ICF International (Nasdaq:ICFI) has analysed the causes and
effects of the Norwegian Pearl incident on 4 November 2006 that
resulted in more than 10 million people from Germany to Spain
experiencing a disruption in their electricity supply. In France, five
million people were affected in the country's biggest blackout in
nearly 30 years. Since the Italian blackout in September 2003, this
marks the second time in just over three years that a local fault has
cascaded across European borders. The European Commissioner for Energy
and Transport, Andris Pielbags, has launched an inquiry that is due to
report back in early 2007 amid calls to review the manner in which the
supply of power is managed.
"The underlying causes of the Norwegian Pearl incident may include
a lack of investment in transmission infrastructure both within and
between countries, the failure of regulatory oversight, an
uncoordinated generation supply response, a failure to provide
sufficient backup reserves, and the lack of transparency and pricing,"
says Kim Keats Martinez, director of power and fuels in ICF's London
office. "All these are symptoms of an industry structure in which the
services required for the safe and secure delivery of power are
managed by a patchwork of national system operators that may not
account for competitive market principles. We believe that the
European Commission should conduct an assessment, including a review
of the costs and benefits, of setting up a European Regional
Transmission Organisation (RTO). Under such an RTO, the owners of
Europe's transmission grids could retain ownership of their grids
while transferring management and responsibility for operations,
markets, and supply security to a new supranational entity."
"If it made sense to do so, this European RTO could set harmonised
tariffs for the use of the whole network, create market mechanisms to
manage transmission congestion, and promote the efficient use and
expansion of generation and transmission," says Chris McCarthy, a
transmission expert at ICF. "ICF's experience with the best practices
in U.S. transmission markets suggests that the benefits of RTOs can be
considerable, and must be balanced carefully against the costs. We
have carried out such studies for a number of the RTOs in North
America. Today more than 60 percent of U.S. demand is served by seven
active RTOs, indicating that economies of scale are key in considering
how to most reliably serve regional load through combinations of
generation and transmission. A Europe-wide RTO would be larger than
any of the U.S. RTOs, and a detailed analysis would indicate whether
the economics of such an RTO would make sense, and whether the
reliability benefits would help prevent future European blackouts."
ICF International (Nasdaq: ICFI) partners with government and
commercial clients to deliver consulting services and technology
solutions in the energy, environment, transportation, social
programmes, defense, and homeland security markets. The firm combines
passion for its work with industry expertise and innovative analytics
to produce compelling results throughout the entire program life
cycle, from analysis and design through implementation and
improvement. Since 1969, ICF has been serving government at all
levels, major corporations, and multilateral institutions. More than
1,800 employees serve these clients worldwide. ICF's Web site is
http://www.icfi.com
