In his weekly “Stories I’d like to see” column, journalist and entrepreneur Steven Brill spotlights topics that, in his opinion, have received insufficient media attention. This article was originally published on Reuters.com.
1. My Alaska-Hawaii electricity repair team:
It’s 10 o’clock and the lights are out. Do you know where your local utility actually lives?
I have already written that New York State Electric and Gas — the incompetent, uncaring electric company that services our home in northern Westchester County, New York — is not exactly a community utility. It is part of a Spanish energy conglomerate. Nonetheless, when a repair crew finally arrived six days after Hurricane Sandy hit and I chatted up the guys who were about to climb our poles, I was amazed to hear that one was from Hawaii and the other two from Alaska. That they had come that far seemed so absurd that I asked to see their driver’s licenses.
Adding to this theater of the absurd was the fact that the truck they were driving was owned by something called Michels Company and had come from Syracuse, NY. That’s about 250 miles from our house. And they had been commuting all week on that truck to the repair jobs in our neighborhood from a motel in Kingston, NY — which is 72 miles away.
My new Hawaiian and Alaskan friends told me they were recruited by Michels and flown to New York on the Wednesday after the storm. Michels, they explained, is a far-flung construction contractor based in Brownsville, WI (which is about midway between Green Bay and Milwaukee) with 27 field offices from Seattle to Syracuse. The company handles jobs ranging from the Keystone Pipeline to building highways to climbing our light pole. The crew chief, who was from Green Bay, told my wife that for New York State Electric and Gas and many other utilities, Michels has become the lead outside contractor for storm repairs. From headquarters in Wisconsin, it coordinates the now-standard practice of rounding up electricians from all over the country to become an electric company’s temporary storm recovery crisis team.
All of this — not to mention the obvious broader tableau of how we seem to accept it as the new normal when our public utilities routinely tell customers that power outages will take a week or more to fix — cries out for comprehensive reporting.
What has happened to this most basic core of our infrastructure — the electric companies that, town by town, have been awarded monopolies that our public officials are supposed to regulate? Have they become shells that simply hold their monopoly licenses and do the billing and collecting while outsourcing the work their customers rely on?
How could the way we regulate those monopolies have failed so miserably that they apparently have an economic incentive to hollow out their own repair crews and outsource that work to a seemingly prospering contractor who recruits and flies people in from across the continent and beyond, and then has them commute an hour and a half by truck every day to climb light poles?
Beyond the clown-show economics of that, serving customers cannot possibly be part of the equation in those incentives; by definition, my crew couldn’t get in position to start work until two days after the storm lifted and even then they had to orient themselves to a new continent. It would be great to read a bunch of stories that explain all this, along with sidebars on Michels Company and its itinerant pole climbers.
The state and local officials who regulate utility monopolies set rates by allowing companies a certain profit margin above their costs. Does that mean my rates are now going to go up to pay the tab (and maybe a profit margin, too) for my repair crew’s plane fares and motel bills? How does the rate setting work in states and communities across the country? What is it about the way rates are regulated and profits accounted for and allowed that seems to encourage utilities to cut their staffs but then pay for outsourced workers to fly in days later? Has any state or local government tried to reverse those incentives by building in penalties — say, $200 per home per day — for outages lasting more than 24 hours? Or are the utilities’ lobbyists in our state capitals too strong to allow that?
More important, what kind of twisted incentives let utilities get away with not making the kinds of investments — such as putting the wires underground, in the case of my community — that would prevent blackouts and probably pay for themselves in unspent repair crew time and overtime (not to mention tickets on Hawaiian Air) within 5 to 10 years?