Pepco and BGE reap what they sow

Over the last few weeks Pepco, one of the major power suppliers for Maryland, along with their compatriots at BGE, have found themselves getting beaten up pretty badly in the media and facing scorn and discord from their customers.  Many of their customers lost power during some severe thunder storms that passed through the area a few weeks back and then once the storms passed through the clean-up efforts began and soon after the power restoration efforts, and therein is the problem for these two major utilities.  The power restoration efforts and clean-up efforts took, at least in the opinion of most of their customers, far too long to accomplish and left far too many people without power during some of the hottest times of the year.  Elderly residents that rely on power to keep their fridges running so they can keep medications cold, as well as relying on the power to keep the air conditioning running in their homes so they too can stay cool, and of course younger residents as well, all lost power and waited for long periods of time to have it restored.

Those customers understand the nature of the beast and know that the storms that came through the D.C. metro area and did so much damage were not expected/anticipated and they know the storms did far more damage than a typical summer thunderstorm does, but when they went for days upon days without power and then got nothing but doubletalk or false and misleading information from the power companies they grew angrier and angrier.

Long ago, if my memory is not failing me, I talked about this same issue and how these power companies were responsible for the mess.  They have cut back on personnel to barebones levels, if not even lower, and in reality they don't have the crews readily available to deal with these kinds of problems.  Pepco admits that they had to bring in crews from Ohio and other places and of course it takes a considerable period of time to get those crews from those areas into the areas that need the attention and during all of that staging and movement of resources the customers sit without power and the clean-up work waits as customers and residents know they are not supposed to put themselves in harm's way lest they find themselves on the wrong end of a severe electrical jolt (as one young man found out when trying to help his neighbors out as he was fatally shocked when attempting to remove a tree branch near a power line).

Emergencies aren't easily predicted and managing them after the fact is not an easy task either, but these companies used to do a far better job of dealing with these issues back in the days when they were regulated power companies and weren't looking so hard at their bottom line profit margins.  In older days they carried more than enough personnel to proactively trim trees and branches back away from power lines, and they carried more than enough personnel to man their repair crews so when power lines were damaged they could be repaired as soon as possible and power would be restored to customers as fast as humanly possible.  Now, in modern times, the crews aren't here until after the damage is done and they can't get here quickly enough to respond in a timely fashion.  There is no longer that "as fast as humanly possible" element and customers are not happy and politicians are grand-standing on the issues.

Pepco could hire additional personnel and train them and keep them ready, but of course they won't as it would mean paying personnel that are often not needed, or at least would be, in their minds, looking for things to do (uh, gee, how about going back to proactively trimming trees and such?!? an effort that really does seem to be lacking in most areas) while collecting paychecks.

BGE is in the same boat, and they too don't seem all that interested in changing the situation.

Sadly both companies may be looking down the barrel of a hurricane that may deliver some damage this coming weekend.  Of course for this one they are getting plenty of advance notice and they may very well have crews on alert and may already be paying to move personnel into the area to be at the ready.  If so, good for them.  If not, then shame on them for not learning the lessons of the last storm.  Either way, eventually the customers will be paying for it all as the costs of all of the clean-up and power restoration will of course be passed directly on to the customer at the earliest possible point.

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Reply #1 Top

Electric companies are not real companies in the capitalist sense.  They are more government than private in that they cannot buy a coke without approval.  California found out several years ago that you cannot continue to milk a dead cow - and the result was massive rolling power blackouts (and a new Governor).

Pepco is not in that dire of straights.  But it is hurting.  It is hurting because their rate increases regularly get denied or cut significantly.  Unlike some governments, Electric Companies do not have the option of running massive and never ending deficits, so when they do not get rate increases they have to cut costs.  And a big cost is labor.  You reap what you sow.

I am not saying that Electric Companies are somehow altruistic, or that there is no waste.  Being more government than private, both of those issues are easily and readily answered.  However, unlike real governments, they do not have the control to set their own revenue.  They have to go to the real government to do it.  And when that is denied, the customers suffer.  But then who cares about he customers?  The government does not - they have a scape goat.  And the Utilities do not - they get their money from a handful of elected officials.  So that is why customers are always last.

And probably always will be.  Oh, the Utilities will eventually get around to restoring service.  After all, even though the government sets the money they can get - they still have to provide something to get it.  But they do not lose anything in the long run.  What is the customer going to do - build solar panels?

Reply #2 Top

Actually in Maryland the power business has been deregulated and there is supposed to be competition.  The problem is that Pepco and BGE remain the two main generators of power and any company you may buy your electricity from is simply reselling their products so if there is a failure of the delivery system or the power generation system, well, whose mercy is everyone at?

The current Gov'nor (Martin O'Malley, king of incompetence) and the last Democrat Gov'nor of the state were heavily involved in the mess that is the current situation with power companies in Maryland.  Ehrlich claimed to not have a whole lot of power to change the situation and that was true.  Given that the Democrat controlled legislature in Maryland set up the California style deregulation and didn't really fix it after watching what happened there, what should anyone expect?

You are correct that there are still government influences in the pricing models, but in Maryland it's less (by far) then it used to be and over time it may be nearly none as the free market is supposed to determine things.  The problem remains that the power companies opted to cut their staffing to the bone figuring that if they had to pay big bonuses, overtime pricing and other seemingly high costs it wouldn't matter as it cost the companies much less to hire independent contractors compared to keeping around full-time or even part-time employees due to the benefits they'd have to offer them and the high overhead costs those would lead to.  For much of the time, I guess it all works for these companies, but when they fail, they fail miserably because they can't bring in hundreds of crews that quickly and in the cases of major natural disasters it may take that many if not far more.  If the hurricane that is currently looking to brush the coastline in Maryland comes in land and does some damage, well, it won't be a pretty sight.  It could take weeks to bring power back on and clean up the damages and while people may be a bit more understanding following a hurricane, they'll still get frustrated quickly and the same problems that were just encountered will be just the tip of the iceberg.

Reply #3 Top

Actually in Maryland the power business has been deregulated and there is supposed to be competition.
End of quote

In Virginia too!  But no one has competed yet. probably because although it is "deregulated", any rate changes still have to be approved by the SCC - just like in Maryland.