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Maryland Politics
Posted at 05:00 AM ET, 07/13/2012

Two Maryland senators urge massive fines against Pepco, BGE

Backlash over the power outages following the June 29 storm continue as Maryland Senators Brian Frosh (D-Montgomery) and Jim Rosapepe (D-College Park) urge state utility regulators to impose fines of $100 million each on Pepco and BGE for the economic damages-- from spoiled food to shuttered workplaces --borne by homeowners and businesses left in the dark.

Pepco also is set to answer questions Friday about its storm response when it appears at a scheduled 1 p.m. hearing before the District of Columbia Council’s Public Services and Consumer Affairs Committee.

On the Montgomery County Council, member Hans Riemer (D-At Large) started an online petition Thursday calling for Gov. Martin O’Malley (D) to fire the current members of the Maryland Public Services Commission, which regulates utilities.

The outrage on many fronts came after a storm that at its height took out power to an estimated 1.3 million customers in the Washington area, including the District, parts of Maryland and Northern Virginia.

The massive fines advocated by the Maryland senators would fund what the two lawmakers dubbed a “Surge Reserve” of trained workers to end long power failures, the senators said Thursday.

Both utilities noted that their response was shaped by the fast-moving nature of the storm — which pre-empted some planning — and said they had large worker pools on hand quickly.

“It’s extremely premature to be calling for any action to be taken prior to the full fact-based review by the Maryland Public Service Commission,” BGE spokesman Rob Gould said. “The reality is that no weather service predicted this storm, which is why no utility east of the Mississippi River was in a position to premobilize for this extremely unusual event.”

Gould said the company was able to restore about the same number of outages last week as it did during Hurricane Irene in 2011 — with 1,500 fewer workers.

Likewise, Pepco said that it employs about the same number of linemen as it did 15 years ago, with 147 now compared to 162 then. But it also has about 400 overhead linemen working on contract compared to about 155 it had under contract 15 years ago, according to David M. Velazquez, executive vice president of Pepco’s parent company, Pepco Holdings, and leader of its power delivery business.

The senators urged the Public Service Commission to act under authority from a law passed in 2011 meant to enhance reliability by giving regulators the power to fine utilities as much as $25,000 per customer per day for failing to meet standards.

Last December, Maryland regulators fined Pepco $1 million for failing to fix problems that have led to the frequent outages that have long plagued customers.

Though large, the fine represented a small percentage of the company’s revenue in a given year. In 2010, Pepco Holdings paid more than $240 million in dividends alone. In the quarter immediately preceding the fine, it took Pepco Holdings about a day and a half to earn $1 million, according to the company’s government filings.

In turning attention on Maryland regulators, Riemer said, “It’s time for Gov. O’Malley to fire the current members of the PSC and replace them with real customer advocates,” according to his petition, which was posted on the web site SignOn.org.

“It has been about eight years now since the crisis at Pepco came to light, and as far as Montgomery County residents are concerned, nothing has changed,” Riemer said in the statement. “I can talk until I turn blue about what I think Pepco needs to do better; the fact is that only the PSC can change Pepco, and only the Governor can change the PSC.”

In response, Raquel Guillory, an O’Malley spokeswoman, said the commission is currently following procedure. “There’s a process, and the governor looks forward to hearing from the utilities when they go before the Maryland Public Service Commission,” she said. Regina Davis, a spokeswoman for the commission, could not immediately be reached for comment on Thursday.

Both the District and Maryland require utilities to file detailed reports on their response to major storms within about a month after the incident.

By and  |  05:00 AM ET, 07/13/2012

 
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