Thanks to a state ban on competition among utilities, the manner in which electricity is provided hasn't changed for 100 years. Enormous power plants in remote locations generate the juice, which is then transported hundreds of miles on transmission towers and distribution poles on its way to homes and businesses. It's a long and tenuous supply chain, which makes it leaky and vulnerable. The blackout that darkened the Northeast in 2003 was caused by a tree branch in Ohio.
Engineers have developed small-scale generation technologies (micro-nuclear power plants, mini-gas turbines, solar panels and the like) that can dramatically shorten the distance from generation to end-use. These technologies could make the grid more reliable and eliminate the need for eyesore transmission towers. This can't happen right now, however, because state regulators allow only one provider of electricity in each service area keeping the energy industry locked into the old energy generation model.
If Congress were serious about addressing the problem of America's outdated grid, it would encourage states to dismantle the barriers to energy competition. Instead, it is pushing smart-grid subsidies to further entrench the electric industry's broken regulatory regime by funneling billions of dollars through monopolistic utilities and their bureaucratic benefactors in local government. These subsidies will simply prop up a broken and ossified system.
Example: I attended a lecture yesterday by Deepwater Wind. They're a group of entrepreneurs and investors who want to put in an off-shore wind farm south of Rhode Island's Block Island. DWW is answering the call of Rhode Island politicians to provide all residential power through renewable resources (20% of all RI power by 2020). They're doing it with little or no subsidies at all.

The engineering is pretty straightforward. Take a 3.5 MW wind turbine, technology that's been around for a decade or so now, and stick it on top of a modified version of an offshore oil platform that Americans have been building for a half-century. Since this project is further offshore, it's unlikely (though certainly possible) to suffer from Nantucket's Cape Wind NIMBY problem.
The three biggest roadblocks to such a worthwhile and environmentally-friendly project are federal environmental permitting, state land use and environmental agencies (google "SAMP"), and the state government-run power purchase monopolies agreements described in the article.
Big government isn't the solution to green power, my friends. Green power is chomping at the bit, but government refuses to ease its grip on the grid.
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