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Lou Dobbs Tonight

Power Starts to Come Back in NYC

Aired August 15, 2003 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JAN HOPKINS, GUEST HOST: I'm Jan Hopkins in Times Square, New York. I'm in for Lou Dobbs. We are waiting for a live press conference from New York's mayor, Michael Bloomberg. It will happen at some point this hour, and we will go to that live.
After almost 26 hours after 50 million people found out just how much they depend on electricity, many are back on line. Many others face one more night without lights, TV or air-conditioners, and some face more than one. Here in New York, candles in beer bottles filled in for fluorescent tubes. But at least parts of the five boroughs are back up well before noon today. More are coming back all the time, including CNN's bureau at 5 Penn Plaza. Still, officials warn that all of us should not splurge, lest we crash the system again.

Last night, the city that never sleeps actually did -- in airports, train stations, hotel lobbies and on sidewalks. Tonight, many planes and trains are moving again -- certainly, not all, though -- and many visitors can actually get access to the rooms that they've reserved. They weren't able to do that yesterday because of the power outage.

Don't judge Wall Street by the numbers. What looks like a slow, dull session even for August, it is, under the circumstances, a grand achievement. The power flickered back to the New York Stock Exchange before the opening bell. The exchange does have a reserve power system.

Joining me now with more of the day's developments, my colleagues, Deborah Feyerick at Penn Station, Suzanne Malveaux -- she's traveling with President Bush in California -- and Christine Romans is at the New York Stock Exchange.

But in the meantime, we have some breaking news on what actually may have caused this power outage. Let's go to Atlanta and Fredricka Whitfield.

FREDRICKA WHITFIELD, CNN ANCHOR: All right. Thanks very much, Jan.

Well, as the lights continue to flicker back on in New York now -- about 75 percent of Con Edison customers now with power -- folks are seeing the same thing happen slowly but surely in seven other states and parts of Canada. That's how far this blackout extended. Cleveland, Ohio, not only lost power but drinking water. With the power out, the electric pumps that distribute water from Lake Erie failed. So the National Guard has been delivering fresh water. Michigan's governor has declared a state of emergency in Detroit. The blackout forced most service stations there to shut down, as well. A lot of cars in the nation's auto capital are now parked on empty. Even emergency vehicles are running out of gas.

Next door, about 60 percent of the power is back on in the province of Ontario. Folks there are being urged to conserve what little they have. Neighboring Quebec is sending over what extra electricity it has, about 1,000 megawatts so far.

New developments now have come to light in the investigation of this massive blackout. It looks like the loss of a power line at 3:00 o'clock yesterday afternoon in Cleveland may have started the long, cascading, dark chain of events. CNN's homeland security correspondent, Jeanne Meserve, joins us now from Washington with the power details. And why is this the feeling, Jeanne?

JEANNE MESERVE, CNN CORRESPONDENT: Well, the investigation, Fredricka, is making some headway here. Michael Gent (ph) of the north American Electric Reliability Council -- that's the group that's heading up the investigation -- says they've been poring over logs, and he says the first recorded event they found was the loss of a 345,000-volt transmission line near Cleveland, Ohio. They do not know what happened to that line, why it went down, and they do not yet know what happened in the next hour. You'll remember that it wasn't until after 4:00 that the cascading blackouts actually began.

This line near Cleveland is one of about 50 that feed into what is called the Lake Erie loop. It takes power from plants on both the U.S. and Canadian sides of Lake Erie and moves it from Buffalo to Cleveland, on to Detroit, up into Canada, and then back to Buffalo. Gent says it has caused problems for some time. He describes it as heavily loaded and heavily used. Others have just called it antiquated. Investigators had already determined that power pushing back and forth around that loop had pulled plants and transmission lines out of commission shortly after 4:00 yesterday.

We have an animation that shows you what that looked like. If you look at this and keep track of those pulsing red circles, they show you how, in the first minute, four power plants went down. In the next minute, two went down. The minute after that, two went down. And so on and so forth. This animation, by the way, provided by Genscape, a company that monitors power plant output for energy traders.

This cascading, as it's called, is not supposed to happen. The system is supposedly designed to prevent that. And why it did happen will be a big part of this investigation. Gent says an investigative team is being assembled now, and he hopes to have some more answers about what went wrong and why Monday. Back to you, Fredricka.

WHITFIELD: All right, Jeanne, from Washington, thanks very much.

Let's go back to Jan now in New York -- Jan.

HOPKINS: Thanks, Fredricka. And we are waiting for New York's mayor, Michael Bloomberg, to talk to the press in a few minutes. We will go to that news conference live. But in the meantime let's go to Penn Station and Deborah Feyerick, one of my colleagues, standing there to tell us the latest from the neighborhood -- Deborah.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Jan, we're seeing something that we hadn't seen in a very long time -- that is, cars are actually now beginning to stop at traffic lights. That's because the traffic lights are now back on. They were out for almost a full 24- hour period.

Just over here, the Red Cross. They've been here since 7:30 this morning. By their estimate, they've given out about 700 drinks an hour. Given the temperatures went to 93 degrees in Manhattan, it was a good thing. A lot of grocery stores and delis were closed, and therefore, nobody could get anything to eat or drink, for that matter.

Here at Penn Station a couple of people outside of the building. Before, the crowds were thick, everybody sitting on suitcases. That's because trains weren't leaving. Many operators didn't make it to work. Planes weren't taking off from La Guardia. We ran into somebody who was there for hours. The planes weren't leaving because the metal detectors weren't working, so nobody could screen any bags. And it was virtually impossible, Jan, to get a cup of coffee anywhere.

Now, at Penn Station, again, cheers and clapping when the lights finally went back on. People were trying to get to Washington. That was one of the few trains that was running. But they had to be sitting in that station, and it was some 10 to 15 degrees hotter down there. They were operating on a generator, backup power, but no air- conditioning, and very few lights, for that matter. Right now, though, things slowly grinding back. But you look at the board, it's still a lot of delays and a lot of trains canceled -- Jan.

HOPKINS: Deborah Feyerick at Penn Station, thanks a lot.

The New York Stock Exchange was up and running today. Not much activity, and a lot of people didn't show up for work, but Christine Romans is there, and she has the report -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Jan, you and I have covered quite a few very quiet August Fridays on Wall Street, but this one really takes the cake. You had activity today more about regrouping and commuting than about stocks. In fact, 300 people spent the night here at the New York Stock Exchange, some of them working, some of them sleeping on couches, waiting to get things up and running. By 6:00 AM, they thought they were going to be using their own generators, but Con Ed kicked in, and this was business as usual, opening at 9:30, closing at 4:00. But it was so quiet, 600 million shares changing hands.

And Jan, a lot of traders said it was more symbolic than anything else. They came here to show that a power outage wasn't going to keep trading shut and they were going to go on as necessary. Now, there were some disruptions elsewhere, some glitches. The American Stock Exchange was only open for a few minutes today. You had some shortened trading in the metals pits, and you also had bond markets closing early at the request of a lot of customers, who said they just couldn't get their employees in. Some of the banks were closed. So that was closed.

But for the most part, a routine day, though, very, very quiet. And right now, everyone's trying figure out just how they're going to get home -- Jan.

HOPKINS: Thanks. Christine Romans outside the New York Stock Exchange.

We are waiting for New York mayor Michael Bloomberg to hold a press conference. We will bring that to you live. In the meantime, New York's governor, George Pataki, is demanding an investigation. He says the regional power system should have been upgraded in order to keep massive blackouts like those in the '60s and the '70s from happening again, like they did yesterday. He's also urging people to conserve electricity.

(BEGIN VIDEO CLIP)

GOV. GEORGE PATAKI (R), NEW YORK: We're not out of this yet, and that's part of the important message. While you may hear in western New York, the vast majority of the people have the lights and power back, we still are in the midst of this crisis, and there are still millions of people in this state who have no power. And what we are urging everyone to do is to conserve energy. Don't turn on your air- conditioner unless it's absolutely necessary for health reasons. Don't connect your appliances. Don't go doing your wash. Do everything you can to save power.

(END VIDEO CLIP)

HOPKINS: That is the governor of New York, George Pataki. And again, we are waiting for the mayor of New York to have a news conference. We'll bring that to you when it happens.

But next, let's go to Fredricka Whitfield in Atlanta for more news -- Fredricka.

WHITFIELD: All right. Thanks, Jan. While we're waiting for that to happen, this is also a national issue. Geographically, Mr. Bush is far from the power problem, but politically, he is already at ground zero. CNN's Suzanne Malveaux is traveling with the president in Newport Beach, California. Suzanne, how's the president responding today?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Fredricka, he's responding very strongly about this. And as you had mentioned before, it has become a very hot political issue over the last 24 hours. President Bush took the time, of course, to say that the American people who were affected by this were doing a good job, their cooperation, that they really showed the true character of the American people. He also praised the federal, state and local officials for working well together. But he said that this incident really is a wake-up call, that this power grid, the national power grid system, is antiquated, he called it. He said it needed to be modernized. And he took the opportunity, once again, calling on Congress to pass his comprehensive energy bill.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: It's going to take a while, I think, but we will find out what caused the blackout, and we'll deal with it. I view it as a wake-up call. You know, I've been concerned that our infrastructure, the delivery system, is old and antiquated. And I think this is an indication of the fact that we need to modernize the electricity grid. And so it's a good opportunity for us to analyze what went wrong and deal with it. We don't know yet what went wrong, but we will.

