Energy Policy in Crisis

Never let it be said that President George W. Bush doesn't know an opening when he sees one.

On Aug. 19, just days after the Northeast emerged from darkness, the president announced that he planned to push ahead with an energy bill that he says will prevent future blackouts like the one that shut down parts of eight states and two Canadian provinces.

At a press conference at his Texas ranch, the president said he expected the legislation to include "mandatory standards on reliability, including penalties if electricity suppliers failed to reliably provide power," the New York Times reported.

"What that means is, that companies transmitting energy will have to have strong reliability measures in place, otherwise there will be a consequence for them," he said. "There will be incentives in the new bill to encourage investment in energy infrastructure."

Taken at face value, the president's remarks might seem like good news. After all, a chief cause of the Aug. 14 blackout was the antiquated power grid that carries the juice generated by America's utility companies.

The problem is that the president and his supporters are less concerned about the power grid than they are about helping the energy industry.

The legislation being pushed in Congress goes well beyond updating the energy grid. It calls for oil drilling in the Arctic National Wildlife Refuge in Alaska, tax breaks for the oil and gas industry and other benefits for energy producers.

Democrats want to strip the power grid upgrade from the energy bill and act on it independently of the other proposals, but Republicans are not biting. They want comprehensive reform, they say, not piece-meal legislation -- and that means pleasing their constituents, the folks who pay for the campaigns.

While the president fiddles, however, the nation's electricity grid continues to burn, falling into further disrepair, a product of industry neglect and greed in which the energy companies chase the profits created by generation of power but ignore the transmission systems that bring the juice to our homes and offices.

Basically, the blackout is a symptom of a larger crisis in the industry, one fueled by what Paul Krugman of the Times calls "faith-based deregulation." Krugman tells the story this way: Once upon a time, the power industry was treated as a state-endorsed and regulated monopoly. Each region was supplied with power by one company that "took responsibility for the whole system -- transmission and distribution as well as generation" for that region.

"It was and is impractical to have companies competing either to wire up homes and businesses, or to build long-distance transmission lines," he writes. "Because effective competition was impossible, power companies were given local monopolies, and regulated to keep them from exploiting customers."

That approach remained in place for nearly a century and helped wire and power the nation as it grew.

As the 20th Century drew to a close, however, the free-marketers decided it was time for a change. Competition in the energy industry would be good for everyone. It would drive prices down and lead to better and expanded service.

So the deregulation movement was born and the utility companies -- most of them, at least -- had to sell their power plants and find ways to provide cheaper power.

The experiment has been a failure, and the people of California and the Northeast -- so far -- have been forced to pay. Californians, as everyone knows by now, have been the victims of rolling blackouts and rate hikes caused in part by Enron's jobbing of the market. Rates are rising in New York and elsewhere. Here in New Jersey, consumers who were spared rate hikes by state-imposed rate caps when the state's energy industry began its transition to open markets are bracing for what could be large spikes in our bills now that those caps have been removed. And we're still waiting for the market to offer new companies and better prices.

This should have come as no surprise to the legislators who created this monster, as Robert Kuttner, co-editor of the American Prospect, pointed out in a New York Times op-ed after the blackout.

"In principle, deregulation of the power industry was supposed to use the discipline of free markets to generate just the right amount of electricity at the right price. But electric power, it turns out, is not like ordinary commodities." It can't be warehoused in large quantities like other products, he wrote. It needs excess generating and transmission capacity for times when it is in great demand. And it "requires a great deal of planning and coordination, and it needs incentives for somebody to maintain and upgrade transmission lines."

Deregulation, however, created incentives to generate too much power while ignoring the grid and the planning necessary to keep everything functioning.

So, what should have been a small-scale blackout spread across the country, closing businesses and stranding commuters -- and giving President Bush the political opening he's been looking for to get his energy bill back on the table.

It is important that the Bush plan be stopped and that Congress begin to reign in deregulation and take control of not just the power grid and transmission lines, but generation and all aspects of the industry. There are too many lives and too many businesses that depend on electricity to leave its provision to the market.

Some groups working to reform the energy industry include:

Public Citizen's Critical Mass Energy and Environment Program, 1600 20th St. NW, Washington, DC. 20009; 202-588-1000; web

Sierra Club National Headquarters, 85 Second St., 2nd Floor, San Francisco, CA 94105; 415-977-5500; Legislative Office, 408 C St., N.E., Washington, DC 20002; 202-547-1141; Email; web

New Energy Future, a coalition of state-based Public Interest Research Groups, contact via its website: or through your state chapter PIRG.

Hank Kalet is a poet and managing editor of the South Brunswick Post and The Cranbury Press. Email

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