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Time for a national power authority

Posted By -NO AUTHOR- On 12/11/2012 @ 6:55 pm In Opinion | No Comments

(OpEdNews.com) — The discussions about the power outages from Hurricane Sandy and how such outages can be prevented in the future have overlooked a major factor–the deregulation of electric utilities. In the 40 years before electricity generation, transmission and distribution were deregulated in March, 2000, there were two power outages that affected more than a few million people in the US–the North East Blackout of 1965 and the Quebec Hydro outage of 1989. Together they lasted a bit less than a day. In the 12 years since deregulation there has been five such outages: in 2003, 2005, two last year and then Sandy this year, lasting together 45 days. The large-scale reliability of the North American grid is one hundred and fifty times worse after deregulation than before. This is no coincidence, no fluke of the weather, but cause and effect.

Prior to deregulation, regulated utilities were allowed a certain amount of profit on every kilowatt-hour they produced. They had every incentive to produce as much power as they could, to prevent outages and to get power up and running as fast as possible. With deregulation, the incentives shifted because profit rates were no longer fixed. To maximize profit rates, utilities allowed maintenance workforces to decline by attrition and layoffs, dropping by about 50%. This means that trees and branches that should have been cut back were not–and in storms many more toppled onto power lines. Much-reduced work forces, even bolstered from other regions could not get power lines up and running as rapidly as before. But the deregulated utilities’ owners did not suffer, as they could raise rates to cover any losses from the outages. Indeed, in states which chose to de-regulate, electricity rates are now a full 48% higher than rates in states that continued to regulate electric utilities. A fifty percent increase in price for 150 times as much time without power is no bargain for electric consumers.


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