Long overdue, the action by the U.S., Canadian, and Mexican governments will turn NERC into an organization almost like the mighty U.S. Securities and Exchange Commission, with the power to impose penalties on member companies that fail to abide by its rules. The action is especially significant in light of a U.S.­Canadian team's findings after the 2003 Northeast outages that NERC's policies and planning standards had been violated, and that mistakes already identified after the mid-1990s western North American blackouts had been repeated.

Since August 2003, NERC has established a multidisciplinary process involving experts from the regional reliability councils to assure that planning and operating standards are developed, or reexamined, and adhered to. The goal is to guarantee that imbalances of load and supply will be isolated faster after outages.

At the same time, in the last six to seven years, U.S. investor-owned power companies have boosted investment in electricity transmission infrastructure to US $4.6 billion in 2004 from $2.6 billion in 1999. Similar infrastructure investments are being made in other deregulated electricity markets around the world. Still, there is a long way to go.

Some of the blame for grid maladies must be placed on the deregulation of the electric power industry. Utility industry restructuring has led to an unbundling of generation, transmission, and distribution activities, with coordination of systems put in the hands of entities called Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs).

Deregulation erred, however, by freeing only the price of energy while continuing to fix the price a company could charge for the use of its transmission infrastructure. By encouraging companies to trade masses of power over long distances and to build new generators, the law increased demand for transmission systems but did little to enhance the grid to handle the increased energy flows. Carrying capacity did not keep up with needs, as power companies lacked the means of recovering investments in grid expansion. The risk of grid breakdowns caused by "normal" accidents increased accordingly [see photo, "Operating at the Edge"].

More than 50 million people learned this lesson the hard way in August 2003, when a chain of seemingly preventable electrical events crashed the northeastern grid, darkening millions of customers' homes and businesses in the United States and Canada. The first event—though as Perrow would maintain, not the cause—was a failure in vegetation management: an Ohio power company did not keep up with its tree trimming, allowing highly loaded transmission lines to sag into the branches and short out, causing heavy power surges in other lines. The company's monitoring equipment wasn't working properly, and so it was unaware of the escalating crisis. Even after the stress on the grid was identified, rather than attempt to isolate the problem by shutting down local service, the decision was made to ride through the escalating crisis. Prudent operating guidelines—and indeed recommended NERC procedures—would have required the affected part of the system to be "islanded," that is to say, electrically isolated.

The sequence of outages that had led to the violent power surges were not anticipated on that historical August day, and the interconnected system load was much higher than the remaining grid could withstand. Power transfers from a distance ensued, overstressing neighboring grids, sparking a cascade of failures that blasted critical nodes like firecrackers on a string.

The sequence of "normal" events that led to the August 2003 blackout is far from unique. In fact, such sequences seem to be getting more frequent. In recent years, wide-area outages have affected upward of 140 million customers worldwide. Blackouts not caused by natural calamity have also struck Australia, Croatia, Denmark, England, Greece, India, Italy, New Zealand, Russia, and Sweden [see graph, "Bigger and Increasingly Severe Blackouts"].