We can't end outages, but we can respond to them better

The recent outages that affected Pepco customers throughout the Washington metropolitan area made clear the profound dilemma all of us face as we increase our dependence on electricity to power large appliances, hand-held devices and information technology. We live in an age when demand is escalating. Our electric delivery system must meet that demand. Despite annual investments by Pepco averaging $232 million, advancements in electric technology have not kept pace with information technology. For example, Pepco still must rely on customers to call the company to provide notice of power outages.

This is not an excuse. We at Pepco understand and accept our responsibility to provide an essential service and increase our capabilities to meet demand -- and restore service faster. We also accept responsibility for the communication errors that occurred during our restoration efforts.

It is most clear that expectations for reliability are very high. They should be. We continuously evaluate our system and update our plans to enhance reliability, including our recent comprehensive plan to install smart-grid technology that includes an advanced metering infrastructure.

The Obama administration acknowledged the need for electric utilities nationwide to make system improvements when it made stimulus money available for the adoption of new technologies. Pepco successfully applied for stimulus grants and received $149 million from the total $3.4 billion available. We will spend that money on the deployment of new smart-grid technology that will significantly increase our ability to identify outages, communicate accurate information to customers and accelerate the pace of repairs. This is not to suggest, however, that smart-grid systems will eliminate outages. No technology exists to accomplish that goal. Even putting power lines underground cannot fully eliminate service interruptions.

Electric delivery systems are mechanical and subject to periodic failure because of the weather and myriad other circumstances that damage poles and wires. But new technologies can make the system better, and we can target areas for placing portions of the system underground so long as we all are willing to accept the inevitable cost and disruption that will result.

The most recent storm underscored, yet again, that trees and overhead power lines do not peacefully coexist, especially in storm situations. The D.C. area has the third-heaviest tree canopy in the nation, so Pepco must equally focus on tree trimming and service delivery. We cannot cut down all the trees, and in many areas it is even difficult to gain acceptance for the kind of heavy trimming that is necessary. Nevertheless, more is needed. Beyond trees, we have growing infrastructure requirements. The costs associated with system expansion are substantial. While the federal stimulus grants are enormously helpful, they do not fully cover the costs. We must balance the need and pace of these improvements with their likely impact on customer bills. A collaborative effort between customers, regulators, the company and other stakeholders is needed to ensure we do this together and in a way that will not create economic hardship. It is a reality that must be considered in an honest and frank discussion of system and operational enhancements.

To succeed in the long term, Pepco and the communities we serve must work together to address the challenges we face. We are preparing for a series of meetings with legislators and regulators where we will discuss our plan, which we believe will better meet our customers' expectations. We will make recommendations for additional tree trimming, selective placing of lines underground and infrastructure investments. Pepco will need the participation and input of our customers and political and regulatory leaders. While it will take time to complete all of the actions contained in any final plan, we will remain dedicated to improving electric service for our customers and our community.

Pepco operates on the foundation of trust that exists between customers and a company that has operated in this community for more than 100 years. We know that trust has been shaken by recent events. We are confident, however, that if we can tackle the difficult dilemmas we face, we will not only restore service more rapidly in the future but also restore the trust that we know we must earn.

The writer is chairman of the board, president and chief executive officer of Pepco Holdings, Inc.