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Top Pepco executive vows to enhance utility's reliability

By Ann E. Marimow and Hamil R. Harris
Washington Post Staff Writers
Tuesday, February 8, 2011; 10:10 PM

In his first public appearance since the January snowstorm that left hundreds of thousands of Washington area residents without power, Pepco's top executive said the company's response was "not acceptable, and we're going to fix it."

Pepco Chairman Joseph Rigby told Maryland legislators in Annapolis on Tuesday that he would forgo as much as $900,000 in compensation and that he aims to speed up by at least a year a long-term plan to improve reliability by more aggressively updating antiquated equipment and trimming trees.

In an attempt to rehabilitate the company's image, Rigby, who earns a base salary of $880,000, said he would not take a raise or bonus this year.

"It's not the right thing to do," he said of accepting more compensation, leaning forward on his elbows as he addressed the House Economic Matters Committee.

Legislators from Montgomery County, an area hit hard by the outages, expressed skepticism about the company's commitment to enhancing reliability and vented their frustration over the inability of constituents to get timely and up-to-date information about when power would be restored.

Del. Benjamin F. Kramer (D-Montgomery) described having to empty his refrigerator three times in recent years because of extended outages.

"I'm not a fan," Kramer said, faulting the company's public relations and customer service. "It seems there is no connection between the customer and the call centers, assuming they can actually speak to a human being."

Pepco customers were left in the dark for up to five days after the Jan. 26 snowstorm. During that time, more than 220,000 Pepco customers were without power, including 180,000 in Maryland.

Several legislators pressed Rigby about whether customers would have to pay more than they otherwise would have to help the company recoup outage-related losses. In a system designed to encourage energy conservation, Pepco is authorized to raise rates temporarily to recover money lost when electricity use drops and to lower rates when customers use more.

Critics have said the billing system in Maryland removes any incentive for the utility to quickly restore service when the power goes out.

In his remarks, Rigby stressed that the company has every incentive to restore power after a storm. He estimated that the response to the most recent storm cost more than $10 million.

"I'm disturbed by the impression that we're not incented to restore power," Rigby said. "We want to get through this as fast as we can."

Rigby did not commit to removing major outages from Pepco's billing calculations but said he was "open to discussion" and did not have "major resistance" to the idea.

The hearing comes as Gov. Martin O'Malley (D) is working on legislation with Del. Brian J. Feldman (D-Montgomery) that would direct state regulators to develop reliability standards for utility companies, such as determining how quickly power should be restored after snowstorms.

Regulators have the ability to fine utilities, but the legislation would direct the payments back to affected customers.

A Washington Post report found that Pepco ranks near the bottom in national surveys of reliability and that day-to-day service began declining five years ago.

The visit to Annapolis by top company executives was part of a series of meetings with elected officials designed to restore the company's credibility with its customers.

In Prince George's County early Tuesday, Pepco executives rebuffed a proposal by the County Council that called for financial compensation - or a rate freeze - for customers after the January storm.

Council member Karen Toles asked Pepco President Thomas Graham to consider freezing potential rate increases. But in an interview after the hearing, Graham said that the company is not considering a bill moratorium and that there are no immediate plans for a rate increase.

"I hear my customers," Graham said. "My company feels that is a top priority. We are going to execute this plan, but it is going to take time."

Although Graham told the council that Pepco is committed "to do a better job at restoring service to our customers," council member Eric Olson (D-College Park) said he has never heard so much "anger and frustration" among his constituents.

"A lot of my residents said it has been too little too late," Olson added.

In Montgomery, officials on Tuesday continued challenging Pepco's post-storm performance. A Pepco representative did not make it to the county's emergency operations center Jan. 26 to help coordinate the utility's response, Montgomery officials said.

"Their representative ended up arriving early the next morning, around 7 o'clock in the morning," Chris Voss, manager of Montgomery's Office of Emergency Management and Homeland Security, told the council. "There were some conference calls early on that, unfortunately, Pepco was not on."

Reggie McCauley, director of system operations for Pepco Holdings, said the company will make improvements.

"There were two calls we were made aware of that we didn't join. Our commitment is to improve the communication so we're not missing any more calls," McCauley said. He said weather conditions were responsible for the missed meeting at the emergency operations center.

Staff writer Michael Laris contributed to this report.

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