Blackout probe eyes Ohio company
'Record of negligence'
 
Wojtek Dabrowski and Peter Kuitenbrouwer 
National Post

Monday, August 18, 2003

The investigation into the blackout that crippled much of eastern North America is now focused on FirstEnergy Corp., an Ohio company beset by accounting problems, court challenges and a troubled nuclear power plant with a pineapple-size rust hole in its reactor lid.

FirstEnergy yesterday admitted that three of its transmission lines and a nuclear reactor -- across Lake Erie from Ontario -- shut down before Thursday's blackout, and also said that an alarm function designed to warn operators of trouble was not operating.

But it denied responsibility for North America's largest-ever blackout, which left 50 million people from New York to Ontario without power for up to two days and continues to cause problems for transit, homes and businesses across the region.

The North American Electric Reliability Council, an industry-sponsored group that is investigating the blackout, said it traces the problem to northern Ohio, an area serviced by Akron-based FirstEnergy.

''We now are fairly certain this disturbance started in Ohio,'' NERC president Michehl Gent told reporters. ''We are now trying to determine why this situation was not brought under control after the first three transmission lines relayed out of service.''

Dennis Kucinich, a Congressman from Cleveland and former mayor of the city, blamed FirstEnergy for the blackout, and blasted the company yesterday as a greedy energy giant intent on maximizing profits at the expense of proper maintenance of its 16 power plants.

''This is a company with a sorry record of negligence, failure to have adequate personnel to keep up their transmission, generation and distribution system,'' Mr. Kucinich, a Democratic presidential candidate, told the National Post from Davenport, Iowa. ''They are not to be trusted with anything as serious as the operation of a power system.

"If we were talking about a drunk driver here, they'd be taking away the keys right now.''

''This company, what are they doing? They're trying to enhance their revenues by cutting personnel. They started a couple of years ago by laying off people who were needed to help maintain their systems.''

The troubles at another FirstEnergy nuclear reactor in Toledo, Ohio, have prompted the U.S. Nuclear Regulatory Commission to launch a criminal investigation into allegations the company ''wilfully misled the agency about the worsening condition of the reactor lid in the months before workers found the rust hole,'' according to the Cleveland Plain Dealer.

That reactor has been shut since February, 2002.

FirstEnergy's problems run deeper than the rust hole in the Toledo reactor. In early August, the company restated its earnings twice, telling investors its previous statements about how well it performed as a company had been wrong. After the restatement, the company said it lost US$57.9-million in the most recent quarter.

FirstEnergy made the restatements after an independent audit by PriceWaterhouseCoopers, which last year replaced FirstEnergy's long-time -- but now defunct -- auditor, Arthur Andersen. Arthur Andersen collapsed after emerging as a central player in a scandal that led to the collapse of another energy company, Houston's Enron Corp.

FirstEnergy also lost a court case this month over one of its coal-fired plants, with an Ohio judge ruling the company should have known changes to the plant would increase pollution emissions. A second trial will determine penalties.

Yesterday, Spencer Abraham, the U.S. Energy Secretary, called for more government involvement to ensure the power system works.

''What we need to address the power outage problems are, first, mandatory reliability standards -- in other words, behaviour standards that can be endorsed -- and more transmission,'' Mr. Abraham told Fox News yesterday.

Todd Schneider, a spokesman for FirstEnergy, told the National Post yesterday his company's preliminary analysis suggests ''the transmission grid in the Eastern Interconnection was experiencing unusual electrical conditions'' as early as noon on Thursday. The grid's unstable current and voltage levels, he said, occurred both inside as well as outside the company's transmission system.

However, they were not investigated by FirstEnergy because ''at that point, it wasn't a serious issue'' and service wasn't interrupted, Mr. Schneider said.

Three hours later, three transmission lines and a nuclear power plant owned by FirstEnergy went offline. The company acknowledged late Saturday that an alarm screen on company computers, designed to alert staff of shutdowns, wasn't working. Still, Mr. Schneider said, FirstEnergy was aware of the situation. He said company operators again did nothing because service was not being interrupted by the shutdowns.

''A power plant tripping offline for utilities -- that's not unusual,'' Mr. Schneider said. ''That happens every week.'' Regarding the failed transmission lines, he added: ''We have thousands of transmission lines in our system and obviously transmission lines do shut down, too, and that load is transferred to other lines.''