Friday, September 2, 2011

PSNH Wins the Race to Restore Power in New England?

This is the second post in the "You Have to Wonder Why" series.

The first post is here.

In case you were not aware, a race has been on all week to see which New England state would fully restore power first in the wake of Hurricane Irene. In a press release issued today, September 2, PSNH claimed the laurels for . . . . you'll never guess who, New Hampshire. PSNH also noted that it is the largest utility provider in New Hampshire and thereby crowned itself the winner in New England:

Manchester, NH September 2, 2011 – It appears that New Hampshire is the first state in New England to have fully restored electric service to all customers impacted by the remnants of Hurricane Irene. Public Service of New Hampshire (PSNH), the state’s largest utility, restored service to virtually all of its customer as of midnight Wednesday. On Thursday, PSNH crews worked on several dozen remaining customers in the hard-hit areas around Wakefield and Milton. A number of remote camps and vacation homes were also attended to. The outages peaked during the height of the storm Sunday, August 28 when about 125,000 PSNH customers were reported without power. (PSNH press release)
You have to wonder why--why PSNH would choose to frame hurricane recovery in New England as a competition it has won, and especially why PSNH would want to draw attention to its performance in handling the challenge of Irene.

Let's go back to last Friday, August 26. Irene was predicted to track through New Hampshire, and New England utility companies were planning and announcing what their emergency responses would be. PSNH's lobbyist Donna Gamache sent out this email to the entire Legislature informing them that Hydro Quebec, "our friends from the north who have always been there for us in our time of need," would be PSNH's backup:

Dear Legislator:

As you know from other information you are receiving and will continue to over the next few days, PSNH is in full preparation for the arrival of Hurricane Irene.  In addition to tips for your constituents concerning Home Safety and Travel Safety, I wanted you to be aware that our multiple Emergency Operation Centers around the state will be up and running prior to the arrival of Irene.  Additionally, we are pleased to announce that we will have the assistance of some out of state crews, including Hydro Quebec, our friends from the north who have always been there for us in our time of need.  If you happen to see any of these out of state crews in your travels, take a moment to thank them for leaving their families behind to be in New Hampshire to help us all [emphasis added].

As noted in our earlier "you have to wonder why" post, you have to wonder why PSNH or its parent company Northeast Utilities recruited in advance help from an area north of us that was just as likely to be hit by Irene as we were. Was it nothing more than NU's clumsy and cynical attempt to ingratiate Hydro Quebec to New Hampshire so that we would somehow be less offended by its intended assault on our heritage, scenery, and economy?

Whatever it was, the recovery plan backfired. The HQ crews came down to New Hampshire on Sunday, Irene ended up blacking out 250,000 customers in Quebec, more than twice as many as in New Hampshire, HQ pulled its crews out late on Sunday or early on Monday and put them to work at home, leaving PSNH to scramble for now scarce crews in unaffected states to the west of us.

NHPR was soon publicizing the resulting delay in headlines such as "PSNH: Restoration Slower than Normal," and Martin Murray was making general statements about PSNH finding that the repair troops were spread thin, which should have surprised absolutely no one, not that Hydro Quebec had gone home, and warning residents and businesses that power could be out until the end of the week, which it was.

On Tuesday, NH headlines were reading "Thousands still lacking power" (Nashua Telegraph), with the emphasis in the article on still, and it was being widely acknowledged in news outlets that HQ had pulled out. NU's plan to showcase "our friends from the north who have always been there for us in times of need" had turned into a public relations embarassment. Further, PSNH's subsequent claim to have won the race to restore power in New England anyway clearly undercut any claim that New Hampshire really needs our friends from Quebec when the going gets tough. Our U. S. friends from the west clearly suffice. Again, you have to wonder why. . . .

By this point, however, NU, and PSNH collaterally, had an even larger problem on their hands than the poor decision to play favorites with HQ during a hurricane recovery: the miserable performance of another subsidiary, Connecticut Light & Power, which has failed its customers so badly in the wake of Irene that it is leading to questions about the wisdom of NStar's merger with NU:

Stormy Weather for a Utility Merger

Hurricane Irene may not have done much damage on Wall Street. But she ought to blow one deal off course: the $4.2 billion merger of the electric companies Northeast Utilities and NStar. Huge blackouts after the storm have exposed Northeast Utilities’ deficiencies in serving customers despite charging some of America’s highest rates. Regulators should take a critical look before approving the deal.

Utility mergers present special problems to begin with. The companies are regional monopolies providing an essential service. So state watchdogs tend to demand that consolidation create benefits for customers, like lower electricity rates or improved service. That’s why the synergies for shareholders in such deals are generally played down.

Indeed, the need to appease regulators, specifically those in Massachusetts where both Northeast and NStar have their headquarters, was one reason for the lack of any premium in the merger deal announced last October. The companies also promised not to eliminate jobs in customer-facing positions or in operations, commitments of the kind local regulatory authorities like to hear.

But what matters most is what they see on the ground. And Northeast’s handling of the Irene mess provides compelling evidence that its customers are not being served properly. At the company’s Connecticut Light & Power subsidiary, some 220,000 customers still had no power five days after the storm. Connecticut residents pay more for their electricity than any other state in the lower 48, according to the Energy Information Administration.

True, Irene was an unusually powerful storm. But after years of cost-cutting, Connecticut Light was not adequately prepared. It had expected out-of-state crews to pitch in, but many of them had their own problems to contend with. In the last 35 years the utility’s number of customers has grown by 41 percent while its line worker ranks have shrunk by 21 percent, according to a letter a company union wrote to Connecticut’s governor.

The Massachusetts regulators will soon be asked to approve the Northeast-NStar deal. Judging by the evidence in Connecticut and elsewhere — as opposed to the unproved promises of the companies’ executives — the watchdogs need to take care to extract a few pounds of customer service flesh or kill the deal outright. (Reuters; reprinted in the New York Times, Sept. 2, 2011)

Irene has blown the cover on more than one problem with NU and subsidiaries, PSNH and CL&P, and with the would-be alliances with Hydro Quebec and NStar.

A more detailed report is in preparation as the facts continue to emerge.