Behind the Blackout

Thanks to deregulation, Queens merely a pawn in the utilities' board game

And the demand that the CEO step down? "Kevin Burke has no plans to resign."

Vallone is clearly echoing the views of at least some of his constituents. Tony Gigantiello, president of CHOKE and also of the co-op board at Astoria's North Queensview Homes, recalls that on July 16, the first day of the blackouts, manholes exploded around Astoria; residents were virtually trapped in their homes as fumes filled the street for several hours between 30th and 31st avenues in the Forties—emphasizing the irony of the situation. "The major pollution is here in Astoria," Gigantiello says. "We bear the brunt."

Not exactly a fan of deregulation, Gigantiello adds, "We pay a separate charge for transmission on our bill now. But they didn't change a thing. They didn't upgrade anything. Con Ed is the biggest criminal in the city of New York."

There are those who take an opposite tack from the advocacy groups, seeing the Queens debacle as indicative of insufficient deregulation. Jim Lesczynski, the Libertarian Party candidate for Sheldon Silver's Lower Manhattan assembly district, calls the New York State plan "phony deregulation" and adds, "They tweaked their regs and called it deregulation. What we really need is real deregulation. What we really need is a free market in electricity. Then you'd have lots of suppliers rushing in to fill that demand."

But the Queens blackout had nothing to do with inadequate supply; it had to do with grid deterioration. Lesczynski has a quick answer to this observation too: "They can afford to let their equipment go to pot," he says, "because they're a monopoly and what are we gonna do, go elsewhere? If they had someone threatening to compete against them, we would have reliable electricity."

Various competing companies, each with its own lines? Sounds like a lot of potential for chaos.

"The free market has a lot of potential for chaos," he says, "but it has a way of working itself out. If you don't perform you don't stay in business."

Norlander, whose Public Utility Law Project has been working on more traditional solutions than Lesczynski's, sees the problem as inherent to the new order. "We switched to performance-based regulation rather than a general audit of costs," he notes. "The PSC told the utilities, 'We won't micromanage you. Just run the system the way you want to run it and keep the power up and we'll give you a financial slap if you don't.' "

Slocum's prescriptions recall the old line about how the most progressive step you can take when standing at the edge of a cliff is backward.

"The quicker we come to the conclusion that deregulation has failed, the quicker we can improve the reliability of our system," he says. "That means putting Con Ed on a path to being a fully accountable system where the federal government and the state of New York have full regulatory powers. A century ago it was recognized that electricity is a unique commodity and requires unique treatment. Then the Berlin Wall came down and any sort of government intervention in the marketplace was seen as taboo. All the old rules were seen as removed. A century of accepted practice was overturned, and we're paying the price now."

The free-market dogma still reigns, the blackouts and Enron scandal notwithstanding. The federal Energy Policy Act of 2005, passed exactly a year ago, offers transmission companies bigger profit margins as an inducement to build new lines. But Slocum points out that the law applies to lines already built as well. The law also included subsidies to coal and nuclear development. Slocum calls it a "grab bag of giveaways to well-placed special interests. It's the most expensive energy bill in America's history, and there was nothing for mass transit, nothing about fuel-economy standards or conservation. It's not going to help America's energy problems. It just helps the energy companies."

This history also seems poised to repeat itself. Just as power was being restored to the last suffering residents of western Queens last week, the U.S. Senate began debate on a new energy bill that would expand oil drilling in the Gulf of Mexico and seems assured of passage. The House version goes even further in removing federal controls on offshore drilling.

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