As power flickers back on in Northeast, finger-pointing aspects of the Blackout of ’03 are already taking center stage. Opponents of deregulation (like myself) see this as a to-be-expected outcome of turning a vital service — where reliability is the major objective — into a profit center. In fact, none other than Kenny Boy Lay of Enron fame predicted blackouts in an interview for PBS’s Frontline show called “Blackout“:
“Obviously”, that is, if you are the chairman of the company which might have engineered blackouts in New York if that pesky absolution dissolution in bankruptcy hadn’t gotten in the way. Still, deregulation has already done damage to the electrical system, even without the help of crooked power brokers. Part of the problem is that, no longer having a monopoly to produce power in a particular region, electric utilities must now compete against one another to sell the electricity they generate. Yet, at the same time they are competing, they must also maintain a complex network of cooperative interconnections to distribute the power they produce.
So, these utilities must compete for lower prices, must cooperate with their competitors without colluding, and must deliver a profit to their shareholders. Unfortunately for consumers, maximizing the profit takes precedence which also means minimizing expenses. The result: infrastructure has been neglected and blackouts ensue.
As New Mexico Governor and former Secretary of Energy Bill Richardson said, “We’re the world’s greatest superpower, but we have a Third World electricity grid…” (Although, I bet the people sweltering in Baghdad’s 120 degrees would love to have such a “Third World” electrical system.)
Now, I’m just waiting for the Bushies’ reality inversion field to kick in and tell us that the solution to this deregulation-driven problem is more deregulation.
UPDATE: For the full story on the dereg disaster, read Greg Palast‘s column on Znet today.
