Storm Leads to Debate on Spending by Utilities
By JAMES DAO and NEELA BANERJEE
New York Times
WASHINGTON, Sept. 24 — With nearly 600,000 customers still without power in Virginia and Maryland, many critics of the utility industry contend that the companies have cut spending on vital operations in search of profits.
As a result, the critics say, power lines are more vulnerable to falling trees, and repair crews are shorthanded. The real villain, they argue, is deregulation, which has increased pressure on utilities to cut costs and, perhaps, cut corners on maintenance.
"They have cut back significantly on front line or direct services personnel," said David Hughes, executive director of Citizen Power, a watchdog group in Pittsburgh. "We saw it on the turnpike here, where 100 Detroit Edison trucks were heading down to help on Isabel."
But many experts say the true picture is far more complex. Records indicate that most utilities have kept maintenance spending level in recent years. Dominion Virginia Power and Potomac Electric Power have increased the number of their frontline repair crews since deregulation.
A survey of recent storms shows that many utilities are on pace to restore power almost as quickly as in past hurricanes — even though Isabel knocked out power to more homes than any storm in memory.
"No two storms are the same," said Tim Pettit of Duke Power, which spent three weeks restoring power to 696,000 customers that lost power in September 1989 after Hurricane Hugo, a Category 4 storm. "You have got variables that come into play with all of them."
In coming weeks, public service commissions in Maryland and Virginia will begin preliminary reviews of the utilities' preparations for and responses to the hurricane, officials in both states said. If shortcomings are found, the commissions will order in-depth investigations that could take months and involve detailed examinations of spending, personnel and policies. Such investigations could become forums for complaints about deregulation, experts said.
"We'll want to see what they did right and whether there are lessons to be learned," said Sandra Guthorn, acting people's counsel in Maryland, the state's consumer advocate on utility problems.
The maintenance budgets of the two biggest Maryland utilities appear to have held mostly steady since they began reorganizing in the late 90's. Pepco spent $34 million last year on maintaining power lines, more than the $31 million that it spent in 1997 but less than its $40 million in 1999, according to the Maryland Public Service Commission. Baltimore Gas and Electric spent $36 million in 1997, then almost $48 million in 1999 and about $39 million last year.
Dominion Virginia spent far less on maintaining its distribution system last year than 2001, $47 million compared with more than $86 million. It explained the difference as a result of an accounting change. The State Corporation Commission has asked it to restate as soon as possible the distribution maintenance costs under the old system, as the first step to what the state says would be an inquiry into the preparedness for the storm last week.
Most of the distribution maintenance budget of a utility goes to tree trimming, a seemingly mundane procedure that nonetheless summons intensely emotional reactions from consumers.
After an ice storm in January 2000, Virginia regulators pushed Dominion to be more aggressive in tree trimming because "it had placed too much emphasis on aesthetics and the wishes of property owners at the expense of reliability," according to a report by the State Corporation Commission.
Dominion has complied, shearing parts of trees near power line rights of way. But even that was not enough to prevent nearly two million customers from losing power last week.
"I've never seen the breadth of damage that we have out there," M. Stuart Bolton Jr., senior vice president of financial management for Dominion, said. "We're talking 100-foot trees, 40 inches in diameter, that toppled. No tree-trimming program would have mitigated these outages."
Some experts also say the utilities cannot be faulted for some of the problems that made the storm particularly destructive and that have complicated the cleanup. One factor, they said, was that the hurricane last week knocked down more trees than any storm in memory. That was not because of high winds as much as sodden soils caused by record rainfalls.
The weather loosened tree roots across the East Coast, making them vulnerable even to moderate winds, experts said. As a result, Isabel toppled far more trees than Hurricane Floyd in 1999, even though their winds were comparable.
"The trees weren't as strong," Bernie Rayno, a senior meteorologist with AccuWeather in State College, Pa., said. "You factor wind in, and you have a lot of downed trees."
Second, many counties and cities in the region have fallen behind in pruning or cutting down sick and dead trees, many of which tumbled on to power lines. Officials in Washington and Montgomery County, Md., said today that they would push to add spending for tree removal.
"Our backlog is staggering," Councilman Adrian M. Fenty of Washington said. "The district may be at fault for letting trees get enormous and old."
Third, many utilities were unable to send out-of-state crews into the region right away because utilities all along the Eastern Seaboard wanted to wait to see whether the hurricane hit their areas.
Moreover, because of the wide swath, utilities in Maryland and Virginia had to reach as far as Arizona, Michigan and Texas to recruit emergency crews, some of which did not arrive until well after the storm had arrived.
Still, power company officials say they had as many out-of-state workers in place before the storm as they could handle.
For all the complaints, the utilities are on a pace to match their performances after past hurricanes, provided that they meet their own goals of restoring power by this weekend.
When, for instance, Hurricane Floyd — like Isabel, a Category 2 storm with winds of 100 miles an hour at landfall — struck North Carolina, Virginia and Maryland in 1999, Dominion needed 10 days to restore power for 700,000 customers. Baltimore Gas and Electric took eight days to return electricity to 320,000 homeowners and businesses.
Both utilities had more than twice as many customers lose power this year than in 1999.