Power To The People —

Not Power Companies

By Nancy K. Crevier

People do have to take responsibility for their own safety, and for how well they heed storm warnings, but it is the responsibility of public utilities to ensure that they have prepared properly so that the public they serve receives the full benefit of the dollars they pay, and are serviced in a reasonable manner, said Newtown resident and Reuters News Agency “Breakingviews” columnist Rob Cox, Wednesday, September 7. It is on these points, said Mr Cox, that Connecticut Light & Power (CL&P), a subsidiary of Northeast Utilities, failed Newtown residents miserably following Tropical Storm Irene.

“We have to hold a monopoly to a much higher standard than our personal standards,” he said.

This failure is one among many reasons that the proposed upcoming merger between Northeast Utilities and NSTAR in Massachusetts, both headquartered in Massachusetts, should be blown as far off course as the tropical storm sent branches flying, asserted Mr Cox in his September 1 column in The New York Times. The merger would meld the area’s two largest public electric utility companies, and rather than resulting in a lower electric rate to customers and improved service, would more likely lead to increased barriers between customers and company regulators and executives.

The column was the direct result of his own family’s six-day ordeal without power and a rare instance in which he chose to overlap his personal and public lives in order to make a point, said Mr Cox.

“The public obligation of a public utility is to deliver savings to customers at the best price and with the best service,” Mr Cox said, “and CL&P has not done that. Nine days [without full return of power to all of Newtown] is not acceptable.”

Citing the highest cost of all 48 contiguous states, at 17.63 cents per kilowatt hour (only Hawaii is higher, at 31.04 cents per kilowatt hour, and nearly half of the states pay between seven and ten cents per kilowatt hour, according to information from the US Energy Information Administration), Connecticut residents do not receive the same level of service from CL&P for which they pay, he said.

So the idea that regulators, those people who are supposed to make sure that utilities are providing the promised service, and who have the ability to set prices, would consider allowing Northeast Utilities and NSTAR to merge is absurd, in the light of unpreparedness displayed by the local utility company these past two weeks, he said.

“They say they will give better services [through a merger], but empty promises are no substitute for direct evidence — of which we have ample supply. A root and branch investigation of what happened in Connecticut and Massachusetts [after this storm] is in order. The governor and CL&P have to look at this. How did they botch this? Did CL&P prepare, meaning were lines maintained, were trees cut, branches removed prior to this storm? This is part of the agreement a public utility has with its regulators,” said Mr Cox. “Can you imagine if this was a Category 2 or 3 storm? This was just a nasty rainstorm,” he said.

A fully prepared and readied utility company would have had staff and equipment in place, well before the storm raged through the state, he said.

“There was a game played across Newtown and across Connecticut [in the days immediately following Irene]: Spot the CL&P truck. We didn’t see a truck in the whole area I live in for days,” said Mr Cox. “Clearly, CL&P did not have enough people and equipment deployed. But a company about to engage in a merger is not going to do anything to hurt its numbers,” he said, and increasing staff and equipment at this time would certainly have been a costly move for CL&P. “Looking at the merger like a corporate finance guy is different than as a personal customer. It’s interesting how invisible CL&P was during this crisis,” he said.

At this point, it is necessary for the state to objectively look at CL&P’s response to Tropical Storm Irene, and compare it to the response of teams in other states, including the number of crews on site vs number of households in an area. “I find it hard to believe that when an investigation is done that they will find adequate planning was done,” said Mr Cox.

“This is a company that in the first half of 2011, the first two quarters, had a net income that was up 26 percent from the year before, to $117 million. I don’t think they are hurting,” he said.

There is a fundamental conflict between shareholders and customers with public utilities, said Mr Cox. “The primary fiduciary and legal obligation of a board of directors is to maximize profit for the shareholders. So mergers and acquisitions are done to maximize the bottom line. That’s what capitalism is all about, and I understand that. I’m a company critic. That’s my job,” he said.

So who comes first, he asked. Shareholders or customers? “Ultimately, you have to strike a balance.”

He does not see the proposed merger of the two electric giants as a means to achieve any kind of balance that will benefit Connecticut consumers who, he pointed out, do not even have the option of shopping around for another means of power supply. “It’s a monopoly. There is no choice whatsoever, and no marketplace pressure on them to do better,” stated Mr Cox.

It is essential that Newtown and Connecticut residents let their elected officials know that they are not happy with the delayed response by CL&P to Tropical Storm Irene, and for those officials to see that the public utility regulators are doing their jobs, he said.

Realizing that he and his family were not the only ones stung by CL&P’s perceived indifference to Newtown, Sam Cox, the 13-year-old son of Rob and Hannah Cox, has posted a Facebook page and Twitter feed, “CL&P Simply Failed,” viewable at http://www.facebook.com/home.php?#!/pages/CLP-Simply-Failed/243941828981541, “to channel some of the frustration people have been feeling into action.”

 “Do you trust these utilities after this performance?” asked Mr Cox. “Why give them a bigger palate to work with through a merger? We need to look at the evidence.”