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The Blackout of 2003: Why We Fell Into The Heart of darkness

The road to the current reliability crisis is paved with four decades of bad policy decisions.
Fortnightly Magazine - September 15 2003

grew to building new generation and transmission plants, utilities quite naturally grew increasingly reluctant to make these investments. Completed plants were sold in part or entirely to public entities that could more easily raise rates and capital. Projects were canceled, many of which were already under construction. Occasionally completed projects were written off, such as the Shoreham nuclear plant on Long Island. No new significant projects were undertaken.

To summarize, the presumption that providing economic and reliable electric service was the sine qua non of the electric utility industry was now on the table as a negotiable item. No one made a public admission, but the decisions made by regulators, politicians, and utility managers spoke louder than words. Many news stories discussing the 2003 blackout noted that few major transmission investments have been made since the 1960s, supporting the notion that providing economic and reliable service had become negotiable or secondary to financial survival.

Utilities as Social Policy Delivery Instruments

While the power industry's financial condition was deteriorating, external social and political forces were changing its basic business model. This too contributed to an undermining of the economic and reliable service mandate. Utilities became instruments for accomplishing social policy, versus corporations delivering an essential commodity needed for the functioning of modern civilization.

This change in the essential mission of electric utilities was aided and abetted by growing disillusionment with electricity production and delivery systems. The Three Mile Island and Chernobyl accidents did much to feed the disillusionment with commercial nuclear power. Also contributing was a spotty operating record of long construction lead times and resulting high cost, and questions over the need for new capacity. Unresolved spent nuclear fuel disposal and a general unease with an energy form that has military applications made nuclear power vulnerable to concerns about its suitability as an energy source.

Coal-fired power plants avoided public policy disenchantment for a while, but no longer. Pulverized coal-fired power plants are seen as significant sources of pollution and possible contributors to man-made climate change, since they are a major source of CO2. Coal-fired power plants have become the center of significant regulatory and legal proceedings. In the late 1990s, EPA sought to force the closure of coal-fired power plants. States and utilities in the Northeast are suing utilities in the Midwest over the operation of pulverized coal plants. These suits take place even though coal-generated electricity is essential to preventing future blackouts in the same states hit on August 14th.

Nuclear and coal-fired power plants produce more than 70 percent of all the electricity consumed in the United States. Large hydroelectric plants produce another 8 percent. There is no public support for their construction either, or constructing transmission that would bring hydro electricity down from Quebec. In summary, public officials and regulators are unsupportive of using technologies that produce more than 80 percent of power generated in the United States.

There is also little public support for enhancements to the electricity delivery system. Over the last 40 years, increasing transmission capacity has become time consuming. Enhancements to transmission capacity are