A Niagara-Mowhonk (sp?) substation apparently got overloaded, and dropped off the grid, causing a cascading outage. Something similar (sounds identical, actually) happened back in the 1960's - in the same northeast region.
I would have thought that they would have had measures in place to deal with this sort of thing, since it caused problems in the past. But then, electricity is a funny thing...
What everyone seems to forget is the circuit breakers worked, in the '65 outage. Much easier to repalce a few miles of fried line, and reset the breakers than it is to repair/replace generators (hours/days vs months/years)