(END VIDEO CLIP)

MALVEAUX: Democrats already arguing that the president's energy bill is not going to fix those problems. I should let you know, Fredricka, though, in Washington, the debate over the energy bill really has not focused on this grid issue at all, but rather the source of power, talking about oil drilling, trying to find alternative sources of power, as well as trying for the United States to be less dependent on the Middle East for its power, not the delivery system. You can bet, however, that that debate certainly has changed -- Fredricka.

WHITFIELD: All right, Suzanne. Thanks very much, from Newport Beach, California. Now back to Times Square in New York, where we find Jan -- Jan.

HOPKINS: Thanks very much, Fredricka. And again, we are waiting for New York mayor Michael Bloomberg to hold a press conference to talk about what is going on right now in the city of New York. Meanwhile, we are in Times Square. It's starting to get a little noisy here.

Still to come: Will the blackout prove to be a boon or a boondoggle for business owners? We'll look at who stands to cash in.

And later: Critics say the U.S. power grid is Stone Age technology in the 21st century. We'll speak to an expert who says the opposite.

(COMMERCIAL BREAK)

WHITFIELD: Well, you heard Suzanne Malveaux report this just moments ago. President Bush says the blackout serves as a wake-up call to overhaul an antiquated system. Well, Democrats don't disagree, but some are already blaming Mr. Bush for inaction. And Congress is scheduling hearings, as well. The House Energy and Commerce Committee wants to question, among others, the mayor of New York and the governor of New York, along with energy secretary Spencer Abraham -- not right away, though, of course, but when lawmakers return from their August vacations.

Now back to Jan in New York.

HOPKINS: Thanks, Fredricka. We will be hearing from Mayor Bloomberg in just a few moments.

But first: Power has long been the name of the game in Washington, as we just heard from Fredricka. But as an issue, it's also a lightning rod. And here is CNN's Louise Schiavone.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): For a politician on the eve of an election year, there's nothing more unfriendly than a hot, sweaty, frustrated constituent. The rolling blackout which started last night created 50 million of them.

BUSH: And now we've got to figure out how to make the electricity system have the redundancy necessary, so that if there is an outage like there has been throughout our history, that it doesn't affect as many people as it did in the past.

SCHIAVONE: On CNN, former energy secretary Bill Richardson called it a third world system.

GOV. BILL RICHARDSON (D-NM), FORMER ENERGY SECRETARY: We've got to build more transmission lines in the country because we've got more technology, we've got more computer demand, we've got more heat waves, we've got more people. And unless we take those steps, we're going to have massive blackouts.

SCHIAVONE: But in Washington, the steps seemingly go backward in time. Before its August recess the Senate resorted to passing a two- year-old energy bill, after a newer White House proposal went nowhere. The Bush-backed bill did address the nation's electrical system, envisioning a highway of far-reaching high-voltage transmission lines for energy sharing among regions and empowering federal energy regulators to require system reliability and upgrades. But the bill sank under the weight of controversial issues, like subsidies for oil and gas companies and drilling in the Arctic wilderness.

With electricity just a segment of the energy problem, critics of every stripe argue that current national policy ignores an impending crisis.

UNIDENTIFIED MALE: I'm sorry to hear that President Bush did not mention the first option that I would support in trying to make our grid more reliable, which is to invest much more strongly in conservation devices.

SCHIAVONE: Congress seems to be getting the latest message.

REP. EDWARD MARKEY (D-MA), ENERGY AND COMMERCE COMMITTEE: I think that what happened yesterday now guarantees that at least the electricity reliability part of the energy bill does become law.

(END VIDEOTAPE)

SCHIAVONE: At summer's end, House and Senate negotiators will try to hammer out a compromise energy bill. And Congress, of course, will hold hearings on the blackout -- Jan.

HOPKINS: Louise, has anybody said anything about deregulation of electricity? Is that playing into this? And might Congress look at that issue?

SCHIAVONE: Well, there's a robust debate, Jan, about the merits of deregulation, whether or not it created an uproarious marketplace, where caps led private utility owners not to improve the grids, to improve the equipment that they use because their rates were capped and they wouldn't make a lot of money out of it. And so the issue of re-regulation and deregulation no doubt will come up in this discussion -- Jan.

HOPKINS: Louise Schiavone in Washington.

And we are waiting for New York mayor Michael Bloomberg to talk about the latest situation in the city. Meanwhile, the effects of Thursday's blackout could reach far beyond the region plunged into darkness. We'll examine its impact on the economy when we come back.

(COMMERCIAL BREAK)

HOPKINS: We're going live to New York mayor Michael Bloomberg. He's talking about the latest.

(INTERRUPTED FOR COVERAGE OF LIVE EVENT)

HOPKINS: New York mayor Michael Bloomberg talking about the current situation. Some people in New York still without power. But Broadway will be lighted up and in business tonight, as will the Mets at Shea Stadium. Subway service, though, is not back in New York yet and won't be for another eight hours or so.

We have just heard that President Bush has announced a joint U.S.-Canadian commission to investigate what happened. Let's go to Fredricka Whitfield in Atlanta for more -- Fredricka.

WHITFIELD: All right. Thanks very much, Jan. I know a lot of New Yorkers are glad to hear that at least the Mets game is on. And the investigation is now progressing.

Meantime, up north, millions of Canadians are slowly getting back some of their power. It is very gradual. However, officials are warning of some gradual potential rolling blackouts. Scott Laurie of our affiliate, CTV, has more on the blame game and the recovery.

(BEGIN VIDEO CLIP)

SCOTT LAURIE, CTV CORRESPONDENT (voice-over): North America's biggest power outage ever has still left millions without power, and it sparked a power play between Ontario's premier and the mayor of New York, who says the blackout was made in Canada. BLOOMBERG: Oh, I don't think there's any question. All the power companies feel very strongly that it happened in Canada. Whether it was somebody that did something wrong or a piece of equipment that failed or a lightning strike...

LAURIE: Premiere Ernie Eves says not so.

ERNIE EVES, ONTARIO PREMIER: New York, which is the northeastern center that is set up to review the entire northeast of the U.S. and Canada, has concluded this morning that, indeed, it did happen in the upper Midwest U.S., not in the province of Ontario.

LAURIE: The Ontario government still has a state of emergency. It's urging people to stay home and limit electricity use. That means big energy users, like factories and office towers, are supposed to stay shut. Energy critics say Ontario's reliance on power imports could have made the problem even worse.

BRUCE CAMPBELL, IND. ELECTRICITY OPERATOR: We were importing about 10 percent of our power in order to make it through a hot day. That makes us a risky partner.

LAURIE: At Canada's busiest airport, delays and no clear timeline for when backlogs will be cleared up. On the streets, some were worried, like the Napiers (ph), whose son was on life support when power vanished.

UNIDENTIFIED MALE: Well, we were actually quite concerned because our family member was in an ICU on life support. So we were a little bit concerned greatly. And anyway, in the end, everything was OK.

(END VIDEOTAPE)

LAURIE: The premier of Ontario has said that most people in Ontario, 66 percent of the province, should have electricity perhaps by the end of the day. The problem is that rolling blackouts, similar to the ones that took place in California not very long ago, will be the name of the game. That means some people who got power perhaps earlier today could lose it for a couple of hours over the next course of the -- over the next few days -- Fredricka.

WHITFIELD: All right. That same cautionary note being passed on to a lot of people in the Northeast in the States, as well. Well, talking about your piece, you had that one couple talking about some severe medical conditions. Other than that, how are people in general seemingly coping with this?

LAURIE: Most people took the day off. Downtown Toronto was fairly empty today. Usually, it's a very busy place, with rush hour and all that. But today most people agreed with what the premier said and took the day off. They didn't show up. The subway isn't working. Commuter trains aren't working. A lot of people are taking the time to stay at home. But they're being told if they do stay at home, not to use air-conditioning. And that's a problem because it's actually extremely hot today. WHITFIELD: All right. Stay at home, keep the windows open and hope for a breeze. Thanks very much. Scott Laurie of CTV.

We'll be right back right after this break.

(COMMERCIAL BREAK)

HOPKINS: We're back in Times Square in New York, and as you can see, it's a pretty lively place, the way it normally is. The question is could the power outage be good for business? It really depends on what business you're in. Susan Lisovicz is here with that story. Susan, I saw a lot of people buying batteries. There were lines for stores that were open with batteries and water. Those were the two things...

SUSAN LISOVICZ, CNNfn CORRESPONDENT; And you nailed it. I mean, actually, for a very select area of retail it can be good for business. I talked to one retail analyst today. He said your grocery stores generally gain about 10 percent, 15 percent of business during a blackout: batteries, water. I talked to one small retailer today. He sells jeans and shirts. You know what he was selling today, underwear because people didn't have water, and so they were selling a lot of this. But these are low profit margin items. This is not what they want to see selling.

HOPKINS: What else did you find out from retailers?

LISOVICZ: Well, you know, the mayor was talking about the Mets being on a win streak. For retailers it's really a shutout for a couple reasons. One is that this blackout occurred in one of the most populous areas of the country. For your average retailer 10 percent to 15 percent of a chain store has its stores in the northeast. For the Gap, for instance, yesterday it had 500 stores closed out of 3600.

And it's not only the location. It's the timing. We're at the back to school shopping season. This is when retailers roll out their new merchandise and they sell it at full price. This is second only to the Christmas shopping season.

