For the past five years, Pepco has ranked in the lowest quartile nationally in terms of reliability - and these numbers are only measuring non-storm related outages.  Our residents lose power more often on sunny days than anyone in Maryland.  This unplugs the economic engine of our state, costs our residents and businesses hundreds of millions of dollars, damages our competitiveness, disrupts lives and exposes our elderly, infirm, and children to needless risk.

 

Pepco knew their system was deteriorating but placed the needs of its holding parent company, PHI, and shareholders above ratepayers.  It failed to make the necessary investment in infrastructure maintenance and upgrades and failed to properly maintain its tree trimming program.  Equally disappointing is the fact that our state regulators, the PSC, did not even know that it had been this bad for so long. 

 

These circumstances led our County to formally request the Public Service Commission for the following relief:  if two years pass and Pepco is not performing in at least the second quartile for reliability, then the Commission should use its authority to modify Pepco's service area to remove Montgomery County and revoke Pepco's authority to exercise its franchise to provide electrical service.

 

With all that in mind, the County Council began an investigation into what options may exist, other than Pepco, as our sole service provider.  In February of this year the Council asked the County Attorney a series of threshold statutory, regulatory and legal questions that we believed we need to understand as a first step.

 

Earlier this month we received his response.  In his memo the County Attorney suggested that, given the novel issues addressed in the opinion, the Council may wish to also obtain the opinion of the Maryland Attorney General before pursuing the matter any further.  That is the next step that the Council will be taking, and we will be seeking the opinion of Maryland's Attorney General Doug Gansler in this matter.    

Although we do not have public power in Montgomery County, it is not new to Maryland.  Since the 1930's the Southern Maryland Electric Cooperative has been customer owned and operated and serves 150,000 residents.  Public power authorities do not serve shareholders.  Their sole purpose, focus and mission is to serve its owners - its customers.  Public power monies get invested in the local community, they can be more responsive to the values of residents such as the desire for clean energy, and their reliability is considerably higher than that of Pepco.

Much of the editorial criticism of our exploration of public power is that it would mean "government run power".  That simply isn't true.  Most of the large public power entities in the country are run by independent boards of directors.     

Yesterday, Pepco distributed this press release which discusses their efforts to prepare for Hurricane Irene.  Among them, the utility has ramped up their call center so that it maintains 24-hour coverage beginning today.  In the past, I know that it has been a frustrating task to get in touch with Pepco; I am hoping that this time, it will be different.   

 

Pepco's line crews will work extended hours during what the company is already calling a "multi-day restoration effort", as they expect that high winds will cause significant outages.  Pepco leadership shared this morning that they have already secured hundreds of mutual assistance crews that comprise a complement of resources that is unprecedented for Pepco. 

 

To report an outage, call Pepco at 1-877-PEPCO-62 and press "1".  Pepco asks that even if you think a neighbor has already reported your street as experiencing an outage, that you still call to report your home as out also.  If you have access to the Internet, you can report outages at Pepco's website.  They now have an app to report outages, available for free at the App Store.  (The iPhone expert on my staff expects that this app could really simplify the process of reporting an outage, and, if Pepco has the information available, also simplify checking back on the status of outages.)

To report a downed wire, call Pepco at 1-877-PEPCO-62 and press "2".  Of course, never go near any downed wires.

Pepco is urging its customers to take the following precautions, among others, in advance of the storm:

-Assemble an emergency "storm kit".  Include a battery-powered radio or television, flashlight, a first-aid kit, battery-powered or windup clock, extra batteries, special needs items, an insulated cooler and a list of important and emergency phone numbers.

-Keep at least a three-day supply of non-perishable foods and bottled water and have a hand-operated can opener available.

-Have adequate prescription medicines or infant supplies on hand.

-If you or someone you know uses life-support equipment that requires electricity to operate, identify a location with emergency power capabilities and make plans to go there or to a hospital during a prolonged outage.

Pepco is also reaching out to its customers who have registered with them as needing electricity for critical medical equipment, to help them prepare for an extended outage. 

So far this summer we have been relatively fortunate that our power outages have been kept to a minimum.  Knowing that, if you have experienced an outage - blue sky or storm related - you may not agree.  But, in fact, so far we have been spared from the mass storm outages of prior years.    

 

That said, I continue to work aggressively to make sure that Pepco reforms its corporate culture and serves its customers as it should in order to become a top performing electric utility.  The County has submitted a brief to the Maryland Public Service Commission in its investigation of the company and our brief details in very specific terms the changes that we believe are necessary in order to have Pepco perform as it needs to.  In addition, the County has requested that the following remedies be enacted:

 

· Require that Pepco/PHI's shareholders, not Pepco's customers, bear the cost of improving the quality of its service to at least a "second quartile" reliability level;
· Consider reducing Pepco's allowed rate of return on equity and require Pepco to provide certain billing credits to its customers; and
· Ultimately, consider modifying Pepco's service territory or revoking Pepco's authority to exercise its franchise.

           

As you know all too well, today Pepco ranks in the lowest quartile in the nation in terms of reliability and yet have continued to earn their full rate of return approximating 10%.  When we have complained to the MPSC about Pepco's reliability, they have responded in part by saying we can't punish them because we have never held them to any standard.  Well, at least that is now about to change. 

