O'Malley backs fines if utilities fail to meet standards

By John Wagner
Washington Post Staff Writer
Monday, January 31, 2011; 10:32 PM

Maryland Gov. Martin O'Malley said Monday that he supports legislation that would impose fines on Pepco and other utilities that fall short of new state "reliability standards," including ones laying out how quickly power should be restored after snowstorms.

O'Malley (D) pointed to the large number of Pepco customers left in the dark for days after last week's storm, as well as widespread complaints in the Washington area about the utility's customer service practices.

"All of us are beyond frustration here," O'Malley told reporters Monday, echoing a letter sent over the weekend to Pepco Holdings Chairman Joseph Rigby. "It really underscores why it is we need reliability legislation so there's some financial incentives and some financial penalties in place when utility companies fail to perform at a level of service that all of us should expect."

Thomas Graham, president of the Pepco region that includes Maryland and the District, said the utility "doesn't have an objection to standards, as long as the standards are fair." He said that if fines are utilized, the state should also provide incentives for superior performance.

"I understand the frustration of the governor, and I understand the frustration of our customers," Graham said, but he added that a string of major storms had taken a significant toll on Pepco's infrastructure.

O'Malley has pushed state regulators for months to develop reliability standards spelling out expectations for utility companies - a move prompted largely by outages in the Washington region last summer. Monday was the first time O'Malley publicly announced support for imposing penalties when standards are not met.

Several other states, including New York, have similar initiatives in place.

The Maryland legislation, which is being drafted, would direct fines collected from the utilities to affected customers in some cases, aides to O'Malley said.

The governor is working on the legislation with Del. Brian J. Feldman, a Democrat who leads the House delegation from Montgomery County, which experienced the vast majority of outages after last week's storm.

Feldman said he expects members of the delegations from Montgomery and Prince George's counties to sign onto the bill as co-sponsors, a reflection of how deep frustration runs with Pepco, which serves 778,000 customers in those two counties and the District.

A draft of the bill leaves it to the Public Service Commission, which regulates utilities in Maryland, to develop a schedule of fines.

Del. Dereck E. Davis (D-Prince George's), chairman of the House Economic Matters Committee, said he is generally supportive of the governor's efforts but wants to ensure that utilities cannot pass along the cost of fines to customers.

From a political standpoint, the legislation is "pretty much a no-brainer" for O'Malley and lawmakers, said Todd Eberly, a political science professor at St. Mary's College of Maryland. "They want to seem to be reacting to the public anger."

O'Malley has spent much of his tenure sparring with the state's major utilities. He promised during his 2006 campaign to curb a sharp rate increase imposed by BGE, the state's largest electricity provider. BGE's customer base is in the Baltimore area.

In his letter sent over the weekend, O'Malley said the BGE had performed far better than Pepco in restoring power after the storm.

"I am also outraged that your customer communication remains unacceptable; the outage map posted to your website crashed yet again, leaving customers seeking information about their outage in the dark," O'Malley wrote to Rigby.

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