NORTH AMERICA: Deregulation, privatisation to blame for blackout

Wednesday, September 3, 2003 - 10:00

BY JEFF SHANTZ

TORONTO — On August 14, I was stranded on a virtually immobilised transit system as the largest blackout in North American history struck. The power outage affected almost 50 million people across the north-eastern United States, from New York to Detroit, and the Canadian province of Ontario.

The blackout was the most recent in a series of energy fiascos that have stricken parts of North America as neoliberal governments have deregulated the industry and privatised power-generating facilities. Blackouts and power shortages have become a common feature of profit-seeking energy provision in California since the industry was deregulated there.

Vern Fawcett, an eminent retired electrical engineer who worked on some of Ontario's largest electrical projects, pointed out in the August 16 Toronto Star: "It's clear to me that privatisation doesn't work. The only way to ensure reliability is with a public system. For-profit power providers don't spend the money needed to build the necessary surplus capacity and reliability into the system. As a result, systems get overloaded and technical glitches occur... These problems happen because of reduction of personnel and insufficient technical expertise. Outages ... undoubtedly [will] continue to occur."

An investigation into the blackout found that it most likely started in power facilities operated by FirstEnergy, a massive corporation that supplies power to parts of Ohio, Pennsylvania and New Jersey. FirstEnergy is the fourth-largest investor-owned, for-profit electric utility in the US and is run by a major funder of US President George Bush.

A week before the blackout, a judge ruled that FirstEnergy had failed to install anti-pollution equipment when it repaired one of its coal-burning power plants in Ohio. A year ago, one of the company's nuclear power plants came dangerously close to a core meltdown. Such incidents are not limited to FirstEnergy, but occur regularly in capitalist energy provision.

The only part of the region that did not lose power was Quebec, which maintains a self-sufficient power system that was nationalised by the Quebecois government in the 1980s.

Ironically neoliberal advocates of privatisation, like the Ontario provincial government in Canada and New York state in the US, which both began deregulation in 1996, were forced to go crawling to the public generators in Quebec to plead to buy power. Hydro Quebec supplied power to those states, plus New England, as well as sending 50 generators to Ontario.

Despite the knowledge that the electricity system has long needed upgrading, the energy corporations' pursuit of profit resulted in investment being diverted from the transmission network, because it offers low returns. In contrast, over the last decade Hydro Quebec has spent C$2.2 billion on transmission network upgrades.

In addition, measures for overhauling the US grid have been held up in Congress as Bush holds out for a deal on oil drilling in the ecologically sensitive Arctic National Wildlife Refuge in Alaska.

Estimates of the economic cost of the blackout reach upwards of C$5 billion. This does not include the lost incomes of workers whose workplaces were closed or operated at reduced capacity.

Despite the fact that the Ontario provincial government declared a state of emergency and told only essential workers to report for work, the provincial Employment Standards Act does not oblige employers to pay workers who obeyed the request to stay home.

The blackout also alerted many people to the massive wastage of resources under capitalism. Many people were angered by the fact that on the first day after the power came back on, empty Bay Street (Canada's Wall Street) office towers were fully lit up. Numerous letters to the editor and calls to television and radio stations expressed anger over the use of energy to light up advertising signs and storefront displays. For the first time in a long time, there is a very critical public discussion in Canada around such wasteful practices.

Some long overdue recognition has also been given to environmentalists' calls for alternative energy sources and small-scale neighbourhood generators to replace energy megaprojects. A move to take control of power away from bosses and corporations and to develop community control is clearly necessary and will hopefully become a larger part of public discussion.

Most importantly, during the blackout there emerged a new level of community solidarity in working-class neighbourhoods across Toronto and other North American cities. Neighbours who had never so much as spoken to each other held apartment and street parties. People improvised and fed entire streets from food that might otherwise have spoiled. It was a glimpse of socialism from below that even mainstream commentators could not help but acknowledge.

From Green Left Weekly, September 3, 2003.

Visit the Green Left Weekly home page.

From GLW issue 552