Mid-Atlantic Blackouts Expose Pepco’s Deregulation Follies
July 9, 2012
Massive storms that tore through the Mid-Atlantic June 29 left hundreds of thousands of residents of Maryland, Virginia and the District of Columbia without power, sweltering in the record heat.
And in in the midst of 100-degree temperatures, this has many Pepco customers steamed.
Says D.C. resident Tonya Oliver, who lost power three times in one week:
Oliver isn’t alone in her frustration. In less than two days, 1,800 customers signed a Change.org petition calling on the utility to invest its profits towards improving the system’s reliability.
Pepco’s problems are not new, with blackouts not just happening after storms but on high usage days when the grid overloads. In 2010, the Washington Post found that Pepco customers experienced 70 percent more outages than customers of other big city utilities. And the outages lasted more than twice as long.
Pepco’s now infamous service problems have their origins in the energy deregulation movement of the 1990s, says Utility Department Director Jim Hunter, which encouraged the company to slash investment in staff recruitment and basic maintenance.
While most utilities are guilty of cutting back on hiring and infrastructure investment, Pepco is one of the worst offenders, says Hunter:
For Washington, D.C., Local 1900 Business Manager Jim Griffin, Pepco’s trouble in keeping the lights on is the direct result of the company’s refusal to recruit and train a new generation of linemen.
Griffin, who represents more than 1,000 Pepco employees, says the full-time line repair crew on staff was more than 200 when first started at the company 39 years ago. Today it is less than 100.
In 1999, the Maryland General Assembly deregulated its utility industry, forcing companies to sell off their generating capacity and giving customers a choice of providers. The goal, said deregulation supporters, was to foster competition in the electrical industry and drive down prices. The District of Columbia followed suit a year later.
The reality of deregulation turned out to be quite different. Most customers choose not to switch distributors and rates in most areas went up, not down, most notoriously at Baltimore Gas and Electric, which announced a 72-percent rate hike in 2006 when state-mandated price-caps came off.
Deregulation also gave utilities an easy way to boost their profits by reducing their payrolls and cutting back on training, recruitment and basic maintenance – shortcuts that pleased Wall Street shareholders but caused major headaches for customers and staff.
At Pepco, more than 50 percent of the company’s union work force is eligible for retirement, while new hiring has slowed to a trickle. It is a trend that has Local 1900 worried.
As early as 2007, then-business manager John Holt predicted future service problems unless Pepco got serious about attracting new workers, testifying before the D.C. Public Service Commission that it needed to “aggressively hire new workers.”
Sadly Holt’s pleas resulted in only 30 new hires.
As he told the Electrical Worker in 2009:
Pepco fills in the obvious gaps after major storms by bringing in outside contractors, but temporary workers are no replacement for full-time employees, says Griffin.
Not only are there no guarantees that the contractors Pepco brings in abide by the same training and safety standards that Local 1900 does, the time it takes to get out-of-area workers set up and on the job costs precious restoration time.
Basic maintenance and upkeep have also suffered. In December, the Maryland Public Service Commission found the company guilty of neglecting tree-trimming and equipment upgrades.
Montgomery County Council President Roger Berliner told the Washington Post:
Also aiding Pepco’s shoddy service, says Hunter, is a little-known decision by Maryland and D.C. regulators that allows the utility to recoup funds lost during outages.
Under the complex billing arrangement known as “decoupling”, Pepco can raise rates to compensate for payments lost during blackouts, thus removing any financial incentive to restore service or reduce outages.
Despite these obstacles, Griffin says Local 1900 members have responded to the crisis with tremendous professionalism. Linemen have been putting in 12-16 hour days since June 30, working in record-breaking heat under extremely dangerous conditions.
Local 1900’s call center employees have also been putting in long hours, dealing with frustrated and increasingly irate customers still in the dark.
The local was in midst of contract negotiations when the storm hit. Bargaining has been postponed until the restoration is complete.
Boosting new hires in one of Local 1900’s top bargaining goals, says Griffin.
In neighboring Virginia, Dominion Power reports that power has been restored to 98 percent of its customers.
Pensacola, Fla., Local 1055 member Jacqueline Green, working as part of a Gulf Power crew helping to restore power to Dominion customers, was killed July 3 when her bucket truck lost control and hit a tractor-trailer.