Money and Miscommunications Dominate Utility Discussions Before Senate Committee

Joe Tyrrell | December 6, 2012 | Energy & Environment
Despite massive outages and other problems, utilities defend overall performance

Utility companies acknowledged communications problems during and after Hurricane Sandy, but defended their overall performance before a state Senate committee studying responses to the superstorm.

That did not sit well with Stefanie Brand, director of the Division of Rate Counsel, who also took issue with the idea that the utilities wanted to spend some $1.1 billion to $1.2 billion to deploy smart meters.

Brand argued that the BPU and Legislature must scrutinize utility spending and revenues before funneling more customer or taxpayer funds to them.

But not all cost estimates brought a similar response.

The Passaic Valley Sewerage Commission, whose Newark treatment facility inadvertently dumped 775 million gallons of untreated sewage into waterways, won sympathy for its loss of power during the storm and estimated $200 million in resulting damage.

While discussions about costs and miscommunications were a common thread at the state Senate Budget and Appropriations Committee hearing, a number of other topics were touched on, including infrastructure, responsibility, ratepayer increases, and “importing” workers from out of state.

An Unsympathetic Ear

Brand was particularly unsympathetic to the utilities, saying that their rates already include funds for infrastructure.

The power companies’ efforts to replace working meters with “smart” ones “sticks in our craw,” because the devices would not work better during outages, she said.

Noting the $1 billion cost estimate from JCP&L and PSE&G, Brand said, “It might be better to spend that money on raising the substations or improving the reliability of the power grid.”

It was one of the few tart moments during a generally polite hearing in Trenton, but not the most dramatic. A round-robin of exchanges among JCP&L President David Lynch, state Sen. Kevin O’Toole, and Robert Hanna, president of the state Board of Public Utilities, brought underlying tensions to the surface.

“A lot of things went very wrong” during and after the October 29-30 storm, O’Toole told Lynch, “and you have to take some responsibility.” The timing of the rate hike application was “insulting in many ways and it’s coarse in many ways,” O’Toole said.

JCP&L, owned by FirstEnergy Corp. of Akron, was able to bring 8,500 line workers as part of an “army” of out-of-state employees who arrived before and after the storm, Lynch said. As a result, “we were able to restore 1.3 million power outages in really 13 days,” he said.

While the timing of the rate hike request was “unfortunate,” the BPU ordered JCP&L to file it, Lynch said.

But Hanna opened his testimony by countering that the order was to address questions about previous JCP&L spending. The company chose to request a rate increase as well, he said. But he promised that would not simply coast to approval.

The BPU will examine whether the company is using New Jersey as “a cash cow” to prop up FirstEnergy operations elsewhere in the country, he said. If the allegations from Brand’s office turn out to be true, “that would be alarming,” Hanna said.

Earlier this year, Brand’s office reported JCP&L was earning almost 12.4 percent on its New Jersey operations, compared to 8.2 percent for Public Service Electric & Gas. Another rate case revealed Atlantic Electric was sending 82 percent of local revenues out of state, illustrating the potential problem, she said.

Failure to Communicate

While the utilities marshaled their forces better for Sandy than for some previous major storms, Hanna agreed with several legislators that the companies need to examine how they actually dispatch workers.

PSE&G President Ralph LaRossa said bringing in workers beforehand and throughout the cleanup was the most significant improvement. He acknowledged shortcomings in communicating with customers and communities, but attributed that to the industry’s “antiquated” systems.

We have to call customers and say, ‘We think you’re back, are you back?’”

But Hanna “respectfully disagreed,” saying, “we have plenty of ways to communicate.” While the power companies touted their use of social media, legislators backed Hanna.

Power companies have not done enough to coordinate their outreach with local officials and emergency management, said state Sen. Loretta Weinberg (D-Bergen). Many towns already have reverse 911 or other outreach systems, but could not get sound information from their utility contacts, she said.

In Red Bank police and fire personnel contacted residents and businesses directly, said state Sen. Jennifer Beck (R-Monmouth). If the utilities had supplied timely information, “we could have distributed it,” she said.

Sometimes the frustration was personal. After three days without power, and concerned about the effect of cold on his ailing wife, state Sen. Anthony Bucco (R-Morris) said he called JCP&L, looking for some idea when power might be restored. He was told “call 911” for his wife, he said, but instead he bought a generator.

The utility executives agreed with state Sen. M. Teresa Ruiz (D-Essex) that they should work more closely with emergency management officials to identify critical customers and prioritize power restoration to them. One section of her district that suffered a prolonged outage included seven gas stations and a nursing home, Ruiz said.

An Unexpected Surge

Sen. Paul Sarlo (D-Bergen), the committee chairman, chafed when company President Ralph LaRossa said the company “did not expect” the storm surge in Newark Bay. State Police emergency management officials warned of exactly that on the eve of the storm’s landfall, Sarlo said.

LaRossa conceded the point, but added that based on past experience, “we were not expecting the surge to come into Newark Bay at that speed and height.”

Summing up the remarks of all the utilities, RVSC Executive Director Michael DeFrancisci explained, “you prepare for the storm you’re familiar with,” but Sandy broke the pattern.

DeFrancisci understands the problem all to well.

The size of the wave also surprised officials of the Passaic Valley Sewerage Commission, whose treatment plant on Newark Bay was swamped by unprecedented flooding. In previous major storms, areas around the complex flooded, making the problem one of access in and out, said DeFrancisci. Sandy’s floodwaters surged through the complex, as much as a mile from its frontage on the bay, he said

While offices and operational areas had as much as four feet of mixed flood and wastewaters, the facility’s extensive underground facilities proved even more vulnerable, as 200 million gallons needed to be pumped out following the storm.

While power was out, the PVSC lost “775 million gallons of raw sewage into the rivers, the Passaic River and Raritan Bay, said Chief Operating Officer Bridget McKenna. While treatment has continued since November 3, damaged equipment still needs repair or replacement, she said.

The commission began relocating readily movable resources in the immediate aftermath of the storm. But the longer-term repair and renovation, including waterproof seals for underground areas, could cost $200 million or more, DeFrancisci said.

The commission’s customers, the roughly one-quarter of New Jerseyans, cannot afford to pick up the full tab, while political disputes have left it without enough commissioners to even vote on bonding some expenses, Sarlo said.

But committee members clearly viewed the plant as a victim of the power outage and an unprecedented disaster. They pledged to work with the commission to identify and pursue funding sources, such as some programs of the Federal Emergency Management Agency.

In contrasts to the plaintive tone of conversations with other company representatives, committee members beamed at reports from NJ Natural Gas and New Jersey American Water.

Their operations are contingent on electric power, but Kathleen Ellis, the gas company’s chief operating office, said service on barrier islands will be restored by the end of the year, months faster than original projections. State Sen. Jennifer Beck (R-Monmouth) praised the company for its clear daily progress updates.

Water service should be ready for all customers in the area in two months, but actual restoration of service also depends on the status of wastewater treatment facilities, according to water company Vice President David Baker.

The hearing was one of a series being held by the committee to identify needs and costs in the wake of the storm. The next is scheduled 3 p.m. Monday at the Henry Hudson School in Highlands.

The BPU will hold hearings 4 p.m. December 12 at Ramsey High School for the Rockland Electric Co. service area, and 4 p.m. December 18 at Hopatcong Middle School for JCP&L customers.