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The
Troubling Connecticut Power Failure - NYTimes.com
By ROB COX November
3, 2011 www.breakingviews.com.
Complete
Report Below
November 6, 2011
From Susan Kniep, President
The Federation of Connecticut
Taxpayer Organizations, Inc.
Website: http://ctact.org/
Email: fctopresident@aol.com
Telephone: 860-841-8032
CL&P Restoration Projections by Town as of 11/06
Daylight Saving Time Ends: Turn Your Clocks Back
At 2 a.m. on Sunday, we gain an hour.
More weather disasters ahead, climate experts report
Malloy orders independent review of utility storm response
Will storms provide impetus for rethinking the power grid?
Cafero Calls For Special Session On
Energy, Emergency Preparedness
****************************
The
Troubling Connecticut Power Failure - NYTimes.com
By ROB COX November
3, 2011 www.breakingviews.com.
Excerpts of article below….according
to regulatory filings, Connecticut
Light and Power cut its maintenance spending by 26 percent, from $130 million
in 2008 to $96.5 million last year.
The Connecticut
Light and Power division of Northeast,
meanwhile, booked $3 billion of revenue last year
The moneyed folk inhabiting the Connecticut
environs of the hedge fund town Greenwich
wield plenty of power. But many of them have lately been powerless. For the
second time in barely more than two months, a huge swath of the two million
captive customers of Northeast
Utilities, the power company that
covers territory from the Constitution State up through western Massachusetts
and into New Hampshire, have spent too many days without electricity.
In an echo of the financial crisis, it turns out that better
risk management and stronger regulation could have made the fallout much less
bad. This raises serious questions about Northeast’s competence — and whether
it should be allowed to complete a $4.7 billion takeover of a Massachusetts rival, Nstar.
The first blow was Hurricane
Irene in August. Then came a once-in-a-generation pre-Halloween snowstorm. Both
were highly unlikely and unpredictable events, utilities argue, so when
uprooted trees and snow-laden branches took down power lines, the
responsibility lay mainly with God.
But giving Northeast, specifically its Connecticut Light and Power subsidiary, a
divine pass is like absolving Lehman Brothers of any blame for its demise in
2008. Like financial firms, utilities need to manage risks. And they have it
relatively easy: much of the task simply involves clearing overhanging trees
and other hazards from power lines.
Yet according to regulatory filings, Connecticut Light and Power cut its
maintenance spending by 26 percent, from $130 million in 2008 to $96.5 million
last year. Put simply, that seems to suggest that one in every four trees that
could have been trimmed was left untouched, though the company says the
maintenance line was depressed by a deferral of expenses for accounting
purposes.
The utility showed the same kind of tin ear as some banks,
too. Even as customers still faced a week without electricity after Irene
struck, the Connecticut Light and Power boss, Jeff Butler, suggested any
restoration costs should be covered by increasing electricity rates — when
Connecticut’s power is already the most expensive in the continental United
States. Mr. Butler later backtracked. But this week he suggested the weekend
snowstorm came without warning — words he was again forced to eat.
There’s even a near-perfect model of how Connecticut Light and Power could have done
the job better. Norwich, Conn., a city of 40,000, has owned its own electric
utility, as well as those for sewage, gas and water, for 107 years. Norwich Public Utilities’ customers pay, on average, a bit less
than Connecticut
Light and Power’s. Yet after this past weekend’s snow dump, power was
out for only about 450 of its 22,000 customers — and for no more than an hour.
As of Thursday morning, nearly half a million Connecticut Light and Power customers were
still waiting for the lights to go on.
That’s not luck, either. After Irene hit, just 13 percent of
the city’s customers lost their power for more than a day. Within three days,
the whole of Norwich
had been restored. It took more than a week for Connecticut Light and Power to fully restore
power.
That makes it seem odd that Gov. Dannel
P. Malloy has tended to appear alongside Connecticut Light and Power’s Mr.
Butler and to support the utility, even though far more customers lost power
than should have and restoration proceeded too slowly. There’s solid numerical
evidence to justify Mr. Malloy’s berating Connecticut Light and Power and calling for
Mr. Butler’s head on behalf of the citizens of his state.
In contrast to Connecticut Light and Power, Norwich’s
electric unit last year increased operations and maintenance spending by 11
percent, to $2.9 million. Put another way, in 2010 Norwich allocated about $132 a customer to
this line item in its accounts. Connecticut Light and Power reported
maintenance, unadjusted for deferred expenses, of $96.5 million, or around $78
per client.
It helps that the Norwich
utilities are not slaves to the profit motive — though they hand 10 percent of
gross revenue to the city. Last year, before paying this slice to the city, the
electricity division made just a 3.6 percent operating profit margin on its
$52.3 million of revenue. The Connecticut Light and Power division of Northeast,
meanwhile, booked $3 billion of revenue last year and reported an operating
margin nearly five times the size of Norwich’s. But it surely also helps that
Norwich Public Utilities’ general manager, 12 linemen and five commissioners
live in the community, drive the local roads, see the overhanging branches and
bump into their customers at the Norwichtown Mall.
That’s a rare kind of accountability.
Absent more help from the governor, the example of Norwich and similar municipally owned utilities in Groton and Wallingford, Connecticut communities fed up with the lights going out
might consider emulating Boulder.
Citizens of the Colorado
college town this week voted to study a plan to buy back their local utility
assets from a Minnesota-based mega-utility, Xcel
Energy.
Meanwhile, the Massachusetts Department of Public Utilities
should pay close attention. Northeast’s purchase of Nstar
has been pending approval of the department’s three commissioners for a year
now. If they want the residents of their state to avoid the cold and darkness
experienced by hundreds of thousands of Northeast’s customers next time the
wind shifts, they may need to resist the persuasive powers of big business
trying to get bigger still.
For more independent financial commentary and analysis,
visit www.breakingviews.com.
A version of this article appeared in print on November 4,
2011, on page B2 of the New York edition with
the headline: The Powerless In a Power City.
http://www.nytimes.com/2011/11/04/business/the-troubling-connecticut-power-failure.html