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August 15, 2003

Deregulation Destroyed Power Grid

Why is the cause of the massive U.S./Canada power outage such a big mystery? Hmm. How about we follow the money. Bush and Cheney deregulated energy markets, which allowed Enron to go nuts, destroy the life savings of thousands of investors, and drive the state of California into bankruptcy. Meanwhile, energy companies around the U.S. were busy cutting workers, foregoing maintenance of plants and infrastructure, and basically milking every last dime they could out of the system while putting as little as possible back into it. It's the old profit maximization thing that capitalism is so good at, and profits at electric companies have been getting pretty maximized.

So now the grid goes down and everyone is asking why. The people who know why are the power company executives who have laid off maintenance workers and ordered managers to cut costs in order to maximize profits. Those execs know that the grid went down because they ran into into the ground so they could make more money. But of course, they can't just say, "Well, we basically destroyed the grid in the last couple of years to boost our bottom lines, so this was bound to happen." Instead they say, "Um, we're going to study the matter, but what we do know is more deregulation would be a good thing!"

Don't believe me? Read this story from 2001 [link via Buzzflash]. It recounts what management and labor said about energy deregulation almost two years ago. Management (and Bush/Cheney) said:

Companies like Chicago-based Midwest Generation, a unit of Edison International, are seeking to negotiate new labor contracts that boost productivity and make plants more cost efficient to make electricity at more competitive prices, said Doug McFarlan, a spokesman for Midwest.

Labor said:

The [International Brotherhood of Electrical Workers (IBEW) union], which represents about 220,000 utility employees in the United States and Canada, warns that in addition to breakdowns at plants and transmission grids, deregulation leads to smaller, less-experienced workforces as utilities sell their plants to the independent, unregulated power companies.

Now just ask yourself: Who was right? And who should we listen to as the debate over how to "modernize the grid" heats up?

Posted August 15, 2003 12:41 PM | general politics

The result of that Midwest Gen negotiation? A protracted strike that lasted most of the last half of summer and into winter. I used to drive by two Midwest Gen plants when I lived in Romeoville, and I can remember driving by and watching the number of strikers dwindle as it got colder. Eventually, the union settled - giving up dozens of jobs in the process.

My former employer, Exelon, announced the "Exelon Way" initiative shortly before I left in May. Because we'd all gone through and defined what type of work we did, and how look it took to do it, we were guessing layoffs were imminent; shortly before my return from Europe, the long-anticipated announcement of layoffs came. Now my friends are girding themselves for lean times, knowing the 10 and 12-hour days they put in now will become 12 and 14-hour days in the future. All while the company gives lip service to how much work-life balance is important, blah, blah.

It was Exelon's short-cutting that lead to massive outages in Chicago three years ago. Then, the company was paying for years of cheapness, and responded by spending lavishly to avoid losing the City of Chicago at the worst time possible - when the market for electricity in Illinois had been de-reg'd. But no one has come forward to compete with Exelon, and it's only a matter of time before the cost-cutting catches up. This was just a prelude, but I hope it's for something worse that never occurs.

Posted by: greg at August 16, 2003 11:29 PM

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