Pepco's customers were right: Utility is falling down on the job

By Robert McCartney
Thursday, August 19, 2010; B01

For years, Pepco customers have suspected that their electric utility was worse than average when it came to power outages. Their friends and neighbors with other power companies didn't seem to lose the juice so often.

For years, Pepco insisted instead it was just an unlucky victim of Mother Nature and of selfish tree-lovers who wouldn't let the company do necessary trimming to protect overhead wires.

Now it turns out the customers were right all along: Pepco is at the bottom of the class when it comes to frequency of power losses. What's more, Pepco has known about the problem since at least 2005 and has been too cheap or lazy to correct it.

Meanwhile, the Maryland state commission that allegedly regulates the utility has paid inadequate attention to Pepco's poor reliability while going right ahead with approving rate increases.

Happily, in an authentic victory for grass-roots civic activism, the climate of opinion surrounding Pepco has changed dramatically in response to the widespread outages that followed thunderstorms this summer and blizzards last winter. Letters from furious customers have forced politicians and the Public Service Commission to demand answers and talk about imposing penalties if Pepco doesn't improve.

It's important to keep up the pressure, because people's outrage tends to evaporate pretty quickly once their televisions and refrigerators are back on.

The numerous maladies besetting Pepco and its regulators were on vivid display at Tuesday's hearing in Baltimore, where utility executives went before the five-person PSC. I thought one exchange nicely captured two of Pepco's most important problems -- lack of foresight and lack of accountability.

The subject was Pepco's computerized telephone response system, which failed so completely in the first days following the July 25 storm that it mistakenly told some customers they wouldn't get their power back until September.

In retrospect, Pepco said, it should have switched off part of the system as soon as the storm hit, because it couldn't handle the call volume properly.

Ponder that. Relish the irony. The system didn't work precisely because there was so much need for it.

PSC Chairman Doug Nazarian was incredulous: "You're saying the mistake here is that you didn't turn off your system fast enough?" It seemed "colossally silly," he said.

Mike Sullivan, senior vice president of operations, was blase. "Technology has limits," he said. He promised the system will get an "enhancement" that would automatically shut down the troublesome portion when too many calls pour in, and return it to service only when it's ready to give people accurate information.

If Pepco thought ahead better, it would have anticipated that the system would be vulnerable to a quick-moving, large-scale storm. But it became clear at the hearing that planning for the future is not the utility's strength.

In a headline-making concession, Pepco acknowledged that industry surveys show it's been in the worst-performing 25 percent of utilities in terms of frequency of power outages -- NOT including when there are severe storms. (Apparently it doesn't keep track of how it compares when weather turns severe, which of course is when most people care.)

What got less attention was that Pepco also conceded it's been aware all along of measures it could take to increase its reliability. These include increasing tree-trimming, using more damage-resistant cables, and burying wires or rerouting circuits in selected areas that have had frequent outages.

"When we do the work, we're getting 50 to 60 percent improvements," William Gausman, senior vice president for asset management, told the PSC.

But there hasn't been enough of such work, so now Pepco says it wants to raise its spending on reliability from $150 million to $250 million over five years.

It seems pretty clear that the new plan results mostly from the new political pressures. Consider the issue of tree-trimming. Pepco loves to suggest that many outages occur because owners refuse Pepco's requests to trim their trees.

If that were the main problem, though, why is Pepco raising its annual budget for tree-trimming by $3 million, or 70 percent? It's not logical: If unwilling tree owners were the only obstacle, then spending more money wouldn't make a difference.

"We saw the frustration after the snowstorm," Gausman told me after the hearing. "We saw we needed to address the frequency issue more than in the past."

Incidentally, a Pepco official said that for Montgomery County the company has records of only about 75 cases in recent years where homeowners repeatedly refused to allow their trees to be trimmed, although a much larger number has blocked the company from doing as much pruning as it wanted.

As for the regulators, it was astonishing to discover that the PSC doesn't regularly see the industry surveys that Pepco uses to judge its own reliability.

The PSC has legal responsibility for ensuring that Pepco provides reliable service. The politicians seem ready to give it more powers to enforce that responsibility if necessary.

As a first step, the regulators should catch up to Pepco customers in understanding just how bad the service has been.

For the record, I'm a Pepco customer who lost power for about nine hours Wednesday. I discuss local issues at 8:51 a.m. Friday on WAMU (88.5 FM).

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