August 30, 2010

Good evening Chairman Nazarian and members of the Commission. I am Isiah Leggett, County Executive of Montgomery County. Thank you for allowing me to appear before you this evening to provide my perspective on the frequent and extensive power outages in the Montgomery County portion of the PEPCO service area.

I recently met with PEPCO Holdings, Inc. Chairman Joseph Rigby and expressed my concerns and frustration regarding the frequent and extensive outages. I impressed to him and his senior executives the importance of developing a more stable and reliable electricity service in the County. In short, I emphasized the following four major concerns:

1. PEPCO’s contracting and operational procedures and practices for bringing additional resources to bear in emergency situations need reconsideration;

2. PEPCO’s preventive maintenance and tree trimming programs need review and revision;

3. PEPCO’s inability to effectively communicate useful and accurate information in a timely manner to customers; and

4. Practices regarding coordinating activities with the County under emergency conditions needs improvement.

I further advised him that I am committed to working with him, and anyone else with a stake in this issue, to correct these shortcomings.

I informed Mr. Rigby that I was very disappointed with PEPCO’s response time for getting mutual aid and contract resources to help re-establish power to customers who had lost service. There must be a better way to secure these types of resources, get them mobilized sooner, and reduce the period of time that customers are out of service once service is lost.

PEPCO customers have experienced many more outages in the past two years than customers of nearby BGE and Allegheny Power. As discussed in your recent Investigative Hearing, PEPCO ranks in the bottom quartile of utilities with regard to frequency of service disruptions to customers for the past several years; and below average with regard to duration of service outages during that same period. And these statistics exclude major storm events like the ones Montgomery County experienced in the last seven months. What is more disturbing is that PEPCO has been in these low service categories for more than four years!

According to reports submitted to this Commission, PEPCO’s frequency of service interruption for 2009 was about 61% higher than for BGE and more than 100 percent higher than for Allegheny. The SAIFI Index (the index used to measure the average number of outages per customer) was 2.06 for PEPCO in Maryland, 1.28 for BGE and less than 1 for Allegheny. It is my understanding that the median value for North American utilities is approximately 1.10 outages per customer.

Also, as recently reported, during the December and February snowstorms, PEPCO's average outage time was 13.6 hours per customer. That was 5.5 hours longer than the next highest average outage time -- 8.1 hours for BGE.

Viewed from another perspective, PEPCO had 75.9 outages per circuit mile for the February snow storms, more than three times that of the next-highest Maryland electric utility -- 23.1 outages per circuit mile for Delmarva Power and Light (also a PEPCO Holdings Inc. company).

While I recognize we cannot control Mother Nature, the above data suggests that PEPCO needs to upgrade its operations to reflect “best practices” and improve current performance.

When we met recently, PEPCO executives indicated that the vast majority of the outages (92%) for the July 25th storm were caused by trees and limbs falling on power lines; many from outside the public right-of-way. They also implied that this was the primary reason for the extensive outages during the winter storms and the August storms. If that is true, then the resources and increased authority, if necessary, must be provided to the company to keep vegetation from interfering with service reliability.

Mr. Rigby and staff advised me that they planned to nearly double annual expenditures for their vegetation management program. However, I have not yet received a satisfactory answer to the following question: How will PEPCO increase the efficacy of its vegetation management program with regard to property outside the public right of way if it can’t get access to the trees and limbs causing the problem? We must work together to make sure additional expenditures achieve the intended results.

While vegetation issues may be the cause of most service interruptions during severe storms, there are other causes of frequent service disruption that I believe this Commission must investigate.

It was recently reported that there have been frequent, non-storm related outages in Bethesda. The Promenade, a high rise residential building with 1,800 residents has experienced 12 outages since March 2010 that were not storm related. PEPCO representatives have indicated that area of Bethesda where the building is located and portions of Northwest Washington are experiencing "load creep," which means new development and new customers nearby are placing a strain on the power company's infrastructure. The Promenade is just one example of reliability issues unrelated to storm damage. I have received complaints from several office building owners regarding the reliability of their electricity service. PEPCO must move expeditiously to address these types of issues and reinforce or replace what I believe is inadequate or antiquated infrastructure.

Another matter that Mr. Rigby and I talked about was the company’s communication operations during large emergency events. I have received many complaints on this matter and I believe you covered this issue during your Investigative Hearing on August 17. It is essential that this issue be thoroughly addressed and improvements made in order to effectively address customers’ need for timely and accurate information, especially during large-scale emergencies as we have recently experienced.

I want to note that Montgomery County is widely viewed as the economic engine of the State. Many federal agencies, businesses, and academic institutions wish to expand in or relocate to the County. Montgomery County is in active competition to keep existing businesses and institutions, and to attract new ones. We have one of the best educated workforces in the country, an outstanding public school system, great parks, libraries, and recreational facilities; in short, the types of assets and amenities that attract employers. But stable and reliable electricity service is a significant component of what makes a jurisdiction desirable to institutions and businesses. It is imperative that we all work together to make sure that PEPCO re-establishes itself as a utility that provides stable, reliable and affordable service to the customers in its service area.

As a final point, I want to inform you that I have formed a local Work Group to study the issues addressed this evening. PEPCO management has already agreed to participate. Once Work Group activities and deliberations are complete, I will transmit the Group’s findings and recommendations to you which I hope you will find useful in your investigative process.

Thank you.