Friday, August 15, 2003

Why the big power outage in the Northeast yesterday and today? You'll read upteen thousand stories about the complex facts of power generation, distribution and consumption over the next week or so. Make sure you keep all this in its political-economic context.
The country's halting moves toward electricity deregulation over the past decade have dramatically increased the volume of power flowing on the grids.

But the transmission towers themselves remain the stepchildren of the nation's energy infrastructure. People don't want them in their back yards or on their farms. Energy companies aren't interested in building them. And while the system is linked together with advanced computer systems, much of the equipment that opens and closes connections around the nation's three major grids is 1950s vintage, officials said.

"We're a superpower with a Third World grid," New Mexico Gov. Bill Richardson, a former energy secretary, said yesterday.

Cook's organization, the North American Electric Reliability Council warned last year, "The nation is at . . . a crisis stage with respect to reliability of transmission grids." It calculated that $56 billion was needed to upgrade the nation's grids, but only $35 billion was likely to be invested. . . .

The Electric Power Research Institute in Palo Alto, Calif., estimated that while power demand has shot up 30 percent in the past 10 years, transmission capacity has increased by just 15 percent. . . .

As deregulation flourished, investment dwindled in transmission lines, whose profits are limited by regulation.
So as the Enrons of the world were speculating on the newly deregulated utility system in the 1990s, they poured money into places where a quick buck could be turned -- energy trading, as it turned out. Don't forget the booming stock market either, which drained capital away from boring things like electricity transmission lines and fed it into exciting ventures like eToys and Pets.com instead.

When you leave the essentials up to capital, prepare to either get taken to the cleaners or burned.

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