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FOR IMMEDIATE RELEASE: August 10, 2004

NEW SCHUMER REPORT: ON 1 YEAR ANNIVERSARY OF BLACKOUT, U.S. REMAINS VULNERABLE TO ANOTHER POWER OUTAGE – NEW FED AGENCY NEEDED TO FIX GRID

Blackout of August 14, 2003 left 50 million stranded without power; New Schumer report shows that maintenance and communication issues still plague the electricity industry

To prevent future blackouts, Schumer calls for a new federal office to oversee and enforce strong reliability standards for the electricity grid; New agency would treat the grid as a public service similar to the federal highway system

One year after the blackout of August, 2003 which left 50 million Americans without power and brought New York’s economy to a halt, US Senator Charles E. Schumer today released a new report showing that the electricity grid remains woefully vulnerable to further blackouts. To address the nation's glaring electricity deficiencies, Schumer called for a new federal agency with the authority to develop and enforce reliability standards for the grid.

“Last year’s blackout put our security at risk and cost New Yorkers millions of dollars,” Schumer said. “Unfortunately, as the blackout revealed, since deregulation, the spirit of competition has outweighed the spirit of providing quality and reliable electricity. That’s now got to change. Millions of New York businesses and homes shouldn’t go without power because a computer crashes somewhere in Ohio.”

The US transmission grid forms a highway for electricity to travel between power plants and electricity consumers. Originally, the grid was developed to serve local utilities and their customers. However, as a result of industry deregulation which began in 1992, electricity now travels greater distances sharing many of the lines of the grid with other utilities, increasing the interdependence of the electricity industry and the potential for a blackout to spread quickly across the country as it did last year.

Schumer’s report finds that although transmissions across the grid have changed drastically, maintenance standards, communication and infrastructure investment have not kept pace, at the expense of reliability and quality of service. Overloaded electricity lines are now common and the industry has failed to invest in new infrastructure and technology to support the new demands. At the same time, the grid is not being maintained properly. According to GF Energy, over the last decade spending on maintenance such as tree trimming has decreased by 30% for the electric industry. In addition, the era of competition has decreased information sharing among the utilities, leaving the grid further vulnerable to a domino effect in the event of a blackout.

Schumer said today that these problems could be corrected with strict enforcement of industry standards. However, Schumer’s report finds that under the current system, there is no federal agency with that kind of authority, nor is there an agency that is qualified and equipped to take on such a responsibility. The Federal Energy Regulator Commission (FERC), which is the economic regulator of the energy industry, lacks the technical expertise. The North American Electric Reliability Council (NERC), a self-regulatory council comprised of utility interests, is too closely tied to the industry to lead this effort and compliance with NERC industry standards remains voluntary and unenforceable.

To fill in this regulatory gap, Schumer today called for a new federal office that would have both the authority and the expertise to ensure the viability and reliability of the transmission grid to prevent future blackouts. Schumer said that the office would treat the electricity grid as a public service and function similarly to the Department of Transportation in its oversight of the federal highway system. Under the interstate highway system, transportation and engineering experts at the USDOT oversee infrastructure investment and ensure that the highways are safe and well maintained. Under Schumer’s plan, the new office would provide similar management and oversight to the infrastructure that carries electricity. Specifically, the new office would be charged with the following: • Developing and enforcing all reliability standards.

• Coordinate and require open communication between all transmission and system operators as well as other participants in grid maintenance.

• Disseminating grid information throughout regional and national grid segments.

• Upgrade notification procedures and requirements between operators when problems exist

• Assist the industry with training of control room personnel and implementation of automated monitoring and other technology upgrades.

• Develop strategic plans for grid maintenance and investment.

• Conduct frequent audits of grid operators and assign performance-based ratings for the benefit of customers.

Schumer said that while there are other proposals to mandate compliance with industry standards, a new office with the expertise and the authority to ensure the necessary reforms are made by the industry would provide the type of enforcement necessary to prevent a blackout. "Last year's blackout made it very clear: We need an office with the authority and the know-how to improve the reliability of the grid," Schumer said. "This office is going to hold the utilities accountable for providing the quality service New Yorkers and all Americans deserve.”

Attached is the full Schumer report on the causes of the 2003 blackout and Schumer’s recommendations for increasing grid reliability.

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