Homeland Security

Good morning, Mr. Chairman and Members of the Committee.  My name is James P. Torgerson.  I am the President and Chief Executive Officer of the Midwest Independent Transmission System Operator, Inc. ("Midwest ISO").  I am appearing today to offer what insights I can concerning the circumstances surrounding the power outages and offer suggestions as to what might be done in the future.  The Midwest ISO was formed in 1998.  The Midwest ISO is the nation's first voluntary regional transmission organization that did not originate from a legislative mandate or against the back drop of a tight power pool.  The Midwest ISO is also the first entity found by the Federal Energy Regulatory Commission to be a Regional Transmission Organization. 

The Midwest ISO's region covers portions of fifteen states and the Canadian province of Manitoba.  Of relevance to your inquiry here, we act as a Reliability Coordinator for three sets of companies.  As Reliability Coordinator, the Midwest ISO monitors, plans, conducts analyses regarding the high voltage grid and communicates with the Control Areas in our region who have the primary control capabilities to open and close transmission circuits and to redispatch generation.  We perform this coordination function for the companies that have transferred functional control of their transmission systems to us.  We do it through contract with the East Central Area Reliability Council (ECAR) for two systems that are scheduled to transfer control to us in the future, Northern Indiana Public Service Company and First Energy's Northern Ohio system (First Energy's eastern assets are under the control of PJM).  Finally, through a contract with MAPPCOR we perform this service to companies in the Mid-Continent Area Power Pool (MAPP) region that have not transferred control of their transmission systems to the Midwest ISO.  Three of the more than 30 companies within our reliability coordinator territory suffered outages in the black out - Consumers Power Company, Detroit Edison Company and First Energy Company.

What exactly caused the blackout will be forthcoming from the work being done by the International Task Force formed by President Bush and Prime Minister Chretien of Canada.  As Secretary of Energy Abraham's recent press release states:  "It's a complex job we are undertaking.  . It's going to take some time to compile all this information, get it all synchronized and sequenced, and then determine exactly what happened when - and how it's all interrelated."  The Midwest ISO only has a part of the data needed to reconstruct the events and is not in a position to characterize the proximate cause of the blackout.  The Midwest ISO is cooperating with the International Task Force and the General Accounting Office's investigations into the matter.  Likewise the reason for the cascading effect of the outages is unknown at this time.
 
The analysis that has been done to date in the Midwest seems to indicate that there were a number of events in the Eastern Interconnection on August 14th.  Some are surely related to separations and the substantial losses of load that occurred, and others are likely unrelated.  During the morning and into the afternoon, Midwest ISO personnel were in contact with various control area operators and PJM, the neighboring reliability coordinator about the events of the day, which by the afternoon had included the outages of several high voltage transmission lines.  During the morning of August 14th, there was no indication to the Midwest ISO of significant problems in our territory.  During the course of the hour preceding the cascading event, after the loss of a large generating unit in northern Ohio had already occurred, several transmission line outages also occurred in the Ohio area.  During this period the Midwest ISO operator was in contact with the neighboring Reliability Coordinator at PJM as well as control operators within our territory.  At this point in time, the issues did not seem to implicate a regional problem. 

Things began to change at 4:09.  By 4:10 Eastern Daylight Time portions of the eastern interconnection were separating from one another and the loss of significant load was only seconds or minutes away.  At 4:19 the Midwest ISO initiated the first NERC coordinating call of the day among NERC and the regional Reliability Coordinators.  These calls were repeated every several hours thereafter and eventually to a few times per day during the restoration.  During that first call the issues became ascertainment of system conditions and the commencement of restoration activities.

During the restoration efforts, the Control Area operators performed their responsibilities in linking returning generation with load to be restored.  The Midwest ISO, as a Reliability Coordinator, played its part in analyzing the transfer capability into Michigan and Ohio to safely deliver power into those areas.  The Midwest ISO worked with each area to ensure the individual area restorations would not threaten even a small-scale repeat of Thursday afternoon's events.  The Midwest ISO was able to relay information to Michigan about power available from Illinois that could safely be imported to hasten the restoration of load.  Finally, the Midwest ISO, in combination with the IMO and others, determined when it was safe to reestablish the ties between Michigan and Canada.  I would also like to add that as part of our normal operations, the Federal Energy Regulatory Commission has stationed two of its professional employees in our headquarters.  Among the valuable assistance that they provided, on August 14th these federal employees allowed Midwest ISO to have a single point of interaction with various federal entities concerned with the outage.  FERC's dissemination of the real time data from our headquarters allowed Midwest ISO personnel to devote greater attention to system stability and restoration efforts.
As only one of the companies contributing information to NERC and DOE we do not have a picture of events across and adjoining the footprint of affected systems.  Events occurring across the eastern interconnection including plant outages, voltage conditions and the operation of protective relay schemes will have to be evaluated before cause can be distinguished from effect.  I am awaiting the results of the International Task Force formed by President Bush and Prime Minister Jean Chretien of Canada.  However, there are some preliminary observations that I can share with the Committee:

