Reliability Council—now called the North American Electric Reliability Corporation (NERC)—to coordinate efforts to improve system reliability. Similar bodies, such as Europe’s Union for the Coordination of Transmission of Electricity, exist around the world.

Why, then, had the U.S. grid become vulnerable enough to fail massively in 2003? One big reason is that investment in upgrading the transmission system has been lacking. Sharply rising fuel prices in the 1970s and a growing disenchantment with nuclear power prompted Congress to pass legislation intended to allow market competition to drive efficiency improvements. Subsequent laws have instigated a sweeping change in the industry that has come to be called restructuring. Before restructuring began in earnest in the 1990s, most utilities conducted all three principal functions in their region: generating power with large plants, transmitting it over high-voltage lines to substations, then distributing it from there to customers over lower-voltage lines. Today many independent producers sell power near and far over transmission lines they do not own. At the same time, utilities have been selling off parts of their companies, encouraged by the Federal Energy Regulatory Commission to further promote competition. Gradually the transmission business has become a confusing mixture of regulated and unregulated services, with various companies controlling fragmented pieces.

Investors have found generation, now largely deregulated, to be attractive. But because the transmission system has been only partially deregulated, uncertainty over its fate makes investors wary. (Deregulation of distribution is still in its infancy.) Meanwhile, even though wheeling occurred in the past, since the 1990s much larger amounts of power have been moved over great distances. As a result, massive transfers are flowing over transmission lines built mostly by utilities for local use decades ago.

Proposed federal legislation might encourage more investment, but even if transmission capacity is added, blackouts will still occur. The entire power grid has to be refurbished, because the existing control technology—the key to quickly sensing a small line failure or the possibility of a large instability—is antiquated. To remain reliable, the grid will have to operate more like a fighter plane, flown in large part by autonomous systems that human controllers can take over if needed to avert disaster.

A Need for Speed
modern warplanes are so packed with sophisticated gear that pilots rely on a network of sensors and automatic controls that quickly gather information and act accordingly. Fortunately, the software and hardware innovations required to fly the power grid in a similar fashion and to instantly reroute power flows and shut down generation plants are at hand.

Reconfiguring a widely interconnected system is a daunting challenge, though. Most power plants and transmission lines are overseen by a supervisory control and data acquisition (SCADA) system. This system of simple sensors and controllers provides three critical functions— data acquisition, control of power plants, and alarm display—and allows operators who sit at central control stations to perform certain tasks, such as opening or closing a circuit breaker. SCADA monitors the switches, transformers and pieces of small hardware, known as programmable logic controllers and remote terminal units, that are installed at power plants, substations, and the intersections of transmission and distribution lines. The system sends information or alarms back to operators over telecommunications channels.

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