So the question, Jan, is not really whether consumers will come back. We know that parents and kids will come back to the stores. The question is whether retailers will have to mark down to make up for the lost time.

HOPKINS: And what have retailers learned from 9/11 that they can apply in a situation like this?

LISOVICZ: Well, they're really two different factors. I mean, there's no question that we were all reminded of 9/11 yesterday when we were trying to get home, when you saw tens of thousands of people evacuating the city. But 9/11 was a national retail crisis. People were depressed. They were frightened. They didn't want to leave their home. In this particular case it's an inconvenience, and it's the northeast, and hopefully it will soon be over.

HOPKINS: Thanks. Susan Lisovicz. A lot of analysts say that the outage will hit the economy like a blinding blizzard. But as our own Peter Viles reports, that doesn't necessarily mean that the economy is lost in the dark.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): From Detroit to New York City, the biggest blackout in American history is clearly a shock to the economy. Travel plans disrupted, work days cut short. But how bad is the damage? Well, not serious enough, says Bear Stearns, to derail an economy that is gaining steam.

JOHN RYDING, BEAR STEARNS: Yes, the data for August will be affected, For example, it's the payroll survey week. Hours worked will be depressed because a lot of people took a three-day weekend. Maybe that's good for some people. But losing a day in the summer is certainly not a make or break event for the U.S. economy, which generally speaking, is on an improving upswing at the present time.

VILES: The mayor of New York likened the crisis to a blizzard that shuts the city down. Big storms tend to have minimal economic impact. It's true they stop some economic activity in its tracks. But they also create new spending, emergency spending.

TRACI MULLIN, NATIONAL RETAIL FEDERATION: A lot of those sales will be made up. So we really sort of view this as an inconvenience, more like a snow day than anything else.

VILES: There's an element of good timing to all of this. August is a very slow economic month. And Friday is the slowest workday of the week.

(END VIDEOTAPE)

VILES: A number of variables, though, still in this economic equation. We don't know when the situation will be over, when power will be restored everywhere. We don't know if we're going to have civil disobedience anywhere, looting perhaps, which would have its own economic cost. And the biggest thing we don't know is when there's an outcome to all of this, some sort of solution, we hope, in the energy system. Will that cause the cost of energy to go up?

Rising energy prices always are negative for the economy -- Jan.

HOPKINS: If the utility companies have to pay more to upgrade their systems, that's what you're talking about...

VILES: Anything that increases energy costs is a drag on the economy. It's like a tax on the economy because everybody pays energy costs.

HOPKINS: Thanks, Peter Viles.

And coming up, actually, we will be talking with a former commissioner from the Federal Energy Regulatory Commission. He'll talk about what's wrong and what's right with the system. (COMMERCIAL BREAK)

HOPKINS: Yesterday, former Energy Secretary Bill Richardson called the U.S. power network a third world electricity grid. There's at least one man who begs to differ. He's Bronco Terzic. He's director of regulatory services for Deloitte & Touche and a former member of the Federal Energy Regulator Commission. He joins us from Washington.

But with a network that went down so quickly, why wouldn't you say what Bill Richardson said, and that is, that the grid seems to be like a third world country?

BRANKO TERZIC, FRM. FFRC COMMISSIONER: Well, anybody that's been in a third world country knows that that's just not true. I've spent the last four years working in Central and Eastern Europe. I'm an engineer and earlier in my career I appraised electric systems. Believe me, we have the finest electric system in North America, and it's just not true. The system is stressed. We need new investment. And we need to also change maybe the way we're operating the system.

HOPKINS: But it's interesting. You're saying that from Washington. I'm sitting in New York. I walked down 20 flights yesterday and home 40 blocks and then up 20 flights. That certainly seems like a third world country.

TERZIC: Well, I guess at the moment when power is out it's out. But the frequency of power outages, the duration of power outages, historically in the United States, has been nowhere near what either the second or the third world has. I think the statistics will bear me out.

What we have is a unique system, unique series of probably consequences, probably multiple events that happened at the same time. We'll have to get to the bottom of it. We'll have to make a mix of it. No excuses for that, but the system itself, the quality of the engineering, design is world standard. No question about it.

HOPKINS: But when you look at what happened with the system going down so quickly, do you think that it was really an accident, or is something else going on here?

TERZIC: No. Well, I have no reason to believe it wasn't a disaster caused by a series of, probably, accidents. In earlier failures, in the failure of '65 and the failure of '77 and some western failures, there was discovered to be some error on the part of decisions that could be made by system operators and by others. We'll have to see whether it was humanly possible to mitigate or preempt some of those things that occurred.

But you know, the system shut itself down safely, which is what it's supposed to do. The operators tried to balance the system as best as they could but look, in May 22 of this year the New York ISO told the people of New York there is insufficient generating capacity in New York and there's also insufficient transmission and said, you know, this system is okay only if we have a normal summer and then barely so.

HOPKINS: But you're talking about upgrading an infrastructure. That's going to take some time to do, and it's going to cost a lot of money, isn't it?

TERZIC: Well, I think we'll look at it this way. The investment we make in new electricity transmission infrastructure will save us millions and billions in unnecessary new generation, will make existing generation more efficient, and in the long run will also improve the economy and cause the economy to grow.

We know that growth in electricity is tied to growth in GNP. And I think that it will cost us more not make the investment in lost business, lost opportunities, down time, than it will to make the investment. Overall, I think it's a net benefit.

HOPKINS: Now, is this something that Congress, though, is going to mandate that utilities do? Because it's costly and it's going to hurt these companies' bottom line and their stock price.

TERZIC: That's not true. Utilities have invested when they can get a fair return. The electric grid in the United States is not deregulated. Somebody earlier said it was deregulated. Believe me, the Federal Energy Regulatory Commission, my old agency, regulates every power plant in the United States that sells power at wholesale, and the state commissions regulate those plants that sell power at retail.

The transmission system is split. Transmission construction and approval is under the authority of the states. The pricing of transmission system is under the authority of the FERC. They all have their tools, and they can use them. Congress can come in and add some additional help. There are some components of the proposed energy bill which will help in this area.

HOPKINS: Thanks very much, Branko Terzic, a former federal regulatory commissioner and also former CEO of Yankee Energy, which is a New England power utility.

Let's go back to Atlanta and Fredricka Whitfield.

WHITFIELD: All right. Thanks a lot, Jan.

Well, let's talk a little more about this power grid and give you the nuts and bolts of it, if you will.

CNN technology consultant, Daniel Sieberg, has been looking at how the system is supposed to work.

(BEGIN VIDEOTAPE)

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT (voice-over): It's easy to take for granted. But the path of electricity from a power plant to your wall socket is a rather, well, circuitous one.

Think of it like our nation's roadways. There are expressways, smaller lanes, on-ramps and off-ramps and intersections. In the world of electricity, these interconnected systems are called power grids. But since electricity cannot be stored, it's generated as needed, then distributed on demand.

Each state shares power with the states next door. When one runs short, a neighbor picks up the slack. That's how the power grid stay in balance, especially in the summer months when energy is in high demand.

The place where power is used, though, is often far away, maybe hundreds of miles from the place the power is generated. There are 6,000 power generating units across the country. Here you can see the flashing red ones, where the 21 outages occurred Thursday. These units are energized with coal, oil, gas, falling water, wind or nuclear fission. A certain amount of power is lost as electricity travels over long transmission lines. So there are substations along the way to boost the current to a higher voltage.

The U.S. and Canada have about half million miles of high voltage transmission lines. The wires eventually lead to regional distribution centers, which in turn manage the power down to local trunks which then dole out the energy to local homes and neighborhoods. And there are monitors all along the grid, ready to make automatic adjustments for sudden demand or spikes in power output.

Daniel Sieberg, CNN, Atlanta.

(END VIDEOTAPE)

HOPKINS: Let's go to New York's Penn Station. Bill Tucker is standing by, talking to some people on the street. What do they have to say, Bill?

BILL TUCKER, CNNfn CORRESPONDENT: Jan, now that we know how it was supposed to work, we know that it didn't work. And where I'm standing right now this morning was literally littered with thousands of people who spent the night out on the street here at Penn Station and down in the station itself. And back behind me, you can see the steps of the post office. There were probably about a thousand people, Jan, who slept up there.

Everybody has a different story to tell about last night. I'm with a couple of ladies, however, that didn't spend the night on the street but they had a different kind of experience.

I'm joined now by Darlene (ph) and Michelle (ph). Darlene (ph), welcome.

UNIDENTIFIED FEMALE: Yes. It's nice to talk with you.

TUCKER: Now tell us what happened to you this morning.

UNIDENTIFIED FEMALE: This morning? Well, we left D.C. on a train at 3:00 a.m., and when we got here we was made to believe when we left D.C. that we was going to be going straight through to Boston, where we'd like to be. But we was told to get off here.

TUCKER: So Amtrak pulled into New York at 6:00 in the morning, told you and your daughter you need to get off now?

UNIDENTIFIED FEMALE: Yes.

TUCKER: Did they tell you you were going to get a train out of here?

UNIDENTIFIED FEMALE: No.

TUCKER: So how are you going to get home?

UNIDENTIFIED FEMALE: Well, my neighbor was with me because she took the vacation with us, and she called her husband, and he's on his way down to get us.

TUCKER: So Michelle, you've been standing around here with your mom all day long waiting for somebody to come and get you?

