Blame California. Deregulation of the electrical business in the Golden State in the late 1990s backfired so badly—contributing to massive price hikes, rolling blackouts, and eventually the ouster of Governor Gray Davis—that other efforts to restructure elec­tricity markets in the United States seem permanently stalled. For example, rules making it easier for wholesale power generators to swap power went into effect in some states and not in others, leaving regional regulatory bodies with the power to block projects that might make the grid as a whole more reliable. "California just screwed that up so badly that everybody else is afraid of it," says Sally Hunt, a power-industry consultant who advised the United Kingdom on the successful privatization of its own power industry in the late 1980s.

So it took no small amount of courage for TransÉnergie U.S., a subsidiary of Hydro-Québec, to push forward with a 1999 plan to lay a new digitally controlled transmission cable under Long Island Sound. Connecting the New England electrical grid to power-hungry Long Island, which lacks the on-island generating capacity to keep up with population growth, would fill an obvious market need. And because the cable would be bracketed on both ends by advanced digital switches that precisely control the amount of power flowing through it, TransÉnergie would be able to stabilize regional power flows at peak times and bill utilities in Long Island or Connecticut for every kilowatt-hour of energy delivered, earning a quick return on its investment. (Metering power sent across the traditional power grid, which lacks such controls, is much more difficult.)