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For Immediate Release

August 15, 2003

NATION’S ENERGY LEADERS ASLEEP AT THE SWITCH;
CAEM VINDICATED IN 2002 PREDICTION OF BLACKOUT

WASHINGTON, DC, AUGUST 15 —The blackout that crippled a third of the US and Canada was predicted by the Center for the Advancement of Energy Markets (CAEM).

In a 2002 report, CAEM foresaw “a major blackout [since the] laws of probability suggest that we are due for a reminder of how old our infrastructure is….” CAEM Predictions

“CAEM has been waving a red flag about the nation’s aging electric transmission infrastructure,” said Ken Malloy, CEO of CAEM, “and Thursday’s blackout is a vivid demonstration of its vulnerability and the need for policies that support infrastructure modernization.”

CAEM has put its money where its mouth is. We have sponsored two relevant major initiatives in the last year: the Grid Enhancement Study (focusing on technologies for upgrading existing infrastructure) and the Infrastructure, Investment, and Incentives Study (focusing on the need for investment in new infrastructure). As part of that second study, CAEM just released a survey of the industry’s opinion of DOE’s recommendations on electric transmission, continued Malloy.

The Four Horseman of the Apocalypse—California blackouts, Enron’s collapse, the meltdown of the trading sector, and now the blackout of a third of the US and Canada—over the last three years and the lack of a true and sustainable consensus on our energy future signify that the nation’s energy leaders have been asleep at the switch, Malloy stated.

There is plenty of blame to go around, Malloy observed. The lack of serious attention to problems of the nation’s energy infrastructure has been a bipartisan failure, obscured by fetishes with oil imports and climate change. Political leaders have used energy as a Christmas tree to hang their favorite ornaments—supply initiatives for Republicans and conservation and efficiency initiatives for Democrats—but exhibit no real understanding of the threat posed by stasis and uncertainty. Foundations and the larger think tanks have done virtually nothing to play their traditional role of being in the vanguard of issues that threaten society. Energy industry executives have been short-sighted, disorganized, and parochial. Consumer groups have been guilty of limited vision and obstructionism, Malloy indicated.

CAEM believes that long-term, sustainable, and effective solutions must adopt a more mature strategy focusing on five directions:

1. Policy:  We need tried and true policy prescriptions grounded in reliance on “right” prices and market reliance, not stale, self-interested, least common denominator proposals.
2. Strategy:  We need an action plan that supporters can follow, not a let-a-thousand-flowers-bloom approach.
3. Organization:  We need effective organizations similar to the type that exist in other reform strategies, such as the consumer and environmental movements.
4. Outreach:  We need a foundation of education, consensus building beyond the business-as-usual players, and credibility for those whose support is essential.
5. Funding:  We need a mechanism for pooling and deploying funding to accomplish the needed reforms.

“Winston Churchill said, ‘Success is moving from failure to failure with great enthusiasm.’ Let’s hope we don’t lose our enthusiasm,” said Malloy.

The Center for the Advancement of Energy Markets (CAEM pronounced KAY-EM) is an independent, nonprofit organization founded in 1999 to promote market-oriented solutions to the challenges that confront the energy industry, other network industries and the nation. CAEM is not a trade association, a consulting firm, or a lobbying group. It is a think tank developing intellectual capital for the movement towards new public policies and regulations, new business models, and new technologies driven by competitive energy markets. It established an affiliate in Canada in 2001. Ken Malloy is a founder and CEO or CAEM and was an official with FERC, USDOE, and the Illinois Commerce Commission for sixteen years and a law professor before government service.