Power Politics

Many special-interest groups see last month’s massive, and as yet unexplained, power outage as the perfect opportunity to lobby for inclusion in an already massive energy package pet projects that they say would have been sure to avoid such an event. Drilling for oil in the Arctic National Wildlife Refuge, recently considered a dead issue in Washington, is again being advanced by conservatives in Congress, for example, while environmentalists have used the blackout to advocate for more conservation and alternative energy research.

Instead of an opportunity to advance corporate interests, the blackout should be seen as a sign that serious changes are needed in the way the country’s power transmission system is built, maintained and overseen. The problem is that there are powerful lobbies dedicated to maintaining the status quo and, so far, they have prevented any real movement toward the compromise necessary for lawmakers to agree on the size and shape of an energy package that Congress still hopes to finalize this fall.

While a bill sponsored by Sen. Olympia Snowe to encourage infrastructure upgrades by shortening the time period for companies to recover their investments in transmission improvements is helpful, such efforts must be accompanied by regulatory reform. Although the cause of the blackout that left millions in the Midwest, East and Canada in the dark remains under investigation, it is clear that allowing utilities to operate with little regional cooperation and oversight contributed to the problem. It appears that rather than working together, utilities in the Midwest were more concerned with selling more of their own power than maintaining the system’s overall stability, resulting in widespread failures.

The Federal Energy Regulatory Commission has proposed rules that, in part, seek to avoid such scenarios by requiring utilities to join regional transmission organizations. Utilities would sell their power lines to transmission companies or surrender control to independent operators. This has already happened in Maine where energy deregulation required the de-coupling of transmission and generation assets. In New England, for example, the entire power grid is controlled by an independent system operator in Holyoke, Mass.

This model is also followed in the Mid-Atlantic and California. FERC wants to expand it elsewhere to ensure that all power producers have access to transmission lines and to ensure that there is an incentive to improve transmission capabilities. Without regional organizations, utility monopolies have little incentive to upgrade transmission lines to handle power sales from competitors.

The measure is now tied up in regional politics, with Sen. Richard Shelby, an Alabama Republican with ties to southern power companies, negotiating a deal with Vice President Cheney and Senate Energy Committee Chairman Pete Domenici to delay FERC’s required regional transmission organization membership until 2007. The Bush administration has said it favors “voluntary” regional organizations. But as the blackout shows, voluntary means nonexistent since Midwestern utilities worked against, not with, one another despite agreements to cooperate.

The debate over energy policy will no doubt be long and contentious, and lawmakers will be pressured to compromise a lot to get a package completed in a timely fashion. But that is no reason to ramrod through Congress breaks for utility companies without increasing regulatory oversight to ensure that the nation’s electricity grid is maintained and upgraded.