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Transcript: Energy Secretary Spencer Abraham on 'Fox News Sunday'

The following is a transcribed excerpt from "Fox News Sunday," Aug. 17, 2003

SNOW: It was the largest electrical blackout ever. In the span of just nine seconds 50 million people scattered across eight states and two nations lost power. The economic toll could reach $5 billion. The costs in New York City alone could reach $1 billion. What went wrong? How can we prevent a recurrence?

Joining us, Energy Secretary Spencer Abraham. Also here, Brit Hume, Washington managing editor of Fox News.

Secretary Abraham, let me begin by playing for you a quote by Bill Richardson, your predecessor as energy secretary, sizing up what he believes is a problem right now.

(BEGIN VIDEO CLIP)

BILL RICHARDSON, FORMER ENERGY SECRETARY: This issue, which for years provided yawns in the Congress, mandatory reliability standards, invest in new transmission lines, make our grid more modern. The problem is, we're a superpower with a third world grid.

(END VIDEO CLIP)

SNOW: Is he right?

ABRAHAM: Well, anybody who's had my job I think would reach a conclusion like the one that you just heard. The grid is old. It's aging. And the growth in electricity demand is tremendous. And we're not keeping up with it. And that's why we've been pushing for energy legislation. The bills that both the House and the Senate have passed would address these issues. We've just got to get the job done now. We've been pushing for it for two and a half years, and I hope we'll finish the job soon.

SNOW: Speaking of which, Vice President Dick Cheney a little more than two years ago delivered a speech shortly after he put together his energy proposal. Here is one of the key quotes out of that. He said: "One of the concerns, obviously, is the aging power grid and the growing problem that we have in getting electricity from the power plant to a light switch." "It is clear," he says, "that we must upgrade and expand the power grid. If we put more connections in place, we'll go a long way toward avoiding future blackouts." What has the administration done in the last two years to make more transmission capacity available?

ABRAHAM: We've been doing the things you can do without Congress acting, that is we've done a national grid study, we've identified the corridors where we need more transmission. We've been working with the states to upgrade and improve the identification of new technology. we've invested more than 50 percent increase in our budget on research, but for the incentives to be put in place, for the reliability to be there, Congress has to act. We've called for that in our energy plan.

Interestingly, you know, we were criticized for asking for more federal authority in this area, for more production and transmission. Now it turns out that was exactly what was needed.

SNOW: Let's talk about one key sticking point, which is the fact that the Federal Energy Regulatory Commission, FERC, sets the amount of profit that people can make transmitting electricity. It's a bizarre system. You have people who generate electricity. They make money. Then somebody else transmits it, and you have distribution also fractured. There is no money in transmission because FERC has set a very low profit level.

Now, administratively, the administration can change that, could it not?

ABRAHAM: Well, FERC is an independent entity that has to make those decisions, but one thing is clear. If we pass energy legislation, the bills that are before the Congress would included requirements that FERC put incentives in place, and also open up the competition, so more people could get engaged in the building of transmission, there would be more open access, more opportunities.

HUME: What failed here, was it our transmission grid, the line that failed? Were there transmission lines that failed, or was it a power plant that failed? And how does this actual relate to this problem of aging transmission facilities?

ABRAHAM: Well, that's what we must now address. The first challenge we had was getting the system back and operating to provide power to people who needed it. The president, Prime Minister Chretien of Canada have designated myself and my Canadian counterpart, their energy secretary, to head up a joint task force to both investigate, determine what caused it, why did it cascade, and what do we need to do to make sure it doesn't happen in the future.

(CROSSTALK)

HUME: ... with certainty here, sir, and others are as well, that we need to upgrade the transmission facilities, and you've been trying to do that.

ABRAHAM: Right.

HUME: But you're not yet sure that there was a failure in the transmission facilities, are you?

ABRAHAM: Well, here's the bottom line. Regardless of whether the problem was related to the transmission operations, we need more transmission capability.

HUME: Right, but you can't — but it isn't clear, however, that if you had more transmission capability, this particular thing would have been avoided. Or is it?

ABRAHAM: No. What's clear is that if we don't have an upgraded transmission system, we're going to have more problems like this, because there will be inadequate capability to deliver power in the future. Whether that was specifically what caused this outage remains to be determined.

HUME: Well, what does it look like so far? What do you know so far?

ABRAHAM: It is too early to tell that aspect. That's why we've put together...

HUME: Well, I'm not asking for your final conclusion. I'm just asking what it looks like so far.

ABRAHAM: We've sent today, we're sending teams of investigators into the field all over the regions that were affected. We've got hundreds of thousands of miles of transmission lines that need to be explored, substations, and it's too early to answer that.

SNOW: Is it safe to say that the system was supposed to stop this cascade...

ABRAHAM: Right.

SNOW: ... before (UNINTELLIGIBLE).

