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PSC chairman pummels Pepco performance

Ben Mook//Daily Record Business Writer//June 19, 2011

PSC chairman pummels Pepco performance

By Ben Mook

//Daily Record Business Writer

//June 19, 2011

Pepco officials trying to defend the company’s handling of power outages over the last year met with criticism Friday from the Maryland Public Service Commission.

The PSC is in the middle of legislative-style hearings into the reliability and quality of Pepco’s electric distribution system. The scheduled four-day hearing was initiated after a large number of complaints were logged by the state agency over how Pepco handled power outages during a series of storms last year.

On Thursday, representatives of a Montgomery County task force studying Pepco and the authors of a study looking at the company’s electrical system and operations in Maryland testified before the commission. On Friday, it was Pepco officials turn to testify about how the company responded to power outages and what programs and policies were in place beforehand and going forward to address them.

William Gausman was the first Pepco official to testify. Gausman, who is senior vice president for asset management and planning with Pepco Holdings Inc., parent company of Pepco, said the company realized the gravity of the situation and remained committed to addressing the causes of the complaints.

“We clearly heard that our customers are not satisfied with the service we’re providing,” he said “We absolutely are committed to changing that view.”

He said prior to 2010, year-over-year data showed the company had been posting positive trends in the number and duration of power outages. But he said criticism increased exponentially after the five storms in 2010 knocked power out for hundreds of thousands, often for multiple days.

“Prior to the five storms, we had felt we were meeting the expectations of our customers,” he said.

That statement, though, was later derided by PSC Chairman Douglas M. Nazarian, who said Pepco’s customers had been unhappy with the company’s performance before the 2010 storms. He said the company was being disingenuous by not pointing out that while individually its numbers might have been unchanged or even better, they were still far below those of its peers and were actually in the bottom quartile of those studied.

“Those 2006 to 2009 years that you all are bragging about, showing the flat trends on [outage frequency] and the improving trend on [outage duration] — you’re still, objectively, performing in a lousy way,” Nazarian said.

“I wouldn’t say that,” Gausman answered.

“You think that’s good?” Nazarian asked.

Gausman said Pepco had implemented a stronger tree-trimming policy in 2009 as well as other changes. He said the programs had not had time to be fully implemented to the point strong progress was shown.

Nazarian also questioned why the company had resisted calls to set up a non-discretionary fund to handle maintenance issues such as tree trimming. Falling trees and limbs are the most common cause of power outages in Pepco’s Maryland service territory, which includes Montgomery and Prince George’s counties.

Gausman said the company had committed to spend a certain amount on tree trimming already and had offered to provide status updates to the PSC on progress. He said Pepco needed the flexibility to operate that it would not have if the fund were not discretionary.

“When I read that you want flexibility,” Nazarian said. “All I see in that is you want the ability to decide not to do it because you need the money to do something else.”

He added that Pepco had previously committed to spending a certain amount on cutting back tree limbs only to not fully complete the work.

“The status quo is unacceptable,” Nazarian said. “Why should we allow the discretion to decide to do less than what you committed to do?”

The commission will convene the third day of hearings on Monday.


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