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Blackouts Move Energy Issue to Front of Political News

Huge power fluctuations that forced transformers hundreds of miles apart to go offline were said to be the cause of the power outages across the northeastern United States Thursday.

Power brokers in Washington, however, were wondering why safeguards weren't in place to prevent the cascading effect that left 50 million people without electricity and Detroit and Cleveland without drinking water.

Security analysts have warned that the nation's power grid (search) is vulnerable to attack by terrorists, but other experts in recent years have said the system could collapse on its own because huge power demands were being met with 1950s technology.

David Cook, general counsel of the North American Electric Reliability Council (search), testified to Congress two years ago, "The question is not whether, but when, the next major failure of the grid will occur."

NAERC, founded in 1968, states on its Web site that its mission is to ensure that "the bulk of the electric system in North America is reliable, adequate and secure."

Despite August's congressional recess, the House Energy and Commerce Committee (search) announced plans for an investigation into the blackout.

"While deeply troubling, it is not especially surprising to me that there has been a failure of a major North American power grid," committee Chairman Billy Tauzin (search), R-La., said in a statement Friday. 

"Yesterday's massive blackouts — the worst in American history — highlight the critical need for Congress to enact a comprehensive national energy bill this year," he added. "We simply cannot afford to wait any longer. Our economy and our way of life are at stake."

Among those invited to testify were Energy Secretary Spencer Abraham (search), Federal Energy Regulatory Chairman Pat Wood, New York Governor George Pataki, New York City Mayor Michael Bloomberg and others.

From San Diego, President Bush promised a separate federal investigation into the outage.

"One of the things we'll have to do of course is take an assessment of why the cascade was so significant — why it was able to ripple so significantly throughout our system up East," he said. "That will be a very important part of the investigation, once we deal with the immediate."

Bush has proposed legislation to modernize and expand the national power grid, but his and other attempts have gotten mired in partisan politics.

Democrats argue more federal oversight is needed to prevent energy failures or spikes in prices. Republicans say deregulation would encourage more entrepreneurship, which would lead to grid modernization while preventing price increases because of competition.

The House passed an energy bill earlier this year. The Senate did so before it left for its August recess. Tauzin said he wants to get a bill to the president's desk by Thanksgiving.

Former Energy Secretary and New Mexico Gov. Bill Richardson told Fox News on Friday that while the energy bill appears mired in politics, the latest crisis provides an opportunity to get a bill completed.

"The Congress comes back in September. Pretty much the comprehensive energy legislation was pronounced dead before they left. Now is a chance to revive it. They still can do it before the end of the year," Richardson said.

The electricity industry is working through some major — and sometimes painful — changes, including deregulation. The regulatory scheme now allows energy companies to trade power all around the country, but the process of transmitting energy is highly regulated.

Critics say price controls prevent energy providers from modernizing the old transmission system, adding that regulations force investors to concentrating on markets instead of infrastructure.

"This is still just as heavily regulated and heavily controlled by governmental officials as it ever was — as it was in the '80s, the '70s, '60s and '50s," said Jerry Taylor, director of natural resource studies at the CATO Institute (search).

"The main reason why we don't have more transmission lines, the main reason, is because you can't make any money building it," he added. "It's such a heavily regulated system that until we provide some profit incentives for companies to put some money into it, they're not going to put money into it."

Michael Orzanian, Forbes magazine senior editor, told Fox News that the losers in the money chase would be taxpayers, particularly those in New York, which has been hardest hit since terrorist attacks and economic downturn two years ago.

"New York City has a very small cash reserve to handle this type of event, and obviously this is going to soak up a lot" of that, Orzanian said, suggesting that taxes could rise for garbage collection and other municipal services.

On the security front, the blackout is one of the first major tests for the Department of Homeland Security (search) since it started operations seven months ago.

Bush said the department did a good job of coordinating with state and local governments. One analyst told Fox News that the blackout was an useful test run for the department's emergency response system.

"I am hoping the Department of Homeland Security is going to use this power blackout as basically a real-world exercise to test how well their communications work, to see what improvements in communications and procedures need to be made," said John Pike, director of GlobalSecurity.org.

"The bad news is this is the sort of thing terrorists would like to do, where a small incident has implications for tens of millions of people," he added. "I think the good news about the blackout is that it demonstrates that the electrical infrastructure is robust, and even if it is damaged, it can be put back together on a time scale of hours or days."