- The Washington Times - Tuesday, September 2, 2003

During my 1990 campaign for governor of New York I visited the Niagara Mohawk Power facility Upstate. I learned about “the grid” and had extensive conversations with executives. In all instances, I was impressed with the analysis and particularly taken by the forthrightness of the commentary.

What every single person noted was the system’s fragility. They pointed to the lack of redundancy and the precarious nature of the switching system. It is entirely disingenuous that Gov. George Pataki now contends he didn’t realize this system required attention and is eager for explanations about the cause of the blackout.

When I naively asked about capital expenditures to address the problems, these executives smiled and said, “Where is the money supposed to come from?” I replied: “Your capital budget should cover the costs.” “What capital budget?” they asked.

Even with so-called deregulation, only wholesale prices are uncontrolled — the acquisition of energy sources. But the retail price is regulated by the State Power Commission. Since the commission is appointed by the governor, its principal concern is not arousing consumer ire. Consequently, profits are derived from either cutting expenses or clever wholesale buying. The production price is therefore only partly related to what the consumer pays. Lost in this calculus is the capital-improvements expense.

That is only part of the problem. Since localities, cities and states have power commissions, any effort to create a federally mandated regional authority runs headlong into jurisdictional issues. Moreover, while energy needs cross state borders, making the logical case for a regional authority, power commissions represent a major parking space for patronage jobs. In New York state, for example, a Power Commission appointment is tantamount to a sinecure.

As energy demand has risen, the system basically remained unchanged. There was a lot of talk and much bluster after the 1977 blackout but relatively little activity.

Rules put in place by the country’s utilities after a huge 1965 blackout were meant to prevent a critical failure. But these were rules, not capital improvements. The electric system is supposedly designed to isolate problems, confining them to small geographic areas.

To a degree, the system performed as designed, since circuitbreakers shut down equipment that might have been damaged. Yet the Aug. 14 blackout from Connecticut to western Michigan was a real stress test of the system, and it failed. In fact, this was the worst electrical disaster since Aug. 10, 1996, when another “cascading failure” knocked out power in the West.

Clearly, this recent event will produce a lot of handwringing. If the president’s seeming determination is genuine, perhaps some real change also will be forthcoming. As I see it, the way to begin is with electrical policy provisions that allow the federal government to override moribund state authority.

Second, money must be made available to modernize the energy grid, money that most likely will be provided by the federal government. The electricity industry needs incentives to upgrade facilities.

Third, federal regulators should override environmental lobbies that invariably stand in the way of new projects, contending conservation is sufficient to reduce energy demand.

No one wants the lights to go out again. The price we pay materially and emotionally is profound.

There are several bills pending in Congress on energy matters. As I see it, any bills that could make a difference should address policy, hardware and incentives. Most important, let’s stop deceiving ourselves by listening to politicians who maintain we don’t have a problem or the blame resides elsewhere. It’s time to look in the mirror and note, “The enemy is us.”

Herbert London is president of the Hudson Institute and John M. Olin Professor of Humanities at New York University, and also is the publisher of American Outlook and author of “Decade of Denial,” recently published by Lexington Books.

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