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The Electric Power System is Unreliable

The U.S. electric power system is designed and operated to meet a “3 nines” reliability standard. This means that electric grid power is 99.97 percent reliable. While this sounds good in theory, in practice it translates to interruptions in the electricity supply that cost American consumers an estimated $150 billion a year.

In other words, for every dollar spent on electricity, consumers are spending at least 50 cents on other goods and services to cover the costs of power failures.

These costs result from losses in affected industries being passed down to consumers. For example, broken down by business type, the average estimated cost of a one-hour power interruption is:

Industry Average Cost of 1-Hour Interruption
Cellular communications $41,000
Telephone ticket sales $72,000
Airline reservation system $90,000
Semiconductor manufacturer $2,000,000
Credit card operation $2,580,000
Brokerage operation $6,480,000

In an increasingly digital world, even the slightest disturbances in power quality and reliability cause loss of information, processes and productivity. Interruptions and disturbances measuring less than one cycle (less than 1/60th of a second) are enough to crash servers, computers, intensive care and life support machines, automated equipment and other microprocessor-based devices.

The problems of power outages and their associated costs are becoming more severe. Forty-one percent more outages affected 50,000 or more consumers in the second half of the 1990s than in the first half of the decade. The “average” outage affected 15 percent more consumers from 1996 to 2000 than from 1991 to 1995 (409,854 versus 355,204).

All signs indicate that the worst is yet to come. The system’s infrastructure is slowly deteriorating as a result of age and neglect. In fact, today’s electric power industry spends less on research and development than the dog food industry.

In the United States, the average power generating station was built in the 1960s using technology that is even older. The average age of a substation transformer is 42 years, but the transformers today were designed to have a maximum life of 40 years.

Another cause of the increasing number of power outages is congestion in the delivery system. A Department of Energy study from 2002 looked at 186 transmission paths within the Eastern Interconnection and found that 50 are used to their maximum capacity at some point during the year and 21 are congested during more than 10 percent of the hours of the year.

From 1988 to 1998, U.S. electricity demand rose by nearly 30 percent, while the transmission network’s capacity grew by only 15 percent. Summer peak demand is expected to increase by almost 20 percent during the next 10 years.