Rob Cox, a writer for Reuters, has delved into the disappointing response of some investor-owned utilities in Connecticut following the recent blizzard, noting the better performance of muni power companies. Hurricane Irene recently revealed the similar superiority of muni electrics compared to the investor-owned in Massachusetts, prompting us to note the parallels with Wired West's initiative in Western Massachusetts. They have created an electric light coop to build a next-generation fiber-optic network out to everyone in the area.
And on the same day that Longmont embraced locally owned broadband in Colorado, nearby Boulder started the process of kicking Xcel out in favor of an electric grid that is accountable to the public.
So let's see what the New York Times has to say about municipal ownership of infrastructure. They begin by noting the many ways Connecticut Light and Power (the subsidiary of Northeast, an investor owned utility presently consolidating with another large IOU) has cut its maintenance spending over the last few years -- leaving many more power lines vulnerable to the tree-bending blizzard.
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.
To reiterate, the publicly owned system is cheaper, more reliable, and responds more quickly in emergencies. Sounds like efficiency.
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.
And yet, we see the exact same response from elected officials in the face of a less efficient private sector -- they blindly embrace the private sector, pretending we have no other options.
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.
Well, that is curious. The publicly owned utility is able to charge less for power while spending more per ratepayer. And we know that more money from the local utility stays in the community whereas the absentee-owned companies result in fund flight.
It helps that the Norwich utilities are not slaves to the profit motive — though they hand 10 percent of gross revenue to the city.
Whoops! There goes the whole "they have an advantage because they don't pay taxes BS argument...
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.
It shouldn't be a "rare" kind of accountability if we recognized the limits of where the private sector excels and encouraged it to "tend to its knitting" as my grandma says.
Photo, courtesy of autowitch on flickr.