 

The battleground now shifts to the MPSC.  They have all the authority they require to mandate that Pepco provide service as reliably as other top performing utilities in the nation.  I recently testified on behalf of our county before the MPSC, urging them to hold Pepco to the highest possible standard.   The District of Columbia's Public Service Commission has recently announced its intention to require Pepco to become a top performing utility over a period of years.  It would be an extreme disservice to our community if Pepco were required to meet stronger reliability standards in the District than in Montgomery County.

 

The cost of Pepco's unacceptably poor service has also become clearer.  According to the county's survey of our residents and businesses, outages have cost us as much as $300 million.   And those costs do not calculate the immeasurable psychological damage -- worrying about our loved ones, our families, seniors, and those who need power to literally breathe.  We cannot tolerate, nor should we, anything less than reliable electric service.  I will continue to do everything I can to get our state regulators to hold Pepco accountable.

 

When I look at the sign on the left, I just sigh.  Progress in improving Pepco's reliability is not for the faint of heart.  It is a slow process.  Slower than it should be.  Their five year plan is too long and doesn't even promise to get us to where we should be -- equivalent to top performing utilities in the country.  

 

I am not alone in being critical of the plan.  As the Washington Post reported on its front page, an independent consultant reviewed the plan and concluded it was "cobbled together ....as a quick attempt to throw money at the problem, or more accurately, to quickly promise to throw money at the problem."  The report goes on to observe that Pepco doesn't even "know whether the projects in the new plan will actually achieve its reliability goals because it had not fully analyzed them."  According to the consultant, the plan is a classic case of a "ready, shoot, aim" approach to solving this crisis.   

 

But there is progress in Annapolis.  With the leadership of the Governor and Delegate Feldman, and a host of Montgomery County Delegate and Senate sponsors, I do believe we will get a state law that requires Pepco to adhere to reliability standards that meet your expectations and stiff penalties if they fail to do so.  I testified last week before the Economic Matters Committee with Delegate Feldman, Majority Leader Barve, and the Governor's representative in support of the effort.  And I expect to be back next week before the Senate when it takes up this matter.

 

I also sent a letter, signed by 7 of my colleagues, to our County Attorney requesting that he advise our Council on the legal, regulatory, and statutory issues that would arise should our County wish to pursue public power as an alternative to Pepco.  My colleagues and I want to look carefully at this possibility.  It would be a serious undertaking and it should be approached in a serious manner.  That is what we are doing.

Given yesterday's storm there are several items to report to you regarding Pepco.

 

Power restoration progress:

To report power outages or downed wires Pepco has asked you to call 1-877-737-2662.

 

On a conference call with Pepco executives today at 1:00 PM, I was assured that the vast majority of power outages would be restored by 11 PM tomorrow evening.  That said, it is possible that restoration will continue into the weekend until all power is restored.  As of this moment in time, there are 168,000 people without power in the Pepco service area with 115,000 of those in Montgomery County.
 

Pepco has 11,000 people working round the clock to restore power with local contract crews being brought in and crews from Ohio and the Delmarva area assisting as well.  The nature of the snow with its heavy, thick and wet quality was a not a good friend to our trees or our power lines.  We do have good coordination going between the County crews that are plowing and the need to get Pepco crews into power affected neighborhoods.  There are two Pepco employees assigned to the County's Emergency Preparedness Center working to make sure that plows get into areas with power outages.  Pepco reported 2,000 down wire reports and 124,000 calls into their call center.   

 

Our office has been flooded with calls and emails from people who are simply fed up; who continuously got a busy signal when they tried to report a downed line; who called to report an outage last night, and when they went online today, the Pepco map did not show the outage; who are concerned about food safety; who wonder when this will get better.  I certainly share your frustration.  I have already asked Pepco executives to brief our T&E Committee on February 7th at 2 PM on their response to this storm and their plans to upgrade their system.  That briefing will be televised.

 

Maryland Public Service Commission action: I am pleased to report that every indication suggests that the Maryland Public Service Commission, the state agency that has exclusive and complete authority over Pepco, has gotten the message that there needs to be "standards" for reliability. On January 13, 2011 the Maryland PSC published a proposed rule governing Maryland utilities and the reliability of their service. This proposed rule is comprehensive and covers a wide range of issues, including how fast electrical service must be restored and even how quickly phones must be answered.

While I may differ on how this issue should be addressed, what the penalties should be for failure to meet the standards, and the need for state legislation, the MPSC appears committed to making progress... and that is a good thing. Comments on the proposal are due on February 18th and I will be working with the County Executive and my Council colleagues on our response.                     

 

Vegetation management: Pepco has been quite busy trimming and removing tress.  We have heard from many of you questioning their decisions as to when, how and how much to trim or cut.  We are trying to work with Pepco to assure that good quality practices are used and that consumers are consulted.  You should know that utility pruning is solely aimed at line clearance and does not provide for removal of all dead limbs.  Comcast does its own pruning and it can be confusing as to which lines are electric and which belong to other utilities.