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and then the following...
Ideas & Trends; Forget Deregulation. It's the Wires, Stupid.
TEN days after the biggest power failure in American history, finger-pointing over the role that electricity deregulation played in the blackout is flowing at the speed of light.
Opponents of electricity deregulation say that this month's outage proves that the market cannot be trusted to supply dependable, cost-efficient electricity. Over the last few years, as deregulation has spread, the electric grid has grown steadily more unstable. More blackouts are inevitable unless states and the federal government reassert control over wholesale power markets, they say.
Supporters of deregulation say that there is no evidence that deregulation played any role in the blackout.
The outage, which began the afternoon of Aug. 14, plunged eight states and two countries into darkness that lasted for more than a day. Cities from New York to Detroit were left without power, as 100 power plants shut down and 62,000 megawatts of electricity were lost, about 10 percent of the total power supply east of the Mississippi. Although there were no major civil disturbances, several blackout-related deaths were reported, including at least two in New York and two in Canada.
The real problem behind the blackout, said William Hogan, a public policy professor at Harvard University, is that the effort to create wholesale power markets has not gone far enough. Some states, like New York, have fully deregulated, forcing utilities to sell plants and buy power from generators in wholesale power markets. In those states, the power grid is controlled by an ''independent system operator'' that controls the flow of electricity to make sure that the power being traded can actually get where it is supposed to go.
But the Midwest has a weaker system operator that does not truly control its grids, and some Southern states have essentially rejected deregulation, allowing utilities to continue to own their plants. The patchwork of rules and standards impairs communication and makes failures more likely, Mr. Hogan said.
''It doesn't make sense to have different rules in Ohio and New York, but we do,'' he said. ''We're in the middle, and that's a dangerous place to be.''
Some independent experts, though, say the controversy over deregulation is misguided.
Deregulation is doing what it is supposed to do by allowing electricity users to seek out the best price for power, even if that power comes from a plant hundreds of miles away. The real problem is that the transmission grid -- the substations and high-voltage wires that move power from plants to consumers -- was not designed for that purpose, said Richard Schuler, an economics and civil engineering professor at Cornell University who is also on the board of New York's independent system operator. Instead, the grid was intended to be a highly reliable way to move electricity relatively short distances.
The grid must be strengthened, and perhaps expanded, so that it can handle its new role, Mr. Schuler said. Unfortunately, the money and the political will to do that are in short supply. No one wants to live near high-voltage transmission wires, and few major lines have been put up anywhere in the last decade. States where electricity is inexpensive are even wary of increasing capacity on lines that already exist, since that will enable their generators to sell power outside their borders. For example, Connecticut is fighting to keep a privately owned power cable that runs under the Long Island Sound to Shoreham, N.Y. from operating, since it would tighten the supply of electricity in Connecticut and might raise prices.
Only a national regulator can force states to accept transmission lines that may not be in their interest, said Richard J. Rudden, chief executive of a consulting firm that specializes in energy issues. But for now, the Federal Energy Regulatory Commission lacks that power.
''We really need the FERC to have more authority in siting transmission lines,'' Mr. Rudden said.
Another obstacle is cost.
Mr. Rudden estimates that it will require $30 billion to $50 billion over the next five years to modernize the grid. But the question of who should pay that cost remains unanswered.
In New York and other states that have deregulated, consumers have seen few benefits from deregulation. They are not exactly clamoring for another surcharge on their bills, even if it is eventually supposed to produce savings. So getting more transmission will take years or decades, unless consumers demand that the grid be improved and accept that in return they may have to pay a bit more for power. But despite the flurry of outrage that the blackout caused, complacency about the reliability of the system will probably creep back in, as long as the lights do not go out again, Mr. Rudden said.
''People are not going to permit the construction of new facilities and pay for them until there's a major outage,'' he said. ''I'm not sure that even this blackout is the wake-up call -- I'm not sure that this is going to pull the nation together.''
Mr. Schuler echoed that sentiment.
''Infrastructure -- when it's first brought on, the public loves it,'' he said. ''Then it becomes almost an entitlement, and we forget how fragile it is, and so we fail to reinvest in it. There's a human propensity to leap over the 'Wow, whiz bang,' and to take things for granted.''
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