Although the legislation sets reliability standards for electric companies for the first time and provides for fines if the standards aren’t met, its enforcement will be the responsibility of the do-nothing regulators at the Maryland Public Service Commission. That’s the state body that wasn’t even aware that Pepco had a problem as the utility’s performance slid to the bottom of the nation’s rankings in recent years.
Moreover, the House of Delegates and the Senate have produced competing versions of the legislation – and the House’s version overall has considerably fewer teeth than the Senate’s.
Negotiators are scheduled to iron out the differences this week, and Pepco’s critics inside and outside the legislature are concerned that the feebler alternative could triumph. It seems the electric industry may have too much influence in Annapolis, and Montgomery County too little, to pass a bill that would truly make a difference.
Anything less than a tough, effective law would be a shameful slight of the needs and interests of Pepco’s long-suffering customers, especially in Montgomery, where the electric service has been particularly egregious.
It would also be a disappointment for Gov. Martin O’Malley (D). His energy adviser, Abigail Hopper, said the governor supports the “strongest bill possible” that would “hold the utilities accountable.”
If the House version ends up as law, Pepco wouldn’t face the possibility of paying any penalties for lousy service until 2014. Moreover, its language is so fuzzy that fines could conceivably total just tens of thousands of dollars, even for large-scale outages that weren’t justified by bad weather. That would be a pittance for a company whose parent’s profit in the past two years totaled $267 million.
The Senate version foresees starting the penalties as early as next year, and they could run in the millions of dollars.
Critics of the Senate version say the risk of huge fines would spook Wall Street, so Pepco (and ultimately its customers) would have to pay higher interest rates to borrow money. Others said that worry is overblown. In any case, in order to have any impact, the bill must guarantee that the penalties aren’t negligible.
“The PSC is going to have to have a big stick, or these guys at Pepco are going to continue to do what they’ve done for the past five or 10 years, which is disinvest in maintenance,” said Sen. Brian Frosh, the Montgomery legislator who sponsored amendments that put more bite in the Senate version.
The whole process is maddening, for several reasons. First, it’s beyond doubt that stiff measures are needed, because Pepco’s reliability is so poor.