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Forbes.com

 

Going Private

October 27, 2003

By Peter W. Huber

Transmission lines extend deep into urban areas. Why not let entrepreneurs bury the cables and sell the real estate?

While regulators ponder how to promote new investment in the grid, I'm wishing I could pay my utility hard cash to bury 50 yards of overhead power line feeding my home in the suburbs of Washington, D.C. The house is in a built-up area--a stone's throw from apartment complexes, a high-rise hotel and a subway station. But it took our utility (Pepco) a full eight days to restore power to our home after September's visit from hurricane Isabel. This right on the heels of some unexceptional storms that moved through the area on Aug. 26 and 27--those left us without power for five days. Ice storms blacked us out for five days as well in 1999. This year will set a truly dismal record, but the fact is, we're in the dark for an hour or more at least five days every year, and I can't remember a year when we didn't have at least a couple of blackouts that lasted a lot longer than that.

The source of the problem is plain enough: the beautiful old trees that line our street. Weather brings branches down on the lines, and if the branches don't bring down the lines themselves, short circuits blow the fuses that protect the pole-mounted transformers. That cuts off power to the small clusters of homes served by each unit. Whenever a storm causes any widespread outage, the utility works on all the bigger problems first, before getting around to the ten-minute job of replacing the fuse to relight the last three houses on our particular street. Burying the wires would solve the problem--but that costs money.

It's reasonable enough for my utility to set priorities in its restoration efforts; what makes no sense is that however willing my neighbors and I might be to pay extra for a slightly better grid, we can't. This is very egalitarian, but it is also very stupid. Affluence is always unfair, but the more the affluent spend on their end of the grid, the better it is for the less well off--my utility could replace fuses faster in other neighborhoods if it didn't have to replace them at all in mine.

Businesses, factories, hospitals and data centers already pay more for better power--they maintain their own private grids and backup generators. Homeowners can buy generators, too, but they cannot easily pool their efforts. Ten grand will get you an 8-kilowatt standby generator with automatic transfer switch--plenty of power for home essentials. But you and 19 neighbors can't spend $1,000 each to bury a short stretch of the overhead line, even though that would be a more economical (and cleaner, energy-efficient) way to accomplish the same result.

A bottom-up approach to grid improvement could go a long way. A few hundred small businesses and homes define a 1-megawatt load, which is big enough to justify an efficient, low-emission backup generator. The tail end of the grid itself already wires such clusters together and switches can readily be deployed to permit local-area power grids to draw electricity from the big power plants when the utility's equipment is up and running and to operate a backup system when it isn't. Utilities could do such things themselves, but regulators won't let them customize either their prices or the quality of service they provide.

How much further might a creeping privatization of the grid be pushed? Privatizing big transmission lines that run across hundreds of miles of open countryside would seem to be infeasible, but why not at least stay open to the possibility of facilitating such schemes in, say, 10-mile stretches? Many of those lines extend deep into urban areas, across very valuable real estate. And new technologies--like superconducting cables--are now at hand. Offered the opportunity, entrepreneurs might indeed step in to bury cables in exchange for the right to make better use of the real estate on the surface.

Same with the tennis-court-size "substations" that transform and switch power. These are all over the place, manyof them on prime land in urban and suburban neighborhoods. Upgrade the often antiquated hardware with modern technology and you free up a lot of real estate, which can be used--among other things--to deploy backup generating stations or solar cells, fuel cells or other technologies for communities ready to pay a premium to feel greener about their power.

The grid is so familiar, essential and dauntingly huge that even the most free-market-oriented pundits rarely propose taking it apart and placing the pieces under truly private control. An incremental, bottom-up strategy for doing just that should, nevertheless, be given serious consideration.

Original Source: http://www.forbes.com/free_forbes/2003/1027/132.html

 

 
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