Friday, July 28, 2006

Power failures are caused by deregulation, not acts of God

By Nancy Jane Moore

An article on explains something I've been saying for some time: Deregulation of the electric power industry led to inadequate maintenance of the infrastructure -- and that's why we keep having major power emergencies.

The people of Queens, NY, just suffered through an extended power outage for over a week. A recent bad storm left many folks in St. Louis powerless for many days. Here in the Washington, D.C., metropolitan area we've had so many extended power outages that I get nervous with every thunderstorm. When the power goes, you never know when it will come back on. After Hurricane Isabel a few years ago -- a category 1 storm that was milder than some of the electrical storms we've had -- several friends of mine were without power for more than a week.

The power companies blame everything on Acts of God or, occasionally, on excessive use by consumers. (The only time electric companies ever encourage conservation seems to be during a heat wave.) But as Tyson Slocum of Public Citizen puts it in the TomPaine article:
With the requirements to invest a share of profits into improving reliability now removed, Wall Street and the power industry shunned putting their money into unprofitable investments like upgrading transmission lines and distribution networks. Why should investors spend money on low-rate-of-return investments like reliability when they can make a killing buying and selling power plants?
He goes on to explain how this affects the companies that are actually in charge of the power that comes into your house and mine:
On top of this market failure, deregulation has also encouraged distributional utilities, like ConEd in New York, to skimp on preventative maintenance spending. They have slashed utility workforces -- particularly experienced, unionized jobs. And regulators in New York and other deregulated states no longer pour over the companies' reliability budgets, allowing the utilities' service to slide in pursuit of higher profits. As a result, distributional utilities now have too much incentive to replace equipment after, not before, it blows.
That probably explains why, from time to time, the power goes out in my neighborhood on nice days when there's not a cloud in the sky and the temperature is so mild I shut off the air conditioner and open the windows.

I won't even get into the exploding manhole covers caused by problems in the underground power lines that plagued the Georgetown area of Washington a few years ago, eventually causing a power outage so bad that businesses in the area had to shut down for several days.

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