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Under 'deregulation,' a tried and tested system which favored cost minimization, was replaced with an untested system which favored profit maximization. It also fractured responsibility for the overall reliability of the system.

Power Blackout: Is Deregulation the Problem?

by Enver Masud

www.globalresearch.ca 16 August 2003

The URL of this article is: http://globalresearch.ca/articles/MAS308A.html


"It's a wake-up call," said President Bush on Friday. "The grid needs to be modernized, the delivery systems need to be modernized. We've got an antiquated system."

Former Department of Energy Secretary Richardson called for passage of the Bush administrationıs Energy Bill.

President Bush, and former Secretary Richardson, were responding to questions regarding the massive electrical blackout which occurred around 4;10 pm on Thursday, August 14, and disrupted the daily lives of 20 million people in New York state, New England, the upper Midwest and Canada.

But itıs much too soon to say whatıs needed. We have yet to find out precisely what occurred.

What we do know is the systems that are supposed to prevent just this type of blackout didnıt.

The power system is protected, or kept intact, by a massive system of sensors, relays and computers -- the System Control and Data Acquisition system (SCADA system).

The SCADA system is designed to isolate that component of the power system which is not functioning, and the power system itself is designed to function normally with any one of its components out of service.

Some critical parts of the power system are designed to even more stringent reliability criteria developed and defined by utility engineers based upon years of accumulated data and experience.

As a last resort, the power system is designed to break into ³islands² with each ³island² having sufficient electric generation to meet the needs of the consumers in that ³island.²

Apparently, this 'island' operation did not take place, or at least it did not take place throughout the region of the blackout. This will be an issue for investigators to resolve.

They will have to pore over data logged by computers throughout the system to identify the precise sequence of events, and hopefully that will lead to the identification of the event that initiated the blackout.

This may or may not have anything to do with an 'antiquated system' or inadequate delivery system. It may well be the failure of a simple relay costing a few hundred or a few thousand dollars.

One thing is virtually certain: no amount of money can guarantee that blackouts will never occur. The cost of proposed solutions has to be weighed against the probability, duration and costs of blackouts.

It is just this type of reasoning that gave the United States the wonderful power system that Americans came to trust, and which served their needs at low cost.

But as the power system grew larger, and as consumerıs electricity rates kept decreasing, utilities tended to grow somewhat complacent.

The blackout of 1965 which disrupted the North Eastern US was a wake up call. In response the electric utility industry, prodded by the federal government, setup management structures to improve coordination among electric utilities, and things began to improve.

Then came the Arab oil embargoes of the 1970s, and things began to change again. For the first time since the freewheeling days of the 1920s, regulatory decisions began to be politicized to a much larger degree than before.

Consumers were promised lower costs if only the electric industry were restructured. Vertically integrated electric companies -- which had responsibility from the electricity generating plant to the customerıs meter -- began to be sold off in pieces. Generation , transmission, distribution became separate entities.

Then came another wake up call: the debacle in California.

The 'deregulation' of California's electricity market was supposed to bring cheaper electricity to the state. Instead, with wholesale electric rates 10 to a 100 times higher than a year before deregulation, California's largest utilities faced losses of over $8 billion.

To avoid bankrupting the utilities, the state Public Utilities Commission in San Francisco approved emergency rate increases of between 7 and 15 percent.

Amidst fears that California utilities would be unable to pay market prices, US Energy Secretary, Bill Richardson, signed an extraordinary, emergency order that forced out-of-state power producers to supply electricity to California.

Californiaıs rate payers and taxpayers picked up the tab. The new ³independent power suppliers² got rich.

But 'deregulation' itself was a misnomer. What really happened was that under 'deregulation,' a tried and tested system which favored cost minimization, was replaced with an untested system which favored profit maximization. It also fractured responsibility for the overall reliability of the system.

So before we rush to legislation to fix the 'problem,'  it's high time we took another look at the whole concept of 'deregulation.'


Enver Masud is an independent consultant with 35 years experience in the US and international electric power sector. He managed the US National Power Grid Study, and National Electric Reliability Study, for the US Department of Energy. Details at http://www.twf.org/bio/em.htm lİ Copyright Enver Masud 2003  For fair use only/ pour usage équitable seulement .


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