The downside of deregulation

The remarks last week by Bill Richardson, Governor of New Mexico and energy secretary during the Clinton administration, on the US power blackout hit the headlines around the globe. «We are a major superpower with a Third World electrical grid,» he said. But how has this happened? «Deregulation is the underlying cause» of the power failure wrote Robert Kuttner, author of «Everything for Sale: The Virtues and Limits of Markets,» in a New York Times editorial on Monday. Electricity is not an ordinary commodity, Kuttner points out. It can not be stored in large quantities; the cost of building and maintaining transmission lines is very high, while the system needs extra generating and transmission capacity to meet rare cases of excess demand. Should the power system fail to withstand periods of peak demand, the entire country will grind to a halt. However, no private enterprise would be willing to invest huge sums of money in creating a capacity that is unnecessary for 95 to 98 percent of the time. This is why Greece’s Public Power Corporation (PPC) made a major contribution when it set up a single nationwide power network by taking over all the local power units that had provided electricity to small towns and villages across the country. Today, 50 years on and after trillions of drachmas of investment in generating and transmission units, some are eyeing the privatization of sections of the corporation, without spending any money. However, who will undertake to pay the huge costs of maintaining and modernizing the network so that it is does not return to Third-World status? Is PPC going to shoulder the costs while some private individuals just collect the revenues?