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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



The technical causes of the great Northeast blackout of August 2003 are coming into focus. For reasons yet unknown as of press time, transmission lines in northern Ohio were lost to the grid, and within seconds 50 million people in the United States and Canada were without power. Soon we will no doubt know the specific reasons for the blackout, and technical corrections and improvements will be made.

Not so well understood are the management and social causes of the blackout, or that anything needs to be done about them. The August blackout, the California energy crisis, the 1996 West Coast power interruption, 1999 system disturbances in the Mid-Atlantic and Midwest, generally deteriorating reliability throughout the country, and the near bankruptcy of major segments of the electric power sector all have the same source. The electric power sector has lost its way, and we are now living with the consequences.

The Electric Power Sector Has Lost Its Purpose

Let's define what the central purpose of the electric power industry was, and should still be: to deliver electric power economically, safely, and reliably to all demographic and economic segments of the United States (or any other country).

Electricity is a commodity and an absolute requirement of an industrial or post-industrial economy. As the blackouts in California, the Northeast, and elsewhere demonstrate, without electricity civilization as we know it comes to a halt. Transportation stops, food spoils, living conditions deteriorate, and factories close.

As economies modernize they become increasingly electrified. The purpose of the power industry is to ensure electricity is available at all times at as inexpensive a price as possible, consistent with safety in production, delivery and use.

But isn't this purpose understood? Don't we already know this? We once did, but no longer-until the events of August 14th. While it existed as a responsibility of the electric industry, it had been superceded by other missions that evolved from regulators, politicians, environmentalists, social interest groups, and finally by power industry managers who seek to satisfy the numerous and often conflicting demands of these aforementioned segments.

The 1960s and '70s saw the Vietnam War, the sexual revolution, the growth of environmentalism, and other social trends that challenged the post-World War II economic and political order. The electric power industry was no exception. Challenges to the power industry's purpose would grow despite the Northeast blackout of 1965, the energy crises of the 1970s, and the economic resurgence beginning in the early 1980s.

Changes in how the electric power industry has been regulated and managed over for the last third of the 20th century leads to the observation that the purpose of the electric power industry became diluted, and the ability of the industry to accomplish this purpose compromised. The industry lost its way.

The Onset of Adversarial Regulation

The tension between utility management and regulators grew with the onset of inflation and high interest rates in the 1960s and '70s. These caused the cost of doing business