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State senators urge big fines for Pepco, BGE

ANNAPOLIS — Two Maryland state senators urged state regulators on Thursday to fine Pepco and Baltimore Gas and Electric Co. more than $100 million each for the long power outages residents suffered during and after a powerful summer storm that swept across the state in late June.

Sen. Brian Frosh, D-Montgomery, and Sen. James Rosapepe, D-Prince George’s, wrote the Public Service Commission that the money could be used to create a “Surge Reserve” fund to pay for additional trained workers to help restore power faster. The senators also have launched a web-based petition where consumers can add their names supporting the idea.

“The results of their failure to face reality and modernize are clear to all Marylanders — food rotting in refrigerators, hourly workers laid off, small businesses closed for days, and hundreds of millions of dollars in goods, services and productivity lost by our constituents,” the senators wrote.

Rob Gould, a BGE spokesman, said it was extremely premature to call for any action before a full review by the PSC, which is underway.

“Recall that no weather service predicted this storm, which is why no utility east of the Mississippi River was in a position to pre-mobilize for this extremely unusual event,” Gould said.

In a statement, Pepco said it has increased its contractor support since 2010 when the company ramped up its reliability enhancement work.

“Because of this, Pepco’s combined total crew complement for ready response after major storms now exceeds 500 line workers and is more than any other time in the company’s history,” the company said.

Pepco officials had told customers that it would take several days to fully restore power, in part because neighboring states were also vying for the same out-of-state crews to work double shifts. But thousands of Pepco customers remained without power a week after the storm hit on June 29, and amid a heat wave that brought triple-digit-temperatures. The outbreak of storms knocked out power to more than 3 million in several mid-Atlantic and Midwestern states.

While BGE serves much of Maryland, Pepco concentrates on the Maryland suburbs of Washington and the District of Columbia.

Some residents who suffered without power for days cheered the idea of heavy fines.

“Oh, absolutely, I agree,” said Paula Nerret, 60, of Silver Spring, who lost power for six days after the storm. “It’s a little hard to swallow, so absolutely, they need to be fined.”

Sharvey Smith, a 39-year-old Baltimore resident who was without power for five days, said she was glad someone was recommending steep fines. Smith, who canceled her Fourth of July party, threw out $200 worth of food that went bad and left home with her family until power was restored. She believes she should get a credit on her bill because of the experience.

“The bill is high, and then I lose power for five days in 100-degree weather — and my bill stays high,” Smith said.

Last year, lawmakers passed a bill requiring the PSC to set reliability standards and increased the fines the PSC can impose to $25,000 per customer per day. In their letter, Rosapepe and Frosh said that if regulators imposed fines of 1 percent of their authority for every day after the second-day-out outages, Pepco’s fine would be about $106 million, and BGE’s would be about $144 million.

The PSC fined Pepco $1 million in December for failing to maintain its system properly over a period of years and subjecting customers to long outages too often.

In an interview, Frosh said $1 million clearly wasn’t enough.

“You’ve got to do something to incentivize these guys,” Frosh said. “They keep doing this. To hit them with a million-dollar fine is silly. They probably spent a million on lobbying. It’s insignificant to Pepco’s bottom line or BGE’s bottom line.”

Meanwhile, Frosh also said he plans to introduce legislation to stop allowing utilities to charge a fee to cover storm-related losses, even after many customers have had to go without power for days. Maryland allows utilities to charge a fee that adds up to less than a dollar for the first 24 hours after a storm that causes widespread outages.