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Professor Richard J. Pierce, Jr.
George Washington University Law School
JURIST Guest Columnist

The cascading blackouts that struck much of the northeast on August 14 surprised no one who studies the US electricity market. It may be months, or even years, before we know the detailed and specific causal chain that produced this event. When we do, the causal chain will be long, with many complicated relationships among natural forces (lightning?), human errors (a switch left in the wrong position?), equipment failures (a malfunctioning generator?), and/or errors in the complicated software that controls the operation of the transmission grid.

It is easy, however, to identify the systemic source of the blackouts. The US transmission grid has inadequate capacity to support the increasing flow of electricity over the grid. During the last thirty years, demand for electricity has increased significantly, but we have not been willing to increase the capacity of our transmission grid. As a result, the grid operates at or near full capacity in many locations when soaring temperatures increase electricity demand. In this situation, many combinations of natural, mechanical, and human sources have the potential to produce cascading blackouts.

Imagine, for instance, a simplified grid with only three wires, each of which operates at ninety per cent of capacity when the temperature reaches ninety-five degrees. Any event lightning, a fallen tree, a malfunctioning relay, etc. can knock out one of those lines. That will produce a local blackout. Whether it produces cascading regional blackouts depends on myriad other variables, but the probability of cascading blackouts increases significantly when the grid is operating at or near capacity in many locations the situation in the northeast whenever demand for electricity is high.

The primary sources of the problem of inadequate transmission capacity are NIMBY (not in my backyard) and BANANA (build absolutely nothing anywhere near anyone). New York City illustrates the problem nicely. Demand for electricity in the City has increased greatly over the last several decades. It makes no sense to meet this additional demand by building new generating plants in New York City. There are an infinite number of better sites in Quebec, upstate New York, South Carolina, West Virginia, etc. Yet, the transmission capacity into the City is severely limited. The logical response is to build generating plants somewhere outside the City and to expand transmission capacity into the City. That requires approval of the regulatory authorities with jurisdiction over transmission lines. Today, those are state and local authorities. Because of the NIMBY and BANANA attitudes that dominate in most of the northeast, it is virtually impossible to get regulatory approval to expand transmission into New York City. Politicians in Connecticut, New Jersey, and West Chester County are not about to anger their constituents to help the residents of New York City. Transplant this same phenomenon to Boston, Hartford, Albany, etc., and you get our present predicament inadequate transmission capacity in many locations in the northeast.

This problem has an easy solution. Congress should enact a statute that confers exclusive and preemptive power to authorize expansions of transmission capacity on the Federal Energy Regulatory Commission. That is the allocation of regulatory jurisdiction that has produced good results for about seventy years in the context of oil and gas pipelines. President Bush included such a change in regulatory jurisdiction as part of the energy legislation he proposed two years ago. It was immediately pronounced dead on arrival due to the combined opposition of left-wing environmental groups (who want no transmission lines built anywhere) and right-wing federalists (who oppose any reallocation of regulatory jurisdiction from state and local authorities to national authorities). I hope that the cascading blackouts of August 14 will change that political dynamic. If not, we will experience cascading blackouts with greater frequency as increases in the demand for electricity continue to outpace increases in the capacity of the transmission grid.

Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at The George Washington University Law School. He is the author or co-author of several books and multiple articles on government regulation, regulatory economics, and the characteristics of the markets for electricity and natural gas.

August 18, 2003


JURIST Guest Columnist Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at The George Washington University Law School, where he is also Associate Dean for Faculty Development. Before joining the Law School faculty, Dean Pierce taught at Columbia University, the University of Virginia, Southern Methodist University, Tulane University, and the University of Kansas. He also was dean of the University of Pittsburgh School of Law. He practiced with Sutherland, Asbill & Brennan in Washington, D.C. Dean Pierce is author or co-author of Administrative Law and Process (3rd ed. 1999); Regulated Industries (4th ed. 1999); Administrative Law Treatise (4th ed. 2001); and Economic Regulation (1994). He has written numerous articles on government regulation, regulatory economics, and the characteristics of the markets for electricity and natural gas.