North American Network Operators Group|
Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical
Re: East Coast outage?
Let me add yet another $0.02 worth, weighing in on the side defending the electric power industry. Let's take a very high level economic point of view. Should oodles of money be spent improving the power generation and transmission grid? Suppose that the current system were judged likely to produce blackouts such as this past week's about once every 10 years. How much does that cost the economy? To be extremely conservative, suppose that an entire day's production is completely lost. Well, in a $10 trillion economy with about 250 working days in a year, that comes to a loss of $40 billion. But if that happens just once every 10 years, the annual cost is only $4 billion. Hence before calling for giant new construction programs, make sure they will not cost more than $4 billion per year. In fact, the $4 billion per year figure is a gross overestimate. Short disruptions such as blackouts appear to have practically no effect on the measureable output of the economy. This is one of those mysteries that economists have not fully explained. However, it is well tested, since we have had a number of snowstorms that paralyzed large parts of the country for a day or two, and in every case, while there were month-to-month variations, on an annual basis the economy simply continued chugging along. (Hurricanes that did a lot of property damage, and long-lasting if minor depressants of economic activity such as SARS tend to do much more to lower economic output.) There is a lot of resiliency in the economy. It does have costs (the economic activity that is lost because of the disruption is made up later, presumably at a cost in longer working hours, etc.,), but those are hard to measure. Hence the true economic cost of suffering a blackout once every 10 years is probably more like $400 million per year. That does not buy much generating capacity or transmission lines. Now we simply will have to build more power plants and transmission lines, since electricity demand is rising. However, this costs much more money than putting down fiber, and causes much more political opposition. Given these constraints, the electric power industry appears to be doing an excellent job. Andrew Odlyzko