Newsletter subscribe

Chairman's Message

Martin O’Malley’s PEPCO Failures

Posted: July 7, 2012 at 7:53 am   /   by   /   comments (0)

While large sections of Montgomery County were without power this past week, the Atlantic’s Gregg Easterbrook delivered a scathing critique of Governor O’Malley’s oversight of PEPCO, entitled “Outage Outrage: The Politics of Electricity.”

“As for O’Malley, utility regulation is one of the classic challenges of government, requiring persistence and attention to detail. O’Malley might have proved himself with White House-level competence by dealing with Pepco. Instead he has done nothing, while gallivanting around the nation promoting himself. Sunday, with a power crisis at home, the governor was more interested in engaging in self-promotion on Face the Nation. O’Malley’s abysmal performance in his own state makes his claim to national leadership seem a practical joke.”

In short, Easterbrook questions if Gov. Martin O’Malley should run for President in 2016, when “he can’t even deal with a dismal power utility in his home state.”

While the Governor’s apologists question whether he should be blamed for a company’s failings, O’Malley cannot claim that he did not see this one coming. In 2006 Candidate O’Malley made utilities and standing up to the “the lobbyist and powerful corporate interests” a cornerstone of his campaign:  O’Malley’s 2006 commercial

He attacked the Public Service Commission, ignoring that his own brother-in-law Max Curran had been a Commissioner since 1999.

But there is more about Curran. Last month, the website Center Maryland released their list of “50 very influential people in Maryland politics.” They said: “When energy companies look at business deals involving Maryland, analysts refer to “Maryland risk” – the uncertainty over how the state’s Public Service Commission might treat the deal.”

So who does Center Maryland say is the top lobbyist for utilities navigating these regulatory problems? Governor O’Malley’s brother-in law, Max Curran.

“The Saul Ewing attorney (and former PSC Commissioner) has become the go-to lawyer to shepherd major energy deals through the regulatory process, including the FirstEnergy-Allegheny Power and Exelon-Constellation Energy deals.”

A listing of Curran’s caseload on his law firm’s website reads as a list of major PSC agenda items:

  • Representation of Constellation Energy Group and Exelon Corp. in their recent successful merger, securing the approval of the Maryland PSC for the approximately $8 billion merger.
  • Representation of FirstEnergy Corp. and Allegheny Energy Inc. in their merger resulting in their ability to exercise substantial control over the policies and actions of a western Maryland electric
  • Representation of a large national energy company in connection with its billion dollar plus acquisition of Mid-Atlantic electrical generating facilities. The matter encompassed six sites in Maryland and Delaware.
  • Representation of a joint venture of major utilities in the licensing and development of the Maryland piece of a 267-mile 765 kV high voltage transmission line.
  • Representation of a nuclear development company, in the siting, licensing and development of a new generation nuclear plant, including representing the company in the complex and extensive regulatory reviews in the state of Maryland.

Over a year ago, a Blue Ribbon Montgomery County Commission appointed by the County Executive, the “Pepco Work Group” reviewed PEPCO’s performance. The group was chaired by former Lockheed Martin CEO Norman Augustine. That, Augustine, who is the former CEO of the largest private corporation in Maryland, as well as former Chairman of the National Academy of Engineering and former Chairman & Principal Officer of the American Red Cross agreed to chair this group shows just how seriously Pepco’s ongoing reliability problems are taken in Montgomery County.

They concluded:

  • Pepco’s performance under both Non-Major Event conditions and during Major Events can be judged inferior by any reasonable standard and clearly so by a collective set of standards. This condition has persisted since 2005.
  • Pepco’s reliability during Non-Major Events has suffered primarily from inattention to long-term planning and underinvestment in the utility’s electricity distribution infrastructure.
  • Pepco’s infrastructure significantly underperforms due to the lack of a proactive preventive maintenance program including the identification of critical maintenance practices, effective record keeping, and continual improvement. This approach allows similar failures to occur, and reoccur, over multi-year periods.
  • Much of Pepco’s system that is served by Underground Residential Distribution (URD) cables is nearing the end of its reliable service life and there is no long term plan for assaying the condition of the system, nor a plan for its replacement.
  • Pepco’s ability to assess system operating status is technologically out-of-date and depends heavily on customer reporting.

Despite, this and other ample evidence of the Pepco reliability failures, what does O’Malley’s Public Service Commission Chair Doug Nazarian have to say?

On Tuesday, Nazarian told the Washington Post: “We, as a commission, can fairly be criticized. We didn’t pick up early enough on the need for comprehensive reliability regulations.”

The criticism should not stop with the PSC, Governor O’Malley take responsibility as well to make sure the PSC is responding to more than the Governor’s brother-in-law’s clients.

Mark Uncapher
Montgomery County Republican Chairman