UNIDENTIFIED FEMALE: Yes.

TUCKER: Has it been fun?

UNIDENTIFIED FEMALE: No. Kind of boring.

TUCKER: I can't imagine why. Jan, it was kind of boring standing around Penn Station all day long, waiting for somebody to come down from Maine to pick them up.

That's a sampling of some of the stories that you're going to get when you walk around here at Penn Station today, Jan. A lot of people going to have something to say about this day for many years to come. Back to you.

HOPKINS: So bill, your story. How long did it take you to get home?

TUCKER: I didn't get home, Jan...

HOPKINS: Ah-ha!

TUCKER: ...as you can probably tell -- you can tell from the George Michael look that I'm sporting here this evening, I ended up sleeping, actually, on the floor of the lobby of the building...

HOPKINS: Oh my goodness.

TUCKER: ...where our offices are. I've slept worse places. It was nice cold marble, so....

(LAUGHTER)

HOPKINS: Thanks. Bill Tucker at Penn Station. A lot of stories about what happened the day the lights went out. If you want advice, you can go to the experts. So we asked Iraqis living in desert climes with no power what they think of yesterday's U.S. power outage. And we'll find out what they have to say ahead.

(COMMERCIAL BREAK)

WHITFIELD: Well, more now on the blackout -- or in a minute we'll have more on the blackout. But first, let's look at some of the other stories we're following for you right now.

Nearly 15 years after a bomb destroyed Pan Am Flight 103 over Lockerbie, Scotland, families of the victims are on track to receive millions of dollars in compensation. Reuters reports that Libya has delivered an official letter to the U.N. Security Council, renouncing terrorism and accepting responsibility for the bombing. A lawyer representing the victims' families says each family is likely to receive at least $5 million.

Israel has agreed to hand over security control of four more Palestinian cities. Though the details are yet to be -- have yet to be ironed out, both sides agreed to meet on Sunday to set a timetable for the handover, which they both want to complete in less than two weeks. The cities involved are Jericho, Qalqilya, and Tulkarem and Ramallah.

HOPKINS: We are back in Times Square in New York. And to some people's surprise, the stock market started on time today and apparently trading without a hitch.

Christine Romans, I don't think, was surprised -- Christine.

ROMANS: No, I wasn't, Jan.

And from the opening bell it was anything but a normal day. First of all, Mayor Michael Bloomberg rang the opening bell on a quiet summer Friday. Second of all, you had traders who were pretty tired and quite a bit scruffy.

(BEGIN VIDEO CLIP)

LINDA JAY, LARRANCHE & CO.: Because you know a lot of cranky people down here, you know, unshaven, unshowered, did not sleep well. You know, one guy told me he put two chairs together and that's how he slept last night.

(END VIDEO CLIP)

ROMANS: It wasn't just one guy. You had Dick Grasso, the chairman of the New York Stock Exchange, says he slept on a couch. Some 300 other people were sleeping and working here all night.

The opening bell rang without a hitch, and by the end of the day it was the quietest trading day of the year; 600 million shares changing hands. You have the Dow up just 11 points, Jan, in a very, very thin market. You had the Nasdaq up about 1 point, and you had the S&P not even up a point.

Oil prices rose. There were some concerns about potential supply disruptions to refineries, but that was also very light trading.

The dollar was steady. Bonds fell. In the end, the experts say, you know, it was an annoying day, but the markets and the economy will probably survive.

It wasn't without glitches, however. The American Stock Exchange was only open really for about 20 minutes. It didn't open until about 3:45 Eastern time. You also had some of the metals markets that were closing early. The bond market closed early as well. And also, Jan, it was inevitable that people would talk about the lessons they have learned from September 11 and how those lessons helped today.

(BEGIN VIDEO CLIP)

DICK GRASSO, CHAIRMAN, NYSE: Well, clearly, there were contingency lessons that we've experienced as a result of the great tragedy of September 11, and we took from those lessons much knowledge that we've applied, and as you see, in perhaps one of the most challenging power outages in the history certainly of this city, if not this nation, we're up and operating business as usual.

(END VIDEO CLIP)

ROMANS: Jan, in the end the closing bell on Wall Street was rung by the most powerful players on Wall Street right now -- the electricians -- Jan.

HOPKINS: That's for sure. Christine, for the whole week, was it a good week or a bad week?

ROMANS: Up a little bit for the markets, but this quiet day, everyone says it's a blip. We'll have to come back Monday and regroup and see what the market wants to do about it.

Jan, I asked a lot of traders, you know, if they were surprised that the dollar didn't get more of a move or that stocks weren't unnerved by this blackout in the northeast, and they said, really no, it was a quiet day, they'll wait to digest all of the news, how it happened, and what the economic fallout is and they'll, you know, reconvene on Monday.

HOPKINS: Thanks very much. Christine Romans outside the New York Stock Exchange.

And if you're hot, sweaty and have no electricity or air- conditioning, you must be in New York? No, Baghdad. We'll get some coping advice from Iraqis in just a moment.

(BEGIN VIDEOTAPE)

RYM BRAHIMI, CNN CORRESPONDENT (voice-over): It was predictable. In the streets of Baghdad, there's not much sympathy for New Yorkers.

UNIDENTIFIED MALE (through translator): I hope they can finally feel what we have been going through.

BRAHIMI: Store owner Abu Tiva (ph) says while New Yorkers count the number of hours without electricity, he's counting the number of hours he has electricity, and the number is four.

He only has electricity four hours a day, and he says that's bad for business. In New York, they're working to restore electricity in days. Here, coalition authorities have promised electricity would return to its pre-war level next month, saying sabotage of power lines has delayed work on this country's electricity grids. But Iraqis complain the U.S. isn't doing enough.

UNIDENTIFIED MALE (through translator): Those who brought fleets, an army, and tanks to this country can't provide me with power? If they wanted to, they could do it in a matter of hours.

BRAHIMI: New Yorkers are coping with temperatures in the 90s. In Baghdad, temperatures can soar up to 55 degrees Celsius, or 130 degrees Fahrenheit.

To cope, Iraqis can buy ice on the streets, or, for the wealthier, generators.

These men have found brief respite in an air cooler, 1960s version, that they've linked to a generator in the neighborhood. But, says this man, what New Yorkers are experiencing is nothing.

UNIDENTIFIED MALE (through translator): Let them be patient like us. We've been patient for 13 years. They have the sea. Their weather is nicer. And there are other states they can go to where it's cooler.

BRAHIMI: Others see this as a punishment from above.

UNIDENTIFIED MALE (through translator): Anything bad that happens to those who hurt good people is a punishment from God.

BRAHIMI: Any advice to New Yorkers, we ask?

UNIDENTIFIED MALE (through translator): I said jokingly, let them link up a power strip to ours and we can send them some power.

UNIDENTIFIED MALE (through translator): What can I tell them? Let each one hold the fan and start fanning, or let them go swim.

BRAHIMI (on camera): There may not be that many swimming pools in Baghdad, but there's the Tigris river. Many Iraqis are advising New Yorkers to do what they do -- head for the river and cool down.

Rym Brahimi, CNN, Baghdad.

(END VIDEOTAPE)

WHITFIELD: Well, before we end the hour another important story, this one in the U.S., to keep an eye on. Folks along the south Texas coast are worried about more than their power going out. A tropical storm named Erika is getting stronger and it's heading straight for them. Our Orelon Sidney is keeping close watch on Erika, and what potential damage it might do -- Orelon.

ORELON SIDNEY, CNN METEOROLOGIST: Thanks a lot, Fredricka. It is indeed getting stronger. As you can see, it's trying to form an eye now. That's the first time we've seen that feature since this storm has been in evidence. It does look like the center of the storm now just about there, but I don't really want you to focus too much on the center, because generally this whole circulation to the north of the center is going to be very active. We're going to see a pretty good chance of some flooding. We do have flash flood watches already in effect for the southern portion of Texas, as we're looking at rain up to six inches in some areas.

Right now the storm 245 miles east of Brownsville. Winds are up to 60 miles an hour at the last update that came in about two hours ago. Moving to the west now at 22 miles an hour. That very fast forward speed is keeping it from developing much more than it is, but we already have tropical storm warnings and hurricane warnings stretching from Port O'Connor, Texas, down to Brownsville, and then continuing southward to La Pesca, Mexico. That means you can expect these conditions within 24 hours.

Big area of high pressure has dominated the nation. That's the steering current that's been pushing our storm on to the west, and will continue to move it almost directly due west tonight. It is forecast to become a minimal hurricane, probably about 74 miles an hour, before it moves on shore. But as you can see, lots of rain already. Probably going to see some tornado watches issued later tonight from Corpus Christi, I think, down to Brownsville, and then as this moves inland, you could see hurricane force winds even up to the Rio Grande Valley. This is a pretty narrow area here, of course, across the southern portion of Texas. So we will certainly be watching for tropical storm force winds, possibly hurricane force winds, moving inland -- Fredricka.

WHITFIELD: Thank you, Orelon. Thanks very much. We'll be keeping a close watch on those developments throughout the weekend. Thanks to you, Orelon. And Jan, good working with you this past hour.

