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Fight the Power (Companies)!

On August 14th, 2003, while George Bush was on a fundraising trip in California, the lights went out on the east coast. When they came back on, I decided to try and figure out who was responsible for the chaos that ensued. Initial reports from CNN stated that the Niagara Mohawk power grid had failed due to “an act of God.” Much of its failure can be blamed on two men as well. Their names are William E. Davis and Rick Sergel.

In January 2002, a British company called National Grid merged with regional power provider Niagara Mohawk. A little over a year later, National Grid “announced the retirement of [Niagara Mohawk] Chairman William E. Davis.” National Grid’s President and CEO Rick Sergel is quoted on the company website as saying that “With his commitment to assist the companies during the transition now complete, Bill has decided that this is the right time for him to retire.” Davis’ “assistance” came in the form of massive layoffs at Niagara Mohawk, setting up Niagara Mohawk shareholders with an inflated stock price around the time of the National Grid merger.

After National Grid assumed control of the Niagara Mohawk power grid, they apparently decided to make it even more “cost efficient,” and we got a blackout in return. In the deregulated market, the main concern for companies like National Grid is profit, even at the expense of service and quality. In fact, National Grid made $1.25 billion dollars in profit in 2002 according to their Annual Report (up $135.2 million from the previous year), but lowered their operating expenses by $200 million dollars from 2001, to $505 million (their lowest in five years, even before the acquisition of Niagara Mohawk). After all, who else’s electricity distribution infrastructure are you going to use? The Niagara Mohawk website lauds the merger in crypto-economic terms: “National Grid’s 11 years of experience in operating a transmission system in a deregulated environment gives it a unique market advantage.”

That unique market advantage is a monopoly. Despite National Grid’s claim that “Our transmission and distribution businesses are efficiently and effectively operated to assure a reliable, constant, high-quality supply of power to our customers,” August 14th proved that assertion entirely inaccurate. Wonder why the phones weren’t working that day? National Grid owns that infrastructure too. Again, straight from the company’s website: “we have a subsidiary in the U.S. that is engaged in the non-rate-regulated business of construction and leasing of telecommunications infrastructure.” Can you hear me now?

This is the inherent danger in the kind of corporate resource consolidation the Bush oligarchy seems so eager to see become the industry standard. According to the details of the merger on Niagara Mohawk’s website, “As National Grid’s third and largest acquisition in the U.S., Niagara Mohawk will double the size of National Grid USA.” Give one company the keys to the kingdom, and a little mistake like over-juicing a few power lines becomes a catastrophe that can only be measured in biblical proportion. Lucky for us, Rick Sergel, the aforementioned President and CEO of National Grid, was appointed in 2002 to the Department of Energy Transmission Grid Solutions Subcommittee by Secretary of Energy Spencer “Deregulation Is Working” Abraham. Sergel’s appointment was no doubt a reward for National Grid’s major contributions to the Republican cause, which included heavy donations to block Campaign Finance Reform ballot initiatives in California and Massachusetts that same year. Apparently, the more money they spend on buying politicians, the less they have to spend on maintaining the power grid.

MICHAEL KIMAID teaches history at Bowling Green State Unversity in Ohio. He can be reached at: mkimaid@bgnet.bgsu.edu

 

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