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

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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.”

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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

 

20 Replies to “Pepco: Deregulation + Greed + Corruption = Suffering for Hundreds of Thousands”

  1. I am a total proponent of jail time instead of fines. When a company pays fines it usually costs us money. Why are we paying them money so they can pay their fine? Nothing could be better than cruel and unusual treatment in prison for both the heads of the companies write down the supervisory levels where the problems exist.

    Deregulation is another issue that never should’ve occurred. How many of you like your cable bill? That is a result of deregulation of the cable industry.

  2. Since corporations are people, when their screw-ups cause even one death, they ought to be executed: dissolved and their assets taken and run by and for the jurisdiction that has suffered their malfeasance.

  3. We had a severe ice storm several years ago. Our lines went down for about 5 hours, our neighbors were not so lucky. They had to wait 5 days for their power to be restored. The huge difference in wait time had to do with miles of electric lines built in very forested areas with lack of access roads. The crews had to follow each line on ATVs in the icy terrain instead of paved streets. We bought a whole house generator the next summer (no outages yet).
    Of course our rural co-op is hands on 1000% better than any big city corporation. We users OWN the co-op so it works for us, not corporate masters. Generac should be doing a bang up business this coming year on the east coast.

  4. You know what’s frightening? In the face of abysmal stupidity like this, the local utility, owned by the city of Lakeland, is talking about privatizing. It’s already being run as a corporation, and for instance went from the usual 30 days to something like 15 day billing for ordinary people (over 15 days late and they cut your power). The local big corporations are the ones pushing this move… for instance Publix Supermarkets (which are really a bunch of bigots and a terrible place to work).

    They’re supposed to be holding public hearings soon on the possibility of selling the power company, for instance to a competitor. Life is hard enough already in this hellhole, and this move (if not stopped) will make life only that much harder for the poor.

    It’s about time we crack down on the corporations and the rich. Make them pay their fair share… and force them to even the playing field.

  5. When this area was hit by the three hurricanes back in 2004, we were without power for 9 days. The power company hadn’t trimmed the trees in our area in years, and it came back and bit them in the ass. At the end of our short street, the power was still good – the problem was the trees in front of our neighbor’s house on each side and to a smaller extent, ours.

    I went into town and saw several examples of high class neighborhoods getting premium treatment – multiple repair trucks for a street no longer than ours, for instance. I also saw where they were in areas doing “onezees and twozees” – taking care of individuals with big fancy homes while entire neighborhoods such as ours suffered in the heat and humidity. The power company vehemently denies it, but I saw it with my own eyes and heard about it from others. (I also talked with the line crews in those neighborhoods, and they admitted they WERE being sent to help the better neighborhoods first.)

  6. I agree and I think Reynardine has the right idea: if corporations are people they should be treated as people, subject to the same laws as biological people. Let’s give them what they want – in full.

  7. I really like the idea of dissolving corporations that cause deaths. I’d also suggest examining the shareholders, and limit the amount they get paid so that the richer the person (and the bigger the investment), the heaver the punishment falls on their head (little investors shouldn’t get hurt much at all).

    I don’t know any way to force those rich bastards to “get religion” so to speak (develop a real code of ethics) than leveling the playing field like that. Knowing that if their investments have actual risk (I think it can be argued not to be the case for the rich in today’s world), and that if the companies they put their money in will hurt them badly if they don’t treat people right – the rich will insist on better treatment and better ethical rules. They might even support greater regulation!

    After all, the only thing they care about is their money. We have to make them care about others.

  8. Jail time sounds good to me. Sounds like this utility needs to be heavily regulated again. They have a monopoly, yes, so whats this garbage about competition?

  9. Like healthcare, utilities should have never been privatized. Anytime you privatize you create a profit incentive which never favors the common good. If the repugs take over this country expect, teachers, firefighters and policeman to be privatized and we will become 1984 on steroids. Robocop is a good movie to see what is in store for us if this happens.

  10. I’ll see your Pepco, and raise you Entergy New Orleans. The day after the Flood, ENO declared bankruptcy to protect its shareholders.

    Papa Entergy then refused to sell them discount fuel because they were bankrupt.

    They were then granted the right to add a ‘fuel surcharge’ to recovering NO resident’s bills so their profits wouldn’t suffer. Just people.

    I’d get bills for $300.00 + of which $220.00 would be fuel surcharge.

    That was 2005. Are you starting to get the message? Pepco obviously did.

    Corporate America worships money. People are merely tools for making money.

    Sort of like the Mayans used human hearts to make smoke for their gawds. Same effect on the people.

  11. “The power company hadn’t trimmed the trees in our area in years, and it came back and bit them in the ass.”

    I don’t think that’s whose ass got bitten . . .

  12. Oh, come on people! Stop taking shots at Pepco management for cryin’ out loud! You can’t expect them to compromise their personal bonus structures to improve service to their customers. After all, they’re ENTITLED to those paydays. We have to set our priorities; some day each of us will get a chance to be CEO of a major corporation and then what will happen to our big bonus payouts? Besides, if you don’t like Pepco’s service you can always sign up with one of the dozen other power companies that has competing infrastructure in your neighborhood, or not.

  13. (Laugh!) Yeah, you’re right about that.

    You should see one of our trees… a big gum tree. They chopped all of the branches off on the side towards the power line when they finally did the trimming, and now it’s leaning out over our home. At least, after years of fussing, they finally sent a guy out a few months ago who checked things out and yep, their responsibility and they will at their cost cut it down (I’ll be sad to see it go, because it’s the only shade our house gets now – but I’ll be glad because in a hurricane, it would take out our home.)

  14. (Laugh!) Conservative Heart hasn’t been around much lately, and I’m glad you came up to take his/her place!!!

  15. A friend of mine from California explained some of the problems they have out there with their power company, and how it all tied together to the big Enron scandal a few years ago as well as the big power blackouts.

    Privatization and corporate greed was behind all of it, and the customers in California paid the price (along with taxpayers and small investors and others).

    This is all part of the pattern… and to think that they (the big power companies) are trying to get laws passed that favor the big corporations over individuals when it comes to solar power (giant solar “farms” vs individual and distributed systems). They’re all monopolists, and need to have the monopolies shattered.

    They also don’t seem to realize how STUPID having all of the power generation tied up in a single utility can be. It’s all about milking all of us for profit, of course.

  16. Sorry for the long pause, I had to put a big bandage on my cheek where my tongue tore a hole through it.

    But this continued deterioration of our utilities really ticks me off. I remember back when I was a lad that my home county in PA lost power for about 4-hours one hot summer day. It was a VERY newsworthy event because it had NEVER happened before. We had the best engineered power grid in the world then, just because it was the right way to do things. Problem is we still have that same grid (with some minor modifications and additions). It hasn’t kept up with market demands; management bonuses and political contributions have been FAR more important.

    But I am surprised that the electric generating companies haven’t been screaming about this. Pepco (et.al) don’t generate their own power anymore, far as I know. I think that they sold off all their generating capacity as part of the “deregulation” a few years back (let’s get that pollution liability off our books while we can!). I would think that the generating companies haven’t been selling near as many megawatt-hours for the last week as they would have liked. Haven’t heard a peep about that.

  17. The pendulum swung from ‘Look what we did!” to “Look what I have!”

    I see signs its swinging back.

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