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Under Fire, Under Scrutiny and Under Arrest?

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Nevelyn Black's picture
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Nevelyn Black is an independent writer with a background in broadcast and a keen interest in renewable energy.  In the last few years, she transitioned from celebrity interviews and film shoots...

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  • Dec 5, 2020

Under Fire. PG&E emerged from bankruptcy five months ago seeking to upgrade equipment, safety measures and business practices.  After recent events, California power regulators are planning to keep a closer eye and a tighter rein on the utility.  Two years ago the utility proposed a rate increase to improve the grid and last month it was approved.  Under the agreement regulators have stipulated that PG&E can not use any of its additional revenue to pay for its bankruptcy settlements or enrich an executive team.  Utility vice-president of regulatory and external affairs, Robert Kenney, responded, “We want to work to exceed our customers’ expectations when it comes to safely and reliably delivering clean energy, reducing wildfire risk in an ever-changing climate, and building a safe and sustainable energy system.”  The company will use funds from the increase to finance grid improvements, trim trees around power lines and look for ways to decrease the need for blackouts during dry and windy weather conditions.  

Under Scrutiny.  ComEd faced appalling accusations of backroom deals and empty promises.  The utility planned to modernize the grid and deploy smart meters but according to report from the Illinois Public Interest Research Group, the smart meters have failed to deliver benefits to customers.  The report blames fixed formula rates for the infraction. According to the report, the laws established a formula rate “that guaranteed revenue and profits,” weakening the regulatory role of the Illinois Commerce Commission.  Public interest groups are pushing instead for a performance-based system of rate increases believed to benefit all stakeholders, with stronger incentives for ComEd and its downstate counterpart, Ameren, to move Illinois toward clean energy.  ComEd disputed the claim that customers have not benefited from its smart meters, which it says have improved reliability and reduced response times for outages.  Rates are under review for Eversource and United Illuminating as well.  A new process was unanimously approved by the Public Utilities Regulatory Authority to lower the expenses the utilities can recoup from customers.  State officials were unsatisfied with the rate hike following a ‘slow response’ from Eversource restoring power after Tropical Storm Isaias.  “PURA has begun demystifying and unwinding decades of ratemaking policies that have evolved into a less customer-friendly, less transparent framework,” PURA Chairman Marissa P. Gillett said afterward.  This statement alone reveals the importance of transparency.  Eversource spokeswoman Tricia Modifica said, “We’ll review the decision once we receive it and look forward to working cooperatively with PURA to institute changes to the rate adjustment process that further enhance transparency and understanding by our customers.”   Eversource countered that its response to the second-most destructive storm of the past decade was both swift — especially given challenges posed by the coronavirus pandemic — and within the parameters of the emergency response plan it had filed with PURA.  New laws will allow PURA to weigh the performance of utilities in the rate approval process.

Under ArrestFirstEnergy fired CEO Charles Jones and former senior management executives after an internal investigation revealed they made a $4 million payment, against company policy, to an unnamed entity.  Five men have been arrested in connection to the violation on federal conspiracy and racketeering charges. As chairman of Public Utilities Commission Nominating Council (PUCO) and a member of the Ohio Siting Board, it is believed that Sam Randazzo would have been in a prime position to sway the fortunes of FirstEnergy and other investor-owned utilities.  He has resigned.  Despite the negative press, FirstEnergy’s earnings estimates have moved 1.6% north.  The company continues to expand its regulated base and increase transmission lines to boost its earnings.  Surprisingly, 65% of their distribution revenues are generated from residential customers, which has helped them offset the decline in other customer groups’ due to the pandemic.

Companies are in business to make money.  Utilities are no different.  Well…they are no different if you omit state regulators, legislation, investors, public interest groups and ratepayers, they’re exactly the same, right?  How could transparency in billing, consumer energy consumption and general business practices, help prevent accusations of mismanagement and, in extreme cases, internal misconduct?


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