HOPKINS: Nice working with you. I already see t-shirts on tourists saying "I survived the blackout." That's it for me in Times Square. I'm Jan Hopkins. "LIVE FROM THE HEADLINES" with Anderson Cooper is up right after this.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired August 15, 2003 - 18:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, GUEST HOST: I'm Jan Hopkins in Times Square, New York. I'm in for Lou Dobbs. We are waiting for a live press conference from New York's mayor, Michael Bloomberg. It will happen at some point this hour, and we will go to that live.
After almost 26 hours after 50 million people found out just how much they depend on electricity, many are back on line. Many others face one more night without lights, TV or air-conditioners, and some face more than one. Here in New York, candles in beer bottles filled in for fluorescent tubes. But at least parts of the five boroughs are back up well before noon today. More are coming back all the time, including CNN's bureau at 5 Penn Plaza. Still, officials warn that all of us should not splurge, lest we crash the system again.

Last night, the city that never sleeps actually did -- in airports, train stations, hotel lobbies and on sidewalks. Tonight, many planes and trains are moving again -- certainly, not all, though -- and many visitors can actually get access to the rooms that they've reserved. They weren't able to do that yesterday because of the power outage.

Don't judge Wall Street by the numbers. What looks like a slow, dull session even for August, it is, under the circumstances, a grand achievement. The power flickered back to the New York Stock Exchange before the opening bell. The exchange does have a reserve power system.

Joining me now with more of the day's developments, my colleagues, Deborah Feyerick at Penn Station, Suzanne Malveaux -- she's traveling with President Bush in California -- and Christine Romans is at the New York Stock Exchange.

But in the meantime, we have some breaking news on what actually may have caused this power outage. Let's go to Atlanta and Fredricka Whitfield.

FREDRICKA WHITFIELD, CNN ANCHOR: All right. Thanks very much, Jan.

Well, as the lights continue to flicker back on in New York now -- about 75 percent of Con Edison customers now with power -- folks are seeing the same thing happen slowly but surely in seven other states and parts of Canada. That's how far this blackout extended. Cleveland, Ohio, not only lost power but drinking water. With the power out, the electric pumps that distribute water from Lake Erie failed. So the National Guard has been delivering fresh water. Michigan's governor has declared a state of emergency in Detroit. The blackout forced most service stations there to shut down, as well. A lot of cars in the nation's auto capital are now parked on empty. Even emergency vehicles are running out of gas.

Next door, about 60 percent of the power is back on in the province of Ontario. Folks there are being urged to conserve what little they have. Neighboring Quebec is sending over what extra electricity it has, about 1,000 megawatts so far.

New developments now have come to light in the investigation of this massive blackout. It looks like the loss of a power line at 3:00 o'clock yesterday afternoon in Cleveland may have started the long, cascading, dark chain of events. CNN's homeland security correspondent, Jeanne Meserve, joins us now from Washington with the power details. And why is this the feeling, Jeanne?

JEANNE MESERVE, CNN CORRESPONDENT: Well, the investigation, Fredricka, is making some headway here. Michael Gent (ph) of the north American Electric Reliability Council -- that's the group that's heading up the investigation -- says they've been poring over logs, and he says the first recorded event they found was the loss of a 345,000-volt transmission line near Cleveland, Ohio. They do not know what happened to that line, why it went down, and they do not yet know what happened in the next hour. You'll remember that it wasn't until after 4:00 that the cascading blackouts actually began.

This line near Cleveland is one of about 50 that feed into what is called the Lake Erie loop. It takes power from plants on both the U.S. and Canadian sides of Lake Erie and moves it from Buffalo to Cleveland, on to Detroit, up into Canada, and then back to Buffalo. Gent says it has caused problems for some time. He describes it as heavily loaded and heavily used. Others have just called it antiquated. Investigators had already determined that power pushing back and forth around that loop had pulled plants and transmission lines out of commission shortly after 4:00 yesterday.

We have an animation that shows you what that looked like. If you look at this and keep track of those pulsing red circles, they show you how, in the first minute, four power plants went down. In the next minute, two went down. The minute after that, two went down. And so on and so forth. This animation, by the way, provided by Genscape, a company that monitors power plant output for energy traders.

This cascading, as it's called, is not supposed to happen. The system is supposedly designed to prevent that. And why it did happen will be a big part of this investigation. Gent says an investigative team is being assembled now, and he hopes to have some more answers about what went wrong and why Monday. Back to you, Fredricka.

WHITFIELD: All right, Jeanne, from Washington, thanks very much.

Let's go back to Jan now in New York -- Jan.

HOPKINS: Thanks, Fredricka. And we are waiting for New York's mayor, Michael Bloomberg, to talk to the press in a few minutes. We will go to that news conference live. But in the meantime let's go to Penn Station and Deborah Feyerick, one of my colleagues, standing there to tell us the latest from the neighborhood -- Deborah.

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Jan, we're seeing something that we hadn't seen in a very long time -- that is, cars are actually now beginning to stop at traffic lights. That's because the traffic lights are now back on. They were out for almost a full 24- hour period.

Just over here, the Red Cross. They've been here since 7:30 this morning. By their estimate, they've given out about 700 drinks an hour. Given the temperatures went to 93 degrees in Manhattan, it was a good thing. A lot of grocery stores and delis were closed, and therefore, nobody could get anything to eat or drink, for that matter.

Here at Penn Station a couple of people outside of the building. Before, the crowds were thick, everybody sitting on suitcases. That's because trains weren't leaving. Many operators didn't make it to work. Planes weren't taking off from La Guardia. We ran into somebody who was there for hours. The planes weren't leaving because the metal detectors weren't working, so nobody could screen any bags. And it was virtually impossible, Jan, to get a cup of coffee anywhere.

Now, at Penn Station, again, cheers and clapping when the lights finally went back on. People were trying to get to Washington. That was one of the few trains that was running. But they had to be sitting in that station, and it was some 10 to 15 degrees hotter down there. They were operating on a generator, backup power, but no air- conditioning, and very few lights, for that matter. Right now, though, things slowly grinding back. But you look at the board, it's still a lot of delays and a lot of trains canceled -- Jan.

HOPKINS: Deborah Feyerick at Penn Station, thanks a lot.

The New York Stock Exchange was up and running today. Not much activity, and a lot of people didn't show up for work, but Christine Romans is there, and she has the report -- Christine.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Jan, you and I have covered quite a few very quiet August Fridays on Wall Street, but this one really takes the cake. You had activity today more about regrouping and commuting than about stocks. In fact, 300 people spent the night here at the New York Stock Exchange, some of them working, some of them sleeping on couches, waiting to get things up and running. By 6:00 AM, they thought they were going to be using their own generators, but Con Ed kicked in, and this was business as usual, opening at 9:30, closing at 4:00. But it was so quiet, 600 million shares changing hands.

And Jan, a lot of traders said it was more symbolic than anything else. They came here to show that a power outage wasn't going to keep trading shut and they were going to go on as necessary. Now, there were some disruptions elsewhere, some glitches. The American Stock Exchange was only open for a few minutes today. You had some shortened trading in the metals pits, and you also had bond markets closing early at the request of a lot of customers, who said they just couldn't get their employees in. Some of the banks were closed. So that was closed.

But for the most part, a routine day, though, very, very quiet. And right now, everyone's trying figure out just how they're going to get home -- Jan.

HOPKINS: Thanks. Christine Romans outside the New York Stock Exchange.

We are waiting for New York mayor Michael Bloomberg to hold a press conference. We will bring that to you live. In the meantime, New York's governor, George Pataki, is demanding an investigation. He says the regional power system should have been upgraded in order to keep massive blackouts like those in the '60s and the '70s from happening again, like they did yesterday. He's also urging people to conserve electricity.

(BEGIN VIDEO CLIP)

GOV. GEORGE PATAKI (R), NEW YORK: We're not out of this yet, and that's part of the important message. While you may hear in western New York, the vast majority of the people have the lights and power back, we still are in the midst of this crisis, and there are still millions of people in this state who have no power. And what we are urging everyone to do is to conserve energy. Don't turn on your air- conditioner unless it's absolutely necessary for health reasons. Don't connect your appliances. Don't go doing your wash. Do everything you can to save power.

(END VIDEO CLIP)

HOPKINS: That is the governor of New York, George Pataki. And again, we are waiting for the mayor of New York to have a news conference. We'll bring that to you when it happens.

But next, let's go to Fredricka Whitfield in Atlanta for more news -- Fredricka.

WHITFIELD: All right. Thanks, Jan. While we're waiting for that to happen, this is also a national issue. Geographically, Mr. Bush is far from the power problem, but politically, he is already at ground zero. CNN's Suzanne Malveaux is traveling with the president in Newport Beach, California. Suzanne, how's the president responding today?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Fredricka, he's responding very strongly about this. And as you had mentioned before, it has become a very hot political issue over the last 24 hours. President Bush took the time, of course, to say that the American people who were affected by this were doing a good job, their cooperation, that they really showed the true character of the American people. He also praised the federal, state and local officials for working well together. But he said that this incident really is a wake-up call, that this power grid, the national power grid system, is antiquated, he called it. He said it needed to be modernized. And he took the opportunity, once again, calling on Congress to pass his comprehensive energy bill.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: It's going to take a while, I think, but we will find out what caused the blackout, and we'll deal with it. I view it as a wake-up call. You know, I've been concerned that our infrastructure, the delivery system, is old and antiquated. And I think this is an indication of the fact that we need to modernize the electricity grid. And so it's a good opportunity for us to analyze what went wrong and deal with it. We don't know yet what went wrong, but we will.

