Interpreting the East Coast Blackout
THE BLACKOUT -- LIGHT DAWNS!
We are pleased to welcome a new writer, Catherine Orloff.
by Catherine OrloffAfter the massive power blackout of August 14-15, a crucial question is WHY this country's electric infrastructure has deteriorated so? Surprise -- part of the answer has to do with land -- the land where new power lines need to go! Energy experts have been warning for years that upgrades to the transmission grid are needed, but "property holders" were at the top of the list of hurdles to these upgrades.
An 8/16/03 Associated Press report stated, "In a typical example of the conundrums, utilities were loath to build new capacity in Connecticut's Fairfield Country, because of high property costs, said Joel Rinebold, director of the Institute for Sustainable Energy at Eastern Connecticut State University." ("Electricity Experts Warned of Need to Update Grid", Providence Journal, 8/16/03, p. A-9)
True, there are also environmental, health, and asethetic concerns regarding the siting of these lines; but while such issues are debated, land values continue to rise. And some solutions do exist, for example, underground power lines. But land must also be taken to put the lines underground! These full takings and easement takings can be prohibitive, especially in and around cities where land values are high. Land price is once again THE fundamental problem, and undertaxed land values cause it.
Also to be remembered is that U.S. electricity is largely generated and distributed by private monopoly companies, many of them huge. Early 20th century Georgists shouted warnings of the unbridled economic power and greed of the "natural monopoly" utilities, and Henry George himself had recommended that they be owned and operated by government (the takeover to be effected without compensation for publicly-created rights-of-way, the bulk of utility companies' value).
But utility muscle, at least political muscle, still seems with us, as evident from the fact that, after the 1977 blackout that left New York City dark for 25 hours, in response to lawsuits, New York's highest Court of Appeals held that the defendant, Consolidated Edison, "cannot be held liable for interruption of service due to the ordinary negligence of its agents and employees." Rather, plaintiffs had to prove either willful misconduct or "gross negligence", which means the failure fo exercise even slight care! What small business in this country enjoys such legal immunity, especially when breakdowns/blackouts can so clearly threaten lives?
But today public awareness of monopoly power is dim, and state and federal regulators sit in largely empty hearing rooms to grant rate increase after rate increase -- never as much as the utilities ask, mind you, for that would make the situation a little too clear. Now even President Bush has called the blackout a "wakeup call" to modernize the nation's power-sharing system, and has said "we will respond." This is scary. Look for piteous calls from the energy industry for federal "assistance" (read "dollars") to deal with this "massive crisis."
Bush should have said, "The electric utilities have failed to upgrade their lines, and the public has suffered massively for it. There is a huge terrorist risk as well. The utilities have one year to complete the required modernization; otherwise I will be calling for their takeover by the federal government. We'll pay them for the (depreciated) value of the wood poles and metal wires, and that's it. Meanwhile I'm calling on Congress to institute an immediate 50% federal land value tax, so that utilities will be able to afford the land to site new lines."
Wouldn't that be shocking?
Catherine Orloff, former director of the Henry George School of Northern California, was a residential and commercial real estate appraiser for more than ten years. She writes on land issues.
Copyright 2003 by Catherine Orloff. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Catherine Orloff and The Progress Report.
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