Blackout '03: Lights Out

(4 of 6)

Vast amounts of money and time have gone into solving the problem of such chain reactions ever since the legendary blackout of November 1965, when an overloaded relay switch near Toronto left 30 million people without power all through New England and down to New York City. In those days, people wondered whether the Russians had attacked. That experience frightened the industry into the creation of the NERC., an industry group that sets standards for the whole transmission system. The NERC set up the system for quarantining sick plants so that if one failed, it would not infect the others. The council also hoped to coordinate utilities' investments in maintaining the grid. "We had a cascading failure of great interest in 1965, and then we spent a whole bunch of money to make sure it didn't happen again," observes Norm Rubin, senior policy analyst for Energy Probe in Toronto. "They obviously didn't get 100% at it."

Even with safeguards in place, there were other problems to contend with. That was made clear in July 1977, when a lightning bolt in northern Westchester County, N.Y., knocked out two transmission lines. Within an hour New York City sealed itself off electrically from the larger grid, but since the city does not generate enough power internally to sustain itself, 9 million people lost power, some for more than a day. Nor were the failures limited to the Northeast. In July 1996, some 2 million customers from Nebraska to Washington State to Baja California Norte in Mexico lost power when a 345 kilovolt line was shorted out by a tree in Idaho. A mechanical glitch shut down a parallel line, setting off the wider collapse. The industry learned to trim trees near power lines.

So what happened last week was a nasty reminder, not a complete surprise to electricity-industry types. Whatever safety margin was built into the system has been eaten away by lack of investment in modernization. "This is the fourth catastrophic failure of the central power grid within the last decade," says Kyle Datta, managing director of the Rocky Mountain Institute's consulting practice, "and yet decision makers are not learning the right lessons from these crises." One such lesson is that it doesn't matter how much power you can generate if you can't deliver it reliably to the people who need it.

And here a combination of market forces, political foot dragging and the reluctance of people to welcome the arrival of high-voltage lines or towers in their backyards has made it almost impossible to create a transmission system that can keep up with demand. There is little incentive for utilities to erect new towers, especially after new federal rules in the late 1980s effectively capped the return on such investments at roughly 11%. One fight between West Virginians, who don't want ugly transmission lines, and Virginians, who need power, has been going on for 12 years. By 1999 transmission investment was less than half the $5 billion it had been 20 years earlier. And Enron's collapse didn't exactly help make utility investment attractive. As energy policy was assembled piece by piece, there was both too little regulation and too much: no one was requiring the utilities to upgrade the grid, and utilities were worried that if they did it voluntarily, they might not be allowed to charge enough to make their money back.