(END VIDEO CLIP)

MALVEAUX: Democrats already arguing that the president's energy bill is not going to fix those problems. I should let you know, Fredricka, though, in Washington, the debate over the energy bill really has not focused on this grid issue at all, but rather the source of power, talking about oil drilling, trying to find alternative sources of power, as well as trying for the United States to be less dependent on the Middle East for its power, not the delivery system. You can bet, however, that that debate certainly has changed -- Fredricka.

WHITFIELD: All right, Suzanne. Thanks very much, from Newport Beach, California. Now back to Times Square in New York, where we find Jan -- Jan.

HOPKINS: Thanks very much, Fredricka. And again, we are waiting for New York mayor Michael Bloomberg to hold a press conference to talk about what is going on right now in the city of New York. Meanwhile, we are in Times Square. It's starting to get a little noisy here.

Still to come: Will the blackout prove to be a boon or a boondoggle for business owners? We'll look at who stands to cash in.

And later: Critics say the U.S. power grid is Stone Age technology in the 21st century. We'll speak to an expert who says the opposite.

(COMMERCIAL BREAK)

WHITFIELD: Well, you heard Suzanne Malveaux report this just moments ago. President Bush says the blackout serves as a wake-up call to overhaul an antiquated system. Well, Democrats don't disagree, but some are already blaming Mr. Bush for inaction. And Congress is scheduling hearings, as well. The House Energy and Commerce Committee wants to question, among others, the mayor of New York and the governor of New York, along with energy secretary Spencer Abraham -- not right away, though, of course, but when lawmakers return from their August vacations.

Now back to Jan in New York.

HOPKINS: Thanks, Fredricka. We will be hearing from Mayor Bloomberg in just a few moments.

But first: Power has long been the name of the game in Washington, as we just heard from Fredricka. But as an issue, it's also a lightning rod. And here is CNN's Louise Schiavone.

(BEGIN VIDEOTAPE)

LOUISE SCHIAVONE, CNN CORRESPONDENT (voice-over): For a politician on the eve of an election year, there's nothing more unfriendly than a hot, sweaty, frustrated constituent. The rolling blackout which started last night created 50 million of them.

BUSH: And now we've got to figure out how to make the electricity system have the redundancy necessary, so that if there is an outage like there has been throughout our history, that it doesn't affect as many people as it did in the past.

SCHIAVONE: On CNN, former energy secretary Bill Richardson called it a third world system.

GOV. BILL RICHARDSON (D-NM), FORMER ENERGY SECRETARY: We've got to build more transmission lines in the country because we've got more technology, we've got more computer demand, we've got more heat waves, we've got more people. And unless we take those steps, we're going to have massive blackouts.

SCHIAVONE: But in Washington, the steps seemingly go backward in time. Before its August recess the Senate resorted to passing a two- year-old energy bill, after a newer White House proposal went nowhere. The Bush-backed bill did address the nation's electrical system, envisioning a highway of far-reaching high-voltage transmission lines for energy sharing among regions and empowering federal energy regulators to require system reliability and upgrades. But the bill sank under the weight of controversial issues, like subsidies for oil and gas companies and drilling in the Arctic wilderness.

With electricity just a segment of the energy problem, critics of every stripe argue that current national policy ignores an impending crisis.

UNIDENTIFIED MALE: I'm sorry to hear that President Bush did not mention the first option that I would support in trying to make our grid more reliable, which is to invest much more strongly in conservation devices.

SCHIAVONE: Congress seems to be getting the latest message.

REP. EDWARD MARKEY (D-MA), ENERGY AND COMMERCE COMMITTEE: I think that what happened yesterday now guarantees that at least the electricity reliability part of the energy bill does become law.

(END VIDEOTAPE)

SCHIAVONE: At summer's end, House and Senate negotiators will try to hammer out a compromise energy bill. And Congress, of course, will hold hearings on the blackout -- Jan.

HOPKINS: Louise, has anybody said anything about deregulation of electricity? Is that playing into this? And might Congress look at that issue?

SCHIAVONE: Well, there's a robust debate, Jan, about the merits of deregulation, whether or not it created an uproarious marketplace, where caps led private utility owners not to improve the grids, to improve the equipment that they use because their rates were capped and they wouldn't make a lot of money out of it. And so the issue of re-regulation and deregulation no doubt will come up in this discussion -- Jan.

HOPKINS: Louise Schiavone in Washington.

And we are waiting for New York mayor Michael Bloomberg to talk about the latest situation in the city. Meanwhile, the effects of Thursday's blackout could reach far beyond the region plunged into darkness. We'll examine its impact on the economy when we come back.

(COMMERCIAL BREAK)

HOPKINS: We're going live to New York mayor Michael Bloomberg. He's talking about the latest.

(INTERRUPTED FOR COVERAGE OF LIVE EVENT)

HOPKINS: New York mayor Michael Bloomberg talking about the current situation. Some people in New York still without power. But Broadway will be lighted up and in business tonight, as will the Mets at Shea Stadium. Subway service, though, is not back in New York yet and won't be for another eight hours or so.

We have just heard that President Bush has announced a joint U.S.-Canadian commission to investigate what happened. Let's go to Fredricka Whitfield in Atlanta for more -- Fredricka.

WHITFIELD: All right. Thanks very much, Jan. I know a lot of New Yorkers are glad to hear that at least the Mets game is on. And the investigation is now progressing.

Meantime, up north, millions of Canadians are slowly getting back some of their power. It is very gradual. However, officials are warning of some gradual potential rolling blackouts. Scott Laurie of our affiliate, CTV, has more on the blame game and the recovery.

(BEGIN VIDEO CLIP)

SCOTT LAURIE, CTV CORRESPONDENT (voice-over): North America's biggest power outage ever has still left millions without power, and it sparked a power play between Ontario's premier and the mayor of New York, who says the blackout was made in Canada. BLOOMBERG: Oh, I don't think there's any question. All the power companies feel very strongly that it happened in Canada. Whether it was somebody that did something wrong or a piece of equipment that failed or a lightning strike...

LAURIE: Premiere Ernie Eves says not so.

ERNIE EVES, ONTARIO PREMIER: New York, which is the northeastern center that is set up to review the entire northeast of the U.S. and Canada, has concluded this morning that, indeed, it did happen in the upper Midwest U.S., not in the province of Ontario.

LAURIE: The Ontario government still has a state of emergency. It's urging people to stay home and limit electricity use. That means big energy users, like factories and office towers, are supposed to stay shut. Energy critics say Ontario's reliance on power imports could have made the problem even worse.

BRUCE CAMPBELL, IND. ELECTRICITY OPERATOR: We were importing about 10 percent of our power in order to make it through a hot day. That makes us a risky partner.

LAURIE: At Canada's busiest airport, delays and no clear timeline for when backlogs will be cleared up. On the streets, some were worried, like the Napiers (ph), whose son was on life support when power vanished.

UNIDENTIFIED MALE: Well, we were actually quite concerned because our family member was in an ICU on life support. So we were a little bit concerned greatly. And anyway, in the end, everything was OK.

(END VIDEOTAPE)

LAURIE: The premier of Ontario has said that most people in Ontario, 66 percent of the province, should have electricity perhaps by the end of the day. The problem is that rolling blackouts, similar to the ones that took place in California not very long ago, will be the name of the game. That means some people who got power perhaps earlier today could lose it for a couple of hours over the next course of the -- over the next few days -- Fredricka.

WHITFIELD: All right. That same cautionary note being passed on to a lot of people in the Northeast in the States, as well. Well, talking about your piece, you had that one couple talking about some severe medical conditions. Other than that, how are people in general seemingly coping with this?

LAURIE: Most people took the day off. Downtown Toronto was fairly empty today. Usually, it's a very busy place, with rush hour and all that. But today most people agreed with what the premier said and took the day off. They didn't show up. The subway isn't working. Commuter trains aren't working. A lot of people are taking the time to stay at home. But they're being told if they do stay at home, not to use air-conditioning. And that's a problem because it's actually extremely hot today. WHITFIELD: All right. Stay at home, keep the windows open and hope for a breeze. Thanks very much. Scott Laurie of CTV.

We'll be right back right after this break.

(COMMERCIAL BREAK)

HOPKINS: We're back in Times Square in New York, and as you can see, it's a pretty lively place, the way it normally is. The question is could the power outage be good for business? It really depends on what business you're in. Susan Lisovicz is here with that story. Susan, I saw a lot of people buying batteries. There were lines for stores that were open with batteries and water. Those were the two things...

SUSAN LISOVICZ, CNNfn CORRESPONDENT; And you nailed it. I mean, actually, for a very select area of retail it can be good for business. I talked to one retail analyst today. He said your grocery stores generally gain about 10 percent, 15 percent of business during a blackout: batteries, water. I talked to one small retailer today. He sells jeans and shirts. You know what he was selling today, underwear because people didn't have water, and so they were selling a lot of this. But these are low profit margin items. This is not what they want to see selling.

HOPKINS: What else did you find out from retailers?

LISOVICZ: Well, you know, the mayor was talking about the Mets being on a win streak. For retailers it's really a shutout for a couple reasons. One is that this blackout occurred in one of the most populous areas of the country. For your average retailer 10 percent to 15 percent of a chain store has its stores in the northeast. For the Gap, for instance, yesterday it had 500 stores closed out of 3600.

And it's not only the location. It's the timing. We're at the back to school shopping season. This is when retailers roll out their new merchandise and they sell it at full price. This is second only to the Christmas shopping season.

