You can bet that after the recent massive power outage that affected portions of the Northeast, Midwest and Canada, utilities — in particular, electrical power — have moved up significantly higher on the priority list of facility site selectors.
Not that it had ever disappeared from the list of important site selection considerations but, let’s face it, most people had become pretty complacent when it came to utilities. After all, California notwithstanding, it had been more than 25 years since the last major regional power outage [in New York City] occurred in the mid-1970s.
Nowadays, however, power companies are running for cover, particularly those directly involved in the Aug. 14 blackout, which affected 50 million people in New York, Ohio, Michigan and Ontario. They want to be seen as doing everything humanly possibly to ensure that a similar outage never happens again, or at least not in their service area.
Almost from the beginning, everyone was quick to blame “the grid,” and I’m sure “the grid” deserves a good part of the blame. So, too, does “deregulation,” particularly the convoluted type of partial, “a little bit yes, a little bit no” type of deregulation that some states adopted in the late 1990s.
And let’s not forget the fact that during the past couple of decades, supply — in the form of new power generating facilities — has not come close to keeping up with demand.
In the meantime, those utilities that “dodged the bullet,” so to speak, are feeling pretty good about themselves. In fact, I was speaking with a utility company economic development friend of mine a few days after the outage, and he said that he had already received a couple of inquiries from companies interested in setting up back office operations in his service territory.
He was feeling pretty good about things, particularly since his utility is part of PJM Interconnection, which operates the wholesale electricity market and power grid for Pennsylvania, New Jersey, Maryland, Delaware, Washington, D.C., and parts of Virginia.
PJM Interconnection has been cited several times during the past couple of years by The Wall Street Journal as an example of a “regional transmission organization” that not only can prevent a widespread blackout, but can also simultaneously reduce prices to customers.
The experts will determine the ultimate solution to the problem, but they need to start by deciding whether all aspects of electrical power — from production to distribution and delivery — is going to be fully regulated or fully deregulated. The status quo is like being a little bit pregnant.
Government leaders need to make up their minds about how they want to create the profit motive — either artificially through regulation, or through market forces by deregulation — and then let the utilities do the rest.
Leaving the profit motive out of any piece of the overall puzzle is a prescription for failure.
If you’ve forgotten what the consequences are, just remember back to mid-August of this year ... and substitute your city for New York or Cleveland or Detroit.
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