Pepco’s failures hurt business

July 8, 2012

Does business have a dog in the continuing fight between residents and government on one side and Pepco on the other when it comes to ensuring electrical energy in a reliable way?

You bet it does. Whether you are a Fortune 500 company or the local bagel shop, an automobile dealer or a self-employed consultant, business needs energy. And so do the many federal agencies located in Montgomery County. Food spoils. Employees don’t get paid. Important projects come to a standstill. Workers see child-care plans thwarted and summer camps disrupted.

I’ve talked to the hotels that lost guests, the food and drink establishments that lost inventory and customers, the engagement party that gets booked elsewhere, the Audi dealership running on empty.

The exhaustive and influential report of the Pepco Work Group put together by Montgomery County Executive Ike Leggett and chaired by former Lockheed Martin chief executive Norman Augustine, released last year, puts it right out there.

Data showed that losses to businesses from Pepco outages in 2010 alone, extrapolated to all county businesses, may have topped $200 million in 2010. Ninety-five percent of businesses experienced one or more outages of longer than five hours. More than half endured Pepco outages even when there was no storm event.

Following the February 1999 ice storm that left 230,000 Pepco customers without power and September 2003’s Hurricane Isabel, which left 76 percent of customers powerless, Pepco strengthened its system maintenance efforts. Soon after, the report documents, the backsliding started. Service deteriorated while Pepco profits first increased, then remained unaffected by poor performance. Rated against other regional utilities, Pepco lagged the field in reliability by 53 percent.

“Pepco’s performance during Non-Major Event circumstances as well as during Major Events has been inferior by virtually any reasonable standard,” the report said. County residents and businesses lose power regularly even when there’s nary a cloud in the sky.

The faults: Pepco’s inattention and underinvestment in basic power infrastructure, inadequate preparation for post-storm recovery efforts and abysmal communications and customer service.

The Maryland Public Service Commission, which is supposed to oversee Pepco in the absence of a “free market” situation, is, if belatedly, moving toward some modicum of accountability, fining the utility $1 million for its failures. And Pepco has trumpeted an improved approach, drawing lessons, if grudgingly, from Leggett’s County Work Group.

This is too late and — so far — too little. Need evidence? Pepco is back at the Maryland Public Service Commission asking for another rate increase — for $66 million. It is even asking customers to pay its expenses in arguing unsuccessfully against the previous $1 million fine.

No one can fault the hot, difficult uncomfortable work that Pepco front-line employees and contractors did last week to restore power to hundreds of thousands of homes and businesses. Or the incredibly valuable labors turned in by our county police, fire and rescue, 911 and 311 call takers, cooling shelter workers and county road crews.

Still, Pepco promises notwithstanding, the recent severe storm put Pepco’s supposed improvements to the test and — guess what? — it failed. It’s up to the Maryland Public Service Commission to hold Pepco truly accountable and responsive.

If not, businesses in Montgomery County and every other jurisdiction touched by Pepco are going to operate at a distinct economic disadvantage vis-à-vis our neighbors.

Steven Silverman is director of the Montgomery County Department of Economic Development.

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