August 24, 2003

August 24, 2003

GOVERNMENT REGULATION CAUSED BLACKOUT

Do you remember the old joke that Soviet dissidents used to tell? What happens when you bring socialism to the Sahara Desert? Nothing happens for seventy years and then there’s a shortage of sand.

According to today’s New York Times, beginning in 1992 the power industry was restructured so that the generation of power was freed from control but the transmission and distribution of power continued to be regulated by the government. So what happened? The power generating companies built new power plants to profit from the fact that they were then allowed to charge market-based rates, “creating the incentive to build more plants.”

But since transmission and distribution of power to homes remained regulated, “Power companies received only a relatively low, government-set return on their investment in the grid, so they allocated far less money to improving transmission reliability than to building power plants.”

So now more electricity is moving over old transmission wires which were never meant to carry such loads.

So much for the government meddling.