· Equipment that was designed to protect transmission lines and generators during cascading events operated successfully to isolate equipment before there was permanent damage to the equipment.  This shortened the time period of the restoration efforts because, had protection systems not operated to protect individual components as designed, the power production and delivery systems could have been severely hampered for many months.
· Automatic protection systems did keep the blackout from spreading even further.
· Considering the size of the area impacted, the restoration proceeded in an orderly manner with much of the load restored within 48 hours of the initial disruption.  The Control Areas have primary responsibility to restore their systems while maintaining a balance of resources and load.  The ISO/RTOs assisted in the restoration effort by ensuring equipment was not being put at risk of furthering cascading as generators were being brought back on-line and as load was being restored.  The coordination among the ISO/RTOs and their member systems worked to assure a reliable restoration.
 
I believe a key reason that the Midwest ISO was in a position to help in the restoration efforts was because of our broader regional view of the area.  Making a few presumptions, I believe the Midwest ISO will be in a better position next year to lessen the likelihood of any recurrence.  We have before FERC a tariff that if accepted and implemented will have the Midwest ISO running wholesale markets, much like PJM, the New York ISO and ISO New England do today.  That tariff will put matters like a regional security constrained unit commitment and real time generation dispatch in place.  Each of these additions should be of substantial benefit.  That will give the Midwest ISO more information about generation unit status than we have today and add an ability to direct generator actions within the footprint.  This market will improve reliability.  Indeed a strong, reliable system is the necessary underpinning of a successful market.  The two are not opposite poles they are two halves of what is necessary for reliable service to customers.

I think all the regional entities involved have an appreciation today that communication between reliability coordinators and other entities has to be raised to a higher level than has been required or practiced in the past.  At a basic level, that has already happened.  The use of the NERC coordinating call to apprise our industry counterparts of the computer virus on August 20th is an example of that increased communication.  Mere telephone communication; however does not seem adequate for the future.  The Midwest ISO and PJM have a Joint Operating Agreement under development that calls for substantial real time automated data transfers between our systems.  While the Joint Operating Agreement is not yet finalized, the Midwest ISO and PJM have recently established the physical communication network links to allow for the types of data transfer called for by the Agreement.  Once the software is in place the enhanced data transfer can be made operational.  We are each reassessing the Agreement to determine what additional features it should have in light of the events of August the 14th.
 
The Committee is also confronting the question of what can be done to prevent a recurrence of the outages.  While the definitive answer cannot be given today, I believe that you will find agreement that widespread adherence to strong enforceable reliability standards will be important.  Equally important is state and federal cooperation in transmission siting.  I am pleased that the states in the Midwest have formed an organization, the Organization of MISO States, to work cooperatively with the Federal government on, among other things, siting of transmission facilities.  We believe such an approach holds great promise to allow the siting of needed transmission facilities while protecting regional efforts to address issues associated with wholesale electricity markets and reliability.

Other matters will be crucial as well.  In my opinion they include:

· A reassessment of the existing hierarchical control structure;
· Increased, automated data sharing about system conditions over a wider area; and
· Review of protective relaying practices in the industry.
For the Midwest area as a whole we need the participation of all major transmission systems in an RTO.  This will end the prospect of the risks posed by a Swiss cheese configuration of systems, some in an RTO and others not.

Finally, for the Midwest ISO in particular, acceptance by FERC of our tariff filing to establish energy markets in our territory is critical.  This will bring added elements of region wide action that are not present today - a security constrained generating unit commitment program and a real-time security constrained economic dispatch. 

Of the items I mentioned, the first, mandatory reliability standards is largely in the hands of Congress.  As to the development of more infrastructure in our region, the Midwest ISO issued its first transmission expansion plan this June.  It calls for construction of $1.3 billion of already planned projects.  It identifies another $ .5 billion of proposed reliability projects.  Commitment of participating transmission owners to pursue these projects is crucial for the future.  The cooperation of the states in allowing timely construction is equally critical. 

The remaining items will call for the strong interplay of industry participants and the national government mediated through or directed by the Department of Energy and the Federal Energy Regulatory Commission. 

This concludes my remarks and I would be pleased to answer questions.