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LIVE FROM THE HEADLINES

Interview With Patrick Wood

Aired August 15, 2003 - 20:24   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, CNN ANCHOR: The blackout dramatically highlights what many call the sad shape of the U.S. power grid.
CNN's Kathleen Koch has the story from Washington.

(BEGIN VIDEOTAPE)

KATHLEEN KOCH, CNN CORRESPONDENT (voice-over): Fifty years ago, plants generated power for a local area. Today they pump electricity clear across the country over lines that weren't built to handle that much power.

LLEWELLYN KING, PUBLISHER, "ENERGY DAILY": Suddenly, these (unintelligible) became very, very, very stressed and they remain stressed but they're inadequate for the amount of power that is being moved and they don't have any new technology in them.

KOCH: Deregulation opened the flood gates and power companies now facing increased competition are loathe to spend on infrastructure improvements like updated transmission lines. Rising natural gas prices have even made power plants using that clean fuel risky investments.

JAMES LEWIS, ENERGY POLICY ANALYST: You find yourself in a position where it's harder and harder to make money and, in fact, you aren't even sure about the supply of natural gas.

KOCH: Finally, new power lines and plants are tough to build. No one wants them in their backyard and there are no guarantees the power they generate will stay local.

(on camera): Congress and the power industry say nothing will change unless the federal government steps in.

THOMAS KUHN, EDISON ELECTRIC INSTITUTE: Well, I think you have to have incentives for investment in the transmission system and in generating plants.

UNIDENTIFIED MALE: The free market does not work for electricity transmission reliability. Only the government can mandate a national standard which protects the strongest, the most anticipatory states and systems from the weakest laggards that refuse to make the investment.

KOCH (voice-over): President Bush is backing power investment and research in his energy plan but officials insist... UNIDENTIFIED MALE: There's a lot more that can be done but the private sector principally has to be able to step up to the plate, know they're going to get a return on their investment.

KOCH: So, blackout concerns remain. The latest assessment from the North American Electric Liability Council prophetically said potential trouble spots this summer were southwestern Connecticut, New York City and Long Island, and that it had concerns about Ontario and Michigan. It's also worried about Wisconsin, California, and states in the western and southeastern grids, all vulnerabilities in a power grid showing its age.

Kathleen Koch, CNN, Washington.

(END VIDEOTAPE)

BLITZER: For more on the problems facing the U.S. power grid, I'm joined by Patrick Wood. He's the chairman of the Federal Energy Regulatory Commission. He's joining us tonight from Beaumont, Texas. Mr. Chairman, thanks very much for joining us. The former Energy Secretary Bill Richardson says for the world's only super power we have a third world power grid, is that true?

PATRICK WOOD, FERC: No, we've got a first world power grid but it's pushing its edge and I think while that may be a bit of an extreme statement it does point to the fact that we are pretty under invested in transmission grid in many parts of this country.

BLITZER: The president today called it an antiquated system. What immediately needs to be done to make sure we don't have these kinds of power blackouts again?

WOOD: Well, he said it two years ago in the energy plan that we've been trying to implement for the past two years. As one of your previous reports just said a lot of this investment, however, depends on the private sector to come in with the proper incentives from folks, and my job, regulators to come in and get the necessary investment in the power lines and the power plants.

I think unfortunately that's a longer term proposition. A lot of power plants have been built so I think the response to the California energy crisis two years ago that people began to feel we were running short of power plants.

There has been a pretty good response to that in almost all parts of the country but we've got to make sure that those power plants are well connected with a well regulated and reliable and dependable grid and it is not at that level yet. Those investments do take years to implement.

BLITZER: Usually when we have a power shortage or a power blackout we get some warning. There are brownouts and other shortages. This time all of a sudden it just went dead. Do you have a handle at all on what happened?

WOOD: That's a great question. To answer specifically we do not have a handle on exactly what happened. I was, just before we got on, looking at a chronology of events from 2:00 in the afternoon to 3:15 yesterday and I think as we finish the forensic analysis of what transpired with the grid around the Great Lakes yesterday we'll figure that out.

But, it is a different type of event than your normal brownouts. Even the California power outages a couple years ago you knew you were running out of generated power and so basically, it's like a train coming up to a car in the crosswalk, you see it coming, you start to put on the brakes and you have time to slow down perhaps and get the people out of the car.

Here you come around the corner and, boom. That does point toward it looking like it may have been a transmission issue or something different than what we've seen with the brownouts and the blackouts that we've seen in the past several years elsewhere.

BLITZER: Chairman Wood it was good of you to join us. Thanks very much. Good luck in this investigation. Let's hope it doesn't happen again.

WOOD: You bet, Wolf, thank you.

BLITZER: Thank you very much.

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