Perspective

Deck: 
Hopes and dreams sag and fail, like an overheated power line.
Fortnightly Magazine - November 1 2003
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Perspective

Hopes and dreams sag and fail, like an overheated power line.


The big blackout has reinvigorated the debate about deregulation, snaring hopes and dreams and bringing them back to Earth. For there can be no doubt that electric restructuring, through its emphasis on market prices and market incentives-but none for transmission-contributed mightily to the recent collapse.

As some had foreseen, the new market models forced greater use of the grid, but did little to beef up the transmission lines that were left to carry the load of competition. A soupçon of planning and of command and control measures might have gone a long way to averting this latest breakdown, not to mention the next one, which is inevitable.

When all is said and done, the blackout illustrates again what we once knew but somehow have now sadly forgotten: that electricity supplies huge external benefits in sustaining modern society, so that catastrophe will surely ensue if those benefits are lost through a failure of the power system. And this value cannot be measured by its worth to individual customers. Rather, all members of society benefit indirectly from maintaining the system as a whole. Therefore, the market price of electricity does not provide a realistic measure of the value of a reliable supply to society. Reliability likely will not receive its due under a system where the market does the regulating.

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