The debt crisis in Greece demonstrates that the greatest threat to the power grid that supplies our homes, vehicles and businesses with electricity could be simple economics.
Utilities and other energy suppliers could shut down because they run out of money, leading to blackouts or at a minimum “brownouts.”
Greece’s electric grid almost shut down in June 2012 when the nation’s natural gas company, DEPA, sent electric utilities what amounted to a disconnect notice. DEPA threatened to turn the gas to power plants off because electric companies had not paid their bills. DEPA sent the notice out because it did not have enough money to pay its suppliers, a Turkish pipeline operator and the Russian company Gazprom.
Greek utilities, including DEPA, went begging to banks for loans to cover hundreds of millions of dollars in unpaid bills, Reuters reported. DEPA alone owed its suppliers $164.11 million and the Greek electric company LGHE owed $383 million.
“DEPA is in negotiations with a consortium of Greek banks for a loan that will allow it to service its obligations for at least a month, until early July,” an unidentified official told Reuters in 2012.
The nation avoided a catastrophe in 2012 by agreeing to harsh austerity measures that made its problems worse. Now that Greeks have voted to reject austerity, their prime minister, Alexis Tsipras, could go begging to Moscow for natural gas — Russia supplies 65 percent of Greece’s gas. But Russia is in desperate need of cash as well.
It Could Happen Here
Americans who think such a catastrophe could not happen in the United States are mistaken. America’s debt-per-capita is far higher than that of Greece — $58,604 per person in the US compared to Greece’s $38,444.
Additionally, privately held US utilities can and have gone bankrupt. The Houston Chronicle reported that Energy Future Holdings Corp, or EFH, which supplied electricity to 140 cities and 1.7 million customers in Texas, declared bankruptcy in April 2014.
“This is a deregulated situation,” consumer advocate Carol Biedrzycki said of Energy Future and its subsidiaries, TXU Energy and Oncor. “What happens to these customers’ contracts?”
Biedrzycki feared that Texans’ electricity bills could greatly increase because of the bankruptcy. One problem in such a situation is that a bankruptcy court judge could simply order the company to raise rates to repay vendors or creditors.
Another US giant, utility Pacific Gas & Electric (PG&E), declared bankruptcy on April 7, 2001, after it was revealed that the utility was $9 billion in debt.
Do you believe a debt crisis could impact the power grid? Could American experience a Greece-type crisis? Share your thoughts in the section below: