Pepco: Deregulation + Greed + Corruption = Suffering for Hundreds of Thousands

By now it’s become apparent that over a million people in Maryland and D.C. suffered needlessly in record heat for days because of corruption and incompetence and greed at Pepco (Potomac Electric Power Company).  Friday’s storm was terrible, but Pepco’s performance was far worse.

Pepco’s corporate motto ought to be “When your power goes out, it stays out.”

On Monday, Maryland’s governor, Martin O’Malley said, “We have to acknowledge the perception that people rightly have that there are not enough crews out there. None of us can be satisfied until every home is restored.”

The Hill reported on Tuesday that “Rep. Chris Van Hollen (D-Md.), a powerful House Democrat allied with House Minority Leader Nancy Pelosi (D-Calif.), says he’ll put embattled utility Pepco under the microscope over days of storm-induced power outages his constituents have faced during the recent heatwave.”

“Once power has been fully restored, I will be evaluating Pepco’s performance. That evaluation will include a comparison of Pepco’s response to that of other utility companies in our region. As part of that assessment, I welcome the comments, observations, and recommendations of all of my constituents.”

Almost week on, Pepco, which has been doing business in the area since the 1920s, said it had restored power to 90 percent of its customers (as of Thursday), leaving 46,000 in the sweltering, dangerous heat. Those poor bastards will have to wait until late Friday, and just in time as it is supposed to get up to 106 on Saturday (11 pm was the time the utility was offering originally for the “vast majority” of customers).

Yet they’re bragging about beating their estimate. Only in Republican-sponsored corporate America is underperformance to be praised and rewarded. You can almost see the bonus checks being deposited.

I don’t see much to brag about.  Neither apparently does Montgomery County Executive Ike Leggett. On Tuesday, reports WJLA, “140 intersections were reportedly without power in hard-hit Montgomery County” alone. Where I live, many intersections ended up closed with cones, preventing cross-traffic and left turns. U-turns became a way of live overnight.

Watch what he had to say on WJLA July 3:

Much of the problem was the result of deregulation during the Bush administration; much of it was simple and inexcusable corporate greed. It is scarcely a surprise that Business Insider put Pepco at #1, above even airlines and cable companies (and Facebook!) on its “The 19 Most Hated Companies In America” list in June 2011.  Outrageously, and bad as that ranking was, Business Insider reported that “Pepco’s rating declined a shocking 16 points from last year.”

Shocking ain’t the word for it.

Pepco was once by all accounts competently run (read: “closer to industry standards”) – until about seven years ago according to the Washington Post, “leaving the utility near the bottom among the nation’s electric companies for keeping the lights on and bringing them back once they go out,” writes Joe Stephens and Mary Pat Flaherty. And the regulators admit they share a sizable chunk of the blame.

But let’s face it: “Our bad” doesn’t get the problems fixed. Mea culpa’s are a good starting point, and that’s all they are.

The sad thing is that Betty Ann Kane, Public Service Commissioner for D.C., says that “Pepco’s dismal reliability record met the District’s formal performance requirements until regulations were stiffened last summer.” But the Washington Post reports that according to their investigation, Pepco “has ranked at or near the bottom in the United States in terms of reliability” in recent years. By 2009 they were in the bottom 25 percent of U.S. utility companies.

That Pepco can claim (with a corporate straight face) that they are in “the second year of a five-year, $900 million plan to improve reliability.” They are eager to tell everybody how much they’ve been improving without expressing any shame over how incompetent they’ve been.

The term “five year plan” should send chills down anyone’s spine old enough to remember the Soviet Union’s record with five-year plans. Significantly, their equipment didn’t work either. Five Year Plan after Five Year Plan left a crumbling Soviet Union in its wake.

Those performance requirements were clearly very low given that 387,000 Pepco customers lost power due to the storm and did not get it back for days – some remain without power now. Since Pepco only serves 778,000 customers, their success rate is looking pretty dismal. And here is why, according to the Post:

  • “Pepco won government approval to sell its power plants and became a ‘wires only’ operation, focused on delivering electricity purchased from outside generating companies”
  • Deregulation
  • To “preserve the bottom line for their investors” they bought up other utilities instead of spending that money on maintenance of what they already operated.
  • Out of greed, neglected tree trimming and equipment upgrades

The deregulation aspect of all this has to be more closely examined. As the Post explains, when deregulation lifted rate caps they expected (or at least told us they expected) that competition would drive down prices. Instead, prices “spiked”. Imagine that. Republican economics don’t work as promised even though we’re told this is a “feature” and not a “bug” as a programmer would say.

We have the Post to thank for things not being any worse than they were during this recent crisis. Their investigation helped wake up regulators to the fact of Pepco’s problems. In 2011 Maryland’s legislature passed a bill finding Pepco $25,000 per day “for each violation of reliability standards”. You can’t shame a corporation into actually trying to provide good service but you can offer negative incentives. In December of last year Pepco was fined $1 million “for failing to fix problems that led to frequent outages.”

That apparently did not do the trick either, given Pepco’s recent performance. This was what they were selling last year in a commercial spot:

Talk is cheap.

To make matters worse, the Post reported Thursday that Pepco is trying to make its customers pay for its negligence and greed. Robert McCartney writes that “In its current case before the state commission, requesting a $66 million rate increase, Pepco is arguing that it should not be penalized a dime for its past shortcomings – even though its public-relations message has been that its learned from previous mistakes.”

Moreover, in a move that ought to win it an award for chutzpah, Pepco is justifying $2.5 million of the new rate request to cover its costs for outside lawyers and consultants in the case decided against it in December.

As McCartney says, “In other words, Pepco wants the same customers who have been suffering the effects of the inadequate upkeep to pick up the tab for experts who argued – unsuccessfully, thank heaven – that its reliability was fine all along”!!!

So we’re gonna screw you, we’re gonna lie about screwing you, and then when you accuse us of screwing you we’re going to hire lawyers to tell more lies about how we didn’t screw you and then when we lose and it turns out that we did in fact screw you, we’re going to make you pay our legal fees for lying to you about lying to you.

Chutzpah indeed.

Yet Republicans complain about big government…at least the government lets me vote. We are all of us victims of corporations and without any say in how they are run and without any ability to affect change when their leadership is venal and corrupt and more interested in lining their pockets than saving lives.

Perhaps power companies like Pepco ought to be charged with murder for each death caused by their inability (unwillingness might be more accurate) to bring the power grid back up. We need something to make it difficult for them to sit on their comfy chairs contentedly counting their cash.

It has been suggested it would be more secure to bury power lines but that would be prohibitively expensive we are told and such ideas will likely not fly in the current economic climate. But it is imperative that something be done to protect and to improve our nation’s fragile power grids. It is not just earth-bound storms and the effects of anthropogenic global warming that threaten us but our own sun: solar storms.

In the International Journal of Research and Applications scientist Pete Riley calculated that the “Probability of a Carrington event occurring over next decade is ~12%.” The Carrington event of 1859, a solar superstorm caused telegraph poles to burst into flame and made the sky bright enough to seem like morning.

In 2011, National Geographic looked at the possibility of such a storm occurring today. Daniel Baker, of the University of Colorado’s Laboratory for Atmospheric and Space Physics says that “Of particular concern are disruptions to global positioning systems (GPS), which have become ubiquitous in cell phones, airplanes, and automobiles,” but that satellite communications but the “big fear is what might happen to the electrical grid, since power surges caused by solar particles could blow out giant transformers. Such transformers can take a long time to replace, especially if hundreds are destroyed at once.”

“Imagine large cities without power for a week, a month, or a year,” Baker said. “The losses could be $1 to $2 trillion, and the effects could be felt for years.” I would rather not, having endured the past few days. The toll of a month or even a year is a terrifying prospect.

Again, there is legislation which would protect us, Solar Shield Bill HR 668, but the Senate has failed to ratify it. Sometimes, you have to spend a buck today to save a few tomorrow. Corporations, and even governments, can fail to understand this simple lesson – and the consequences of their short-sightedness. The time to do something is now.

Pepco photo from WAMU

Image of solar flare from NASA: http://www.nasa.gov/multimedia/videogallery/index.html?media_id=93779141

 

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