Regulation-Haters Spreading More Lies

We don’t yet know the precise cause of the blackout, and perhaps we never will. But we now can say with certainty what we may only have suspected before: The people running our government and our energy industry believe that Americans are fools, because otherwise they wouldn’t dare to conduct politics and business as they do.

For many years, the conservative cant promoted by the energy corporations is that deregulation can relieve any shortages, reduce rising pressure on prices, deliver decent service to everyone, and secure the national energy supply in times of crisis. This might be termed the “Texas ideology,” which is well represented in Washington not only by the usual lobbyists, but at the highest fulcrums of power. Politicians from Houston run both the White House and the Congress-and their notion of the best way to produce and market energy was symbolized, until not so long ago, by their friends, neighbors and contributors at Enron.

While Kenneth (Kenny Boy) Lay may no longer be in a position to raise money and conceive policy for George W. Bush and Tom DeLay, other influential executives remain eager to fulfill his role. Among them was Anthony J. Alexander of Ohio’s First Energy Corp., the firm whose failing transmission lines near Lake Erie seems to have kicked off the blackout. As a deregulation enthusiast and loyal Republican, Mr. Alexander raised more than $100,000 for the Bush-Cheney campaign in 2000, thus earning distinction as a “Bush Pioneer.”

All of the hundred or so checks delivered from First Energy’s donors to the G.O.P.’s accounts were marked with an “industry code”-and in due course, the grateful recipients of the company’s largesse appointed Mr. Alexander to the Bush administration’s Energy Transition Team. (That favor must have been particularly gratifying to him, since the departing Clinton administration had sued First Energy for violating the Clean Air Act.) Whether he also showed up as an adviser to Vice President Dick Cheney’s Energy Task Force remains a mystery, since the administration still refuses to disclose any of the task force’s documents. But public records show that First Energy’s executives and political-action committee have given about $2 million to (mainly Republican) politicians since 1999.

Freed from lots of dreary old regulations, First Energy has been on an expansion spree, buying up other companies in an attempt to seize control of electricity markets in the Northeast. More basic corporate responsibilities got less attention, and the neglect appears to have nearly caused a serious radiation leak from the company’s Davis-Besse nuclear-power plant in Ohio. For the company that bought up General Public Utilities, the former owner of the notorious Three Mile Island, the failure to properly maintain another nuclear plant is an egregious mistake, to say the least.

Financial analysts are as unimpressed with First Energy’s performance as environmentalists and consumers (who got the first taste of a blackout over the July 4 weekend). “Having come less than an inch from potential radiation leakage from Davis-Besse, they’ve now succeeded in blacking out eastern North America, a much more impressive feat,” remarked Credit Sights, a bond-analysis firm, in a report quoted by The New York Times.

With a corporate record like that, raising electric rates or executive compensation would scarcely seem to be the first item on the agenda-except, of course, in the minds of the company’s management, which has tried to do both. What prevents any such outrage from occurring, for the moment, is that state officials in New Jersey and Ohio must still approve rate increases, which they’re in no mood to do.

At this point, an alert citizen might have noticed that the wonders of the deregulated market in energy have yet to become manifest. That alert citizen might also have noticed that deregulation has led to a few rather costly dislocations. Enron’s rise and sudden demise created a catastrophe that radiated outward from Houston to wreak tremendous damage in the energy and financial markets. California’s manipulated energy “crisis” in the winter of 2001 leeched $70 billion from the state, caused severe economic damage, and plunged its politics into their present clownish disarray.

And last week that same thoughtful citizen, plunged abruptly into darkness, had time to contemplate the fact that deregulation exacerbates the corporate tendency to neglect unprofitable yet utterly essential infrastructure-including power transmission lines and facilities. If the citizen were of a certain age, he or she might dimly remember how the nation’s economy grew for decades with regulated utilities (and some that were even owned by the public-like the Los Angeles power plants that continued to supply electricity even during the blackouts).

The restoration of power meant the return of the mass media, with the voices of politicians and experts insisting that deregulation is and always will be the best policy-no matter what might have happened in California, Houston and everywhere between Detroit and Manhattan. They utter that sizable falsehood with the assurance of a con man who knows his rubes.