So the question, Jan, is not really whether consumers will come back. We know that parents and kids will come back to the stores. The question is whether retailers will have to mark down to make up for the lost time.

HOPKINS: And what have retailers learned from 9/11 that they can apply in a situation like this?

LISOVICZ: Well, they're really two different factors. I mean, there's no question that we were all reminded of 9/11 yesterday when we were trying to get home, when you saw tens of thousands of people evacuating the city. But 9/11 was a national retail crisis. People were depressed. They were frightened. They didn't want to leave their home. In this particular case it's an inconvenience, and it's the northeast, and hopefully it will soon be over.

HOPKINS: Thanks. Susan Lisovicz. A lot of analysts say that the outage will hit the economy like a blinding blizzard. But as our own Peter Viles reports, that doesn't necessarily mean that the economy is lost in the dark.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): From Detroit to New York City, the biggest blackout in American history is clearly a shock to the economy. Travel plans disrupted, work days cut short. But how bad is the damage? Well, not serious enough, says Bear Stearns, to derail an economy that is gaining steam.

JOHN RYDING, BEAR STEARNS: Yes, the data for August will be affected, For example, it's the payroll survey week. Hours worked will be depressed because a lot of people took a three-day weekend. Maybe that's good for some people. But losing a day in the summer is certainly not a make or break event for the U.S. economy, which generally speaking, is on an improving upswing at the present time.

VILES: The mayor of New York likened the crisis to a blizzard that shuts the city down. Big storms tend to have minimal economic impact. It's true they stop some economic activity in its tracks. But they also create new spending, emergency spending.

TRACI MULLIN, NATIONAL RETAIL FEDERATION: A lot of those sales will be made up. So we really sort of view this as an inconvenience, more like a snow day than anything else.

VILES: There's an element of good timing to all of this. August is a very slow economic month. And Friday is the slowest workday of the week.

(END VIDEOTAPE)

VILES: A number of variables, though, still in this economic equation. We don't know when the situation will be over, when power will be restored everywhere. We don't know if we're going to have civil disobedience anywhere, looting perhaps, which would have its own economic cost. And the biggest thing we don't know is when there's an outcome to all of this, some sort of solution, we hope, in the energy system. Will that cause the cost of energy to go up?

Rising energy prices always are negative for the economy -- Jan.

HOPKINS: If the utility companies have to pay more to upgrade their systems, that's what you're talking about...

VILES: Anything that increases energy costs is a drag on the economy. It's like a tax on the economy because everybody pays energy costs.

HOPKINS: Thanks, Peter Viles.

And coming up, actually, we will be talking with a former commissioner from the Federal Energy Regulatory Commission. He'll talk about what's wrong and what's right with the system. (COMMERCIAL BREAK)

HOPKINS: Yesterday, former Energy Secretary Bill Richardson called the U.S. power network a third world electricity grid. There's at least one man who begs to differ. He's Bronco Terzic. He's director of regulatory services for Deloitte & Touche and a former member of the Federal Energy Regulator Commission. He joins us from Washington.

But with a network that went down so quickly, why wouldn't you say what Bill Richardson said, and that is, that the grid seems to be like a third world country?

BRANKO TERZIC, FRM. FFRC COMMISSIONER: Well, anybody that's been in a third world country knows that that's just not true. I've spent the last four years working in Central and Eastern Europe. I'm an engineer and earlier in my career I appraised electric systems. Believe me, we have the finest electric system in North America, and it's just not true. The system is stressed. We need new investment. And we need to also change maybe the way we're operating the system.

HOPKINS: But it's interesting. You're saying that from Washington. I'm sitting in New York. I walked down 20 flights yesterday and home 40 blocks and then up 20 flights. That certainly seems like a third world country.

TERZIC: Well, I guess at the moment when power is out it's out. But the frequency of power outages, the duration of power outages, historically in the United States, has been nowhere near what either the second or the third world has. I think the statistics will bear me out.

What we have is a unique system, unique series of probably consequences, probably multiple events that happened at the same time. We'll have to get to the bottom of it. We'll have to make a mix of it. No excuses for that, but the system itself, the quality of the engineering, design is world standard. No question about it.

HOPKINS: But when you look at what happened with the system going down so quickly, do you think that it was really an accident, or is something else going on here?

TERZIC: No. Well, I have no reason to believe it wasn't a disaster caused by a series of, probably, accidents. In earlier failures, in the failure of '65 and the failure of '77 and some western failures, there was discovered to be some error on the part of decisions that could be made by system operators and by others. We'll have to see whether it was humanly possible to mitigate or preempt some of those things that occurred.

But you know, the system shut itself down safely, which is what it's supposed to do. The operators tried to balance the system as best as they could but look, in May 22 of this year the New York ISO told the people of New York there is insufficient generating capacity in New York and there's also insufficient transmission and said, you know, this system is okay only if we have a normal summer and then barely so.

HOPKINS: But you're talking about upgrading an infrastructure. That's going to take some time to do, and it's going to cost a lot of money, isn't it?

TERZIC: Well, I think we'll look at it this way. The investment we make in new electricity transmission infrastructure will save us millions and billions in unnecessary new generation, will make existing generation more efficient, and in the long run will also improve the economy and cause the economy to grow.

We know that growth in electricity is tied to growth in GNP. And I think that it will cost us more not make the investment in lost business, lost opportunities, down time, than it will to make the investment. Overall, I think it's a net benefit.

HOPKINS: Now, is this something that Congress, though, is going to mandate that utilities do? Because it's costly and it's going to hurt these companies' bottom line and their stock price.

TERZIC: That's not true. Utilities have invested when they can get a fair return. The electric grid in the United States is not deregulated. Somebody earlier said it was deregulated. Believe me, the Federal Energy Regulatory Commission, my old agency, regulates every power plant in the United States that sells power at wholesale, and the state commissions regulate those plants that sell power at retail.

The transmission system is split. Transmission construction and approval is under the authority of the states. The pricing of transmission system is under the authority of the FERC. They all have their tools, and they can use them. Congress can come in and add some additional help. There are some components of the proposed energy bill which will help in this area.

HOPKINS: Thanks very much, Branko Terzic, a former federal regulatory commissioner and also former CEO of Yankee Energy, which is a New England power utility.

Let's go back to Atlanta and Fredricka Whitfield.

WHITFIELD: All right. Thanks a lot, Jan.

Well, let's talk a little more about this power grid and give you the nuts and bolts of it, if you will.

CNN technology consultant, Daniel Sieberg, has been looking at how the system is supposed to work.

(BEGIN VIDEOTAPE)

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT (voice-over): It's easy to take for granted. But the path of electricity from a power plant to your wall socket is a rather, well, circuitous one.

Think of it like our nation's roadways. There are expressways, smaller lanes, on-ramps and off-ramps and intersections. In the world of electricity, these interconnected systems are called power grids. But since electricity cannot be stored, it's generated as needed, then distributed on demand.

Each state shares power with the states next door. When one runs short, a neighbor picks up the slack. That's how the power grid stay in balance, especially in the summer months when energy is in high demand.

The place where power is used, though, is often far away, maybe hundreds of miles from the place the power is generated. There are 6,000 power generating units across the country. Here you can see the flashing red ones, where the 21 outages occurred Thursday. These units are energized with coal, oil, gas, falling water, wind or nuclear fission. A certain amount of power is lost as electricity travels over long transmission lines. So there are substations along the way to boost the current to a higher voltage.

The U.S. and Canada have about half million miles of high voltage transmission lines. The wires eventually lead to regional distribution centers, which in turn manage the power down to local trunks which then dole out the energy to local homes and neighborhoods. And there are monitors all along the grid, ready to make automatic adjustments for sudden demand or spikes in power output.

Daniel Sieberg, CNN, Atlanta.

(END VIDEOTAPE)

HOPKINS: Let's go to New York's Penn Station. Bill Tucker is standing by, talking to some people on the street. What do they have to say, Bill?

BILL TUCKER, CNNfn CORRESPONDENT: Jan, now that we know how it was supposed to work, we know that it didn't work. And where I'm standing right now this morning was literally littered with thousands of people who spent the night out on the street here at Penn Station and down in the station itself. And back behind me, you can see the steps of the post office. There were probably about a thousand people, Jan, who slept up there.

Everybody has a different story to tell about last night. I'm with a couple of ladies, however, that didn't spend the night on the street but they had a different kind of experience.

I'm joined now by Darlene (ph) and Michelle (ph). Darlene (ph), welcome.

UNIDENTIFIED FEMALE: Yes. It's nice to talk with you.

TUCKER: Now tell us what happened to you this morning.

UNIDENTIFIED FEMALE: This morning? Well, we left D.C. on a train at 3:00 a.m., and when we got here we was made to believe when we left D.C. that we was going to be going straight through to Boston, where we'd like to be. But we was told to get off here.

TUCKER: So Amtrak pulled into New York at 6:00 in the morning, told you and your daughter you need to get off now?

UNIDENTIFIED FEMALE: Yes.

TUCKER: Did they tell you you were going to get a train out of here?

UNIDENTIFIED FEMALE: No.

TUCKER: So how are you going to get home?

UNIDENTIFIED FEMALE: Well, my neighbor was with me because she took the vacation with us, and she called her husband, and he's on his way down to get us.

TUCKER: So Michelle, you've been standing around here with your mom all day long waiting for somebody to come and get you?

