Midwest ISO: Control Room - American Executive - RedCoat Publishing - American Executive

Midwest ISO: Control Room

Energy Executive Spotlight

Written by John Zorabedian

Thursday, 01 May 2008

Midwest ISO: Control Room - American Executive - RedCoat Publishing

This independent transmission system operator learned to improve efficiency and reliability of the grid after the 2003 blackout.

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Everyone’s familiar with the problem of Christmas tree lights—when one goes out, they all go out. Something similar happened to the electric grid on August 14, 2003, when a cascading blackout affected 50 million people in the Northeastern US and Ontario, Canada—the largest blackout in North American history.

Graham Edwards , CEO

In the aftermath of the blackout, the US government charged the Federal Energy Regulatory Commission (FERC) with ensuring that such a catastrophic failure of the grid never happened again, and much of that responsibility falls to the Midwest Independent Transmission System Operator, known as the Midwest ISO. Formed in 1998 as part of the US government’s energy deregulation plan, Midwest ISO regulates power transactions on the wholesale electric system throughout 15 Midwestern states and Manitoba, Canada, serving 110 member utilities with a capacity of 130,000 megawatts. It is the second largest transmission system operator in the world.

At the nonprofit organization’s headquarters in Carmel, Ind., Midwest ISO coordinates power transactions and ensures the smooth flow of electricity throughout the grid, monitoring scheduled outages and demand across the system—keeping tabs on more than 230,000 pieces of real-time data, around the clock. “Our basic function is to operate the transmission system and allow the flow of power in the most economical and reliable manner possible,” said Graham Edwards, CEO of Midwest ISO. “We also ensure from a reliability standpoint that we have everything coordinated and that reliability is first and foremost in what we do.”

The problem with the grid prior to 2003, Edwards said, is that utilities were not sufficiently coordinating their demand and service interruptions. With better technology and greater inter-agency coordination, Midwest ISO looks at the demand for the entire regional grid, more effectively anticipating problems and managing congestion in the system. “We have enhanced our tools after the August 14, 2003 event,” he said. “We can see broader, deeper, and faster than anyone has in the past.”

Midwest ISO is implementing a system to regulate the electricity flow throughout the grid to an even 60 Hertz. Currently, 24 separate control authorities regulate, or balance, the load throughout their service areas. Under the Midwest ISO plan, called an ancillary services market, Midwest ISO will assume responsibility for balancing the load throughout the entire regional footprint. “The reason for that, and the reason we want to do it, is the value that brings to our customers,” Edwards said. “If we can balance across a broader area, we can have less reserves, less spinning reserves, and less regulation across the footprint.”

Edwards estimates that this ancillary service market, which should go online in September of this year, will provide between $115 million and $205 million in annual savings due to greater efficiency in the grid. “Ancillary services is a big deal for us and our members going forward,” Edwards said. “We continue to develop systems and test systems, both internally and with our market participants.”

To further improve the operation of the grid, Midwest ISO must coordinate with a variety of stakeholders—its 110 member organizations, including power generators, utilities, and transmission companies, as well as state and federal agencies. All of this happens through Midwest ISO’s eight-member board of directors and its stakeholder process. The board consists of seven independent directors elected by the membership and Edwards.

Coordinating stakeholders
Midwest ISO represents a broad array of interests, and as such the governing process of the organization can be somewhat cumbersome. To a large degree, this is due to the function Midwest ISO performs as its mission. Although member organizations continue to own the capital-intensive assets of power generation and transmission, they must effectively give up control over those assets so that Midwest ISO can balance and regulate electricity on the grid.

“The first year I was CEO here, I think we had more than 800 stakeholder meetings during 2006,” Edwards said. “Not quite that many in 2007, but it is an intensive process. The stakeholders work intensely with us, and we have meetings as we look at how we improve systems or what products and services we want to offer to our membership.”

The stakeholders are not represented directly on the board—which is fully independent from member organizations—but provide guidance to the board through an advisory committee. “The advisory committee provides advice and guidance to our board, but our board does not have to seek approval from the advisory committee,” Edwards said. The advisory committee structure is composed of nine sectors, and those sectors have representation on the advisory committee for the various interests, including independent power producers, power marketers, state regulators, environmentalists, and others.

“While we end up with a better product at the end of the day with all that stakeholder involvement, the downside is it takes a whole lot of time, a lot of effort, and a lot of consensus building,” Edwards said. “We’re not going to please everyone on every item. That’s why the independence of the board continues to be critical for us going forward so we can look at a balanced view for what’s best for the entire footprint for the organization.”

Despite the difficulty of navigating so many occasionally competing interests, Edwards said the governing structure of Midwest ISO is upheld as one of the best in the energy industry. And to ensure that these interests are balanced, the board bylaws require that board members understand the complex issues of electricity markets. One board member must have experience operating a transmission system, one must have expertise in transmission system planning, one must have experience in commercial markets, and four board members must have previous executive-level or board experience.

Resource adequacy
Historically, utilities have worked independently to meet demand. Now it is the responsibility of independent transmission operators such as Midwest ISO to ensure that there are adequate resources to meet the growing need for power.

“We need to make sure that we, as a wholesale market provider, are providing the right incentives and the right platform for people to jointly develop generation throughout our footprint and make sure we can meet the growing demand 10, 15, and 20 years from now,” Edwards said.

And although the footprint of Midwest ISO is experiencing a system-wide increase in demand of about 1.5% annually, the demand is not growing evenly in all locations. Midwest ISO is not developing the resources itself, but its mission is to coordinate the development of resources to reliably operate the system. To that end, the lessons learned after the 2003 blackout are crucial.

“We spent a lot of time and resources developing the tools we have and the visibility across those utilities,” Edwards said. “Are we ever going to completely stop transmission lines or generators from tripping? Absolutely not. What we can do is provide better visibility and better coordination on how to manage those types of cascading events. The lessons learned were broader visibility, better tools for reliability, and better recognition of what’s going on and being able to coordinate sooner with your neighbors.”

Overall, Edwards is confident that the organization, its employees, and the stakeholders that it represents have learned those lessons and that the systems and technologies developed since 2003 are capable of handling the great responsibility of operating the grid efficiently and reliably. “The development of our systems and what we’ve accomplished is second to none,” he said.

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