ABRAHAM: Right.

SNOW: So system failed.

ABRAHAM: Yes, clearly there was a breakdown in a system that should have had a fail/safe stoppage.

(CROSSTALK)

ABRAHAM: We don't know where that happened yet and why.

SNOW: Is it possible that the thing responsible was a human being who failed to notice that there was a problem and did not flick the appropriate switch?

ABRAHAM: Look, I am not going to speculate as to whether it was a human error, or was it a mechanical error, but what I will commit to is this: our task force will be very, very robust in its efforts. We're going to get to the solution as quickly as we can. We can't allow it to linger long, and we need to address it. If there is a problem that needs to be addressed further, than we'll correct it.

HUME: What about FERC? If FERC is not allowing a profit margin attractive enough to get transmission, new transmission facilities built or give people the incentive to do so, you say FERC is independent...

ABRAHAM: Right.

HUME: But is the administration in a position where it can urge FERC to act, replace members of the commission, what?

ABRAHAM: Well, certainly we can and we have. And that's why we've been pushing for energy legislation that would in fact set in place the kinds of incentives needed for more transmission.

HUME: So you have to in effect overrule FERC.

ABRAHAM: We really need the Congress to finish the job here. The president's energy plan had 105 recommendations; we've implemented about 90 of them through the executive branch, but the rest require Congress.

SNOW: All right. One of the things that is under debate is whether to set up something called a Regional Transmission organization, that is organizations that are responsible for making sure that the kind of thing that happened last week does not happen. The administration, according to today's "Washington Post," wants to agree to a three-year moratorium, not because it believes it's a bad idea, but because of political pressure from utilities and other interest groups, principally in the northwest and the southeast.

ABRAHAM: Well, you've actually mischaracterized what the standard market design component of the legislation is versus what would have addressed problems or reliability in transmission...

HUME: Wow, wow, wow, I'm lost.

SNOW: Yeah.

(CROSSTALK)

HUME: You're saying we mischaracterized what the measure would do?

ABRAHAM: Right. The measure he's talking about goes to the question of whether or not we would mandate and force down the throats of regional areas of the country a federal approach to deregulation of the marketplace. What we need to address the power outage problems are first mandatory reliability standards, in other words behavior standards that can be enforced, and more transmission, and these two are not the same. And we believe that to get the mandatory reliability standards and the transmission incentives in place is important enough to allow for a slower process on the regulation process.

SNOW: So what you're saying is that those changes in and of themselves will guarantee Americans that they're going to have the energy they need without interruption (UNINTELLIGIBLE).

ABRAHAM: They would substantially increase our ability to get to that point.

SNOW: A lot of folks now come to the recognition that this could be a national problem. You've got three large grids, they're interconnected and they can have impact on one another.

ABRAHAM: They're not interconnected.

SNOW: Do they not have connections with one another?

ABRAHAM: No, no.

SNOW: ... fully integrated, so they're completely isolated?

ABRAHAM: No, we're a country with three separate, non-connected grids. One in the east, one in the west, one basically...

HUME: If you say they're not connected at all, they're not fully interconnected.

ABRAHAM: No, they're not connected.

SNOW: OK, well...

HUME: So in other words, power from the west cannot flow to the east.

ABRAHAM: Correct. They can flow back and forth across the borders, north and south, and therefore through...

HUME: Canada (UNINTELLIGIBLE).

ABRAHAM: But when we had California blackouts a couple of years ago, we could not ship surplus power from the eastern part of the United States to the west to try to make sure there weren't blackouts.

SNOW: This still gets to the point I wanted to raise, which is it's a national problem. Why should not the federal government step in and say, look, everybody has to play along here?

ABRAHAM: Well, we are doing that. That is why we have proposed legislation that would open access to the grid to everybody, that would allow people to prevent others from being on the grid, why we are supporting incentives that would bring more investment into new transmission and generation, why we believe there need to be mandatory reliability standards. we're for all of those things. And we're not opposed to an approach that would more toward regional, better regional governance, but that's a separate set of issues.

SNOW: What is going on right now politically, as a number of Democrats are saying, there are some things here that are deal killers. Among the deal killers is the Arctic National Wildlife Refuge. Is the administration willing to say at this point, look, the changes that you're talking about right now are so compelling and of such national interest at this point that the president will be willing to set aside his desire to open up the Arctic National Wildlife Refuge to oil drilling?

ABRAHAM: Well, we're at a point now where we're going to work closely with the House and Senate conference, trying to produce a bill that accomplishes as many of our objectives as possible. We would like the ability to drill for more oil in America, including the arctic reserve, and it's premature to decide...

SNOW: So the president won't deal here?

ABRAHAM: It's premature to decide how we will — how we will come down until the bill has been fully discussed.

SNOW: All right. Secretary of Energy Spencer Abraham, thanks for joining us.