UNIDENTIFIED FEMALE: Yes.

TUCKER: Has it been fun?

UNIDENTIFIED FEMALE: No. Kind of boring.

TUCKER: I can't imagine why. Jan, it was kind of boring standing around Penn Station all day long, waiting for somebody to come down from Maine to pick them up.

That's a sampling of some of the stories that you're going to get when you walk around here at Penn Station today, Jan. A lot of people going to have something to say about this day for many years to come. Back to you.

HOPKINS: So bill, your story. How long did it take you to get home?

TUCKER: I didn't get home, Jan...

HOPKINS: Ah-ha!

TUCKER: ...as you can probably tell -- you can tell from the George Michael look that I'm sporting here this evening, I ended up sleeping, actually, on the floor of the lobby of the building...

HOPKINS: Oh my goodness.

TUCKER: ...where our offices are. I've slept worse places. It was nice cold marble, so....

(LAUGHTER)

HOPKINS: Thanks. Bill Tucker at Penn Station. A lot of stories about what happened the day the lights went out. If you want advice, you can go to the experts. So we asked Iraqis living in desert climes with no power what they think of yesterday's U.S. power outage. And we'll find out what they have to say ahead.

(COMMERCIAL BREAK)

WHITFIELD: Well, more now on the blackout -- or in a minute we'll have more on the blackout. But first, let's look at some of the other stories we're following for you right now.

Nearly 15 years after a bomb destroyed Pan Am Flight 103 over Lockerbie, Scotland, families of the victims are on track to receive millions of dollars in compensation. Reuters reports that Libya has delivered an official letter to the U.N. Security Council, renouncing terrorism and accepting responsibility for the bombing. A lawyer representing the victims' families says each family is likely to receive at least $5 million.

Israel has agreed to hand over security control of four more Palestinian cities. Though the details are yet to be -- have yet to be ironed out, both sides agreed to meet on Sunday to set a timetable for the handover, which they both want to complete in less than two weeks. The cities involved are Jericho, Qalqilya, and Tulkarem and Ramallah.

HOPKINS: We are back in Times Square in New York. And to some people's surprise, the stock market started on time today and apparently trading without a hitch.

Christine Romans, I don't think, was surprised -- Christine.

ROMANS: No, I wasn't, Jan.

And from the opening bell it was anything but a normal day. First of all, Mayor Michael Bloomberg rang the opening bell on a quiet summer Friday. Second of all, you had traders who were pretty tired and quite a bit scruffy.

(BEGIN VIDEO CLIP)

LINDA JAY, LARRANCHE & CO.: Because you know a lot of cranky people down here, you know, unshaven, unshowered, did not sleep well. You know, one guy told me he put two chairs together and that's how he slept last night.

(END VIDEO CLIP)

ROMANS: It wasn't just one guy. You had Dick Grasso, the chairman of the New York Stock Exchange, says he slept on a couch. Some 300 other people were sleeping and working here all night.

The opening bell rang without a hitch, and by the end of the day it was the quietest trading day of the year; 600 million shares changing hands. You have the Dow up just 11 points, Jan, in a very, very thin market. You had the Nasdaq up about 1 point, and you had the S&P not even up a point.

Oil prices rose. There were some concerns about potential supply disruptions to refineries, but that was also very light trading.

The dollar was steady. Bonds fell. In the end, the experts say, you know, it was an annoying day, but the markets and the economy will probably survive.

It wasn't without glitches, however. The American Stock Exchange was only open really for about 20 minutes. It didn't open until about 3:45 Eastern time. You also had some of the metals markets that were closing early. The bond market closed early as well. And also, Jan, it was inevitable that people would talk about the lessons they have learned from September 11 and how those lessons helped today.

(BEGIN VIDEO CLIP)

DICK GRASSO, CHAIRMAN, NYSE: Well, clearly, there were contingency lessons that we've experienced as a result of the great tragedy of September 11, and we took from those lessons much knowledge that we've applied, and as you see, in perhaps one of the most challenging power outages in the history certainly of this city, if not this nation, we're up and operating business as usual.

(END VIDEO CLIP)

ROMANS: Jan, in the end the closing bell on Wall Street was rung by the most powerful players on Wall Street right now -- the electricians -- Jan.

HOPKINS: That's for sure. Christine, for the whole week, was it a good week or a bad week?

ROMANS: Up a little bit for the markets, but this quiet day, everyone says it's a blip. We'll have to come back Monday and regroup and see what the market wants to do about it.

Jan, I asked a lot of traders, you know, if they were surprised that the dollar didn't get more of a move or that stocks weren't unnerved by this blackout in the northeast, and they said, really no, it was a quiet day, they'll wait to digest all of the news, how it happened, and what the economic fallout is and they'll, you know, reconvene on Monday.

HOPKINS: Thanks very much. Christine Romans outside the New York Stock Exchange.

And if you're hot, sweaty and have no electricity or air- conditioning, you must be in New York? No, Baghdad. We'll get some coping advice from Iraqis in just a moment.

(BEGIN VIDEOTAPE)

RYM BRAHIMI, CNN CORRESPONDENT (voice-over): It was predictable. In the streets of Baghdad, there's not much sympathy for New Yorkers.

UNIDENTIFIED MALE (through translator): I hope they can finally feel what we have been going through.

BRAHIMI: Store owner Abu Tiva (ph) says while New Yorkers count the number of hours without electricity, he's counting the number of hours he has electricity, and the number is four.

He only has electricity four hours a day, and he says that's bad for business. In New York, they're working to restore electricity in days. Here, coalition authorities have promised electricity would return to its pre-war level next month, saying sabotage of power lines has delayed work on this country's electricity grids. But Iraqis complain the U.S. isn't doing enough.

UNIDENTIFIED MALE (through translator): Those who brought fleets, an army, and tanks to this country can't provide me with power? If they wanted to, they could do it in a matter of hours.

BRAHIMI: New Yorkers are coping with temperatures in the 90s. In Baghdad, temperatures can soar up to 55 degrees Celsius, or 130 degrees Fahrenheit.

To cope, Iraqis can buy ice on the streets, or, for the wealthier, generators.

These men have found brief respite in an air cooler, 1960s version, that they've linked to a generator in the neighborhood. But, says this man, what New Yorkers are experiencing is nothing.

UNIDENTIFIED MALE (through translator): Let them be patient like us. We've been patient for 13 years. They have the sea. Their weather is nicer. And there are other states they can go to where it's cooler.

BRAHIMI: Others see this as a punishment from above.

UNIDENTIFIED MALE (through translator): Anything bad that happens to those who hurt good people is a punishment from God.

BRAHIMI: Any advice to New Yorkers, we ask?

UNIDENTIFIED MALE (through translator): I said jokingly, let them link up a power strip to ours and we can send them some power.

UNIDENTIFIED MALE (through translator): What can I tell them? Let each one hold the fan and start fanning, or let them go swim.

BRAHIMI (on camera): There may not be that many swimming pools in Baghdad, but there's the Tigris river. Many Iraqis are advising New Yorkers to do what they do -- head for the river and cool down.

Rym Brahimi, CNN, Baghdad.

(END VIDEOTAPE)

WHITFIELD: Well, before we end the hour another important story, this one in the U.S., to keep an eye on. Folks along the south Texas coast are worried about more than their power going out. A tropical storm named Erika is getting stronger and it's heading straight for them. Our Orelon Sidney is keeping close watch on Erika, and what potential damage it might do -- Orelon.

ORELON SIDNEY, CNN METEOROLOGIST: Thanks a lot, Fredricka. It is indeed getting stronger. As you can see, it's trying to form an eye now. That's the first time we've seen that feature since this storm has been in evidence. It does look like the center of the storm now just about there, but I don't really want you to focus too much on the center, because generally this whole circulation to the north of the center is going to be very active. We're going to see a pretty good chance of some flooding. We do have flash flood watches already in effect for the southern portion of Texas, as we're looking at rain up to six inches in some areas.

Right now the storm 245 miles east of Brownsville. Winds are up to 60 miles an hour at the last update that came in about two hours ago. Moving to the west now at 22 miles an hour. That very fast forward speed is keeping it from developing much more than it is, but we already have tropical storm warnings and hurricane warnings stretching from Port O'Connor, Texas, down to Brownsville, and then continuing southward to La Pesca, Mexico. That means you can expect these conditions within 24 hours.

Big area of high pressure has dominated the nation. That's the steering current that's been pushing our storm on to the west, and will continue to move it almost directly due west tonight. It is forecast to become a minimal hurricane, probably about 74 miles an hour, before it moves on shore. But as you can see, lots of rain already. Probably going to see some tornado watches issued later tonight from Corpus Christi, I think, down to Brownsville, and then as this moves inland, you could see hurricane force winds even up to the Rio Grande Valley. This is a pretty narrow area here, of course, across the southern portion of Texas. So we will certainly be watching for tropical storm force winds, possibly hurricane force winds, moving inland -- Fredricka.

WHITFIELD: Thank you, Orelon. Thanks very much. We'll be keeping a close watch on those developments throughout the weekend. Thanks to you, Orelon. And Jan, good working with you this past hour.

HOPKINS: Nice working with you. I already see t-shirts on tourists saying "I survived the blackout." That's it for me in Times Square. I'm Jan Hopkins. "LIVE FROM THE HEADLINES" with Anderson Cooper is up right after this.

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