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New CEO Promises Better Response Time, But Says New Regulations May Increase Costs

by | May 17, 2012 5:30am () Comments | Commenting has expired | Share
Posted to: Energy, Environment, Weather

More than five weeks into the job, the new Northeast Utilities CEO Thomas J. May held unprecedented 30-minute Connecticut press conference Wednesday where he reminded reporters that he was a “poor kid from the streets of Hartford,” and that he grew up in the shadows of Trinity College.

May who took over the helm of Northeast Utilities last month when the multi-billion merger between Massachusetts-based utility NSTAR was finalized said he now splits his time between Boston and Hartford.

The merged company which includes four electric and two natural gas subsidiaries is now the biggest utility company in New England, serving millions of customers across Connecticut, Massachusetts, and New Hampshire, but May stressed his local credentials.

“At a time when foreign companies are buying up U.S. utilities, to me this merger means that local companies are going to stay local,” May said, though he declined to definitively say if the merger would result in layoffs for any of the 9,000 employees.

Since taking over, May’s been meeting with employees—the “troops,” he calls them—in towns across the state, telling them he’s a “nut about customer service,” which will be music to the ears of the thousands of Connecticut Light & Power customers who went without power for extended periods of time during Tropical Storm Irene and the massive October snow storm.

As part of the merger, May said that the company has “made a lot of promises to regulators,” in terms of improving services. Much of that improvement will come in the way of increased communication, May said.

May described a drill planned for July in which the company will coordinate response with each town’s emergency operating center. He said the company would be establishing a hotline and an online system where customers will be able to inquire about the status of power lines.

NSTAR has also had to answer to angry Boston customers and politicians in recent months, after a transformer fire in March that left much of the Boston neighborhood of Back Bay without power for several days. An hour-long blackout last week that left Boston Mayor Tom Menino demanding an explanation.

May said that the mishaps on the Boston power grid were analogous to Red Sox slugger David Ortiz’s start last season: a low moment in an otherwise stellar career.

Under the terms of the merger, Connecticut will receive a $25 million rate credit, which will work out to about $16 per customer.

The company also agreed to freeze electric distribution rates for customers for two years. Company executives told shareholders this month, however, that after the rate freeze expires the company will ask state regulators if it can pass the $220 million it lost in Hurricane Irene and the October snowstorm on to its customers, the Hartford Courant reported.

May said that the state’s recent storm preparedness bill would create some increased costs for the company, but said that he couldn’t say whether or not ratepayers would bear the brunt of the costs until the Public Utility Regulatory Authority issues its standards.

The bill, which passed in the waning hours of the legislation, creates performance standards and fines for utility companies if they fail to meet restoration goals.

FRACKING

Connecticut may soon see an increase in natural gas obtained through the controversial extraction method hydraulic fracturing, also known as “fracking.”

The gas obtained by the utility through its two gas subsidiaries primarily comes from the Marcellus Shale rock formation, which covers a vast area stretching from New York to West Virginia and to Ohio and much of western Pennsylvania.

Fracking involves drilling deep into rock formations and breaking the rock to release pockets of natural gas. The method has received criticism because of reports of the gas leaking into local water supplies. In an oft-cited occurrence, people who live in the Marcellus Shale region have filmed themselves lighting the water in their faucets on fire.

The merged utility has about 500,000 natural gas customers, 200,000 of which are in Connecticut, and this number may rise soon.

Because of the high price of oil, May said that natural gas may become more widely used in the state.

A Texas company is proposing a $500 million expansion of the Algonquin natural gas pipeline, which cuts across the state and connects to the Texas Eastern pipeline to bring in gas from the Marcellus Shale region.

“Theres no doubt that we should be taking advantage of gas. For my entire career, we’ve been at the end of the energy pipeline. That’s one of the reasons why you see so much fuel oil that we heat our homes with in the Northeast, because the gas was in the Gulf, and it cost a lot of money to pipe it up here,” May said.

“I believe that is our future.”

May also stressed the potential economic benefits of using gas obtained by fracking.

“If we can have somebody heat their homes for $1.25 a gallon, instead of $4 a gallon, think of what money comes back into the Connecticut economy,” he said.

NU spokesperson Al Lara said that while there are no public plans to shift more of the companies portfolio toward natural gas, he said that “if there is gas that would make it cheaper for customers we would try to access that gas.”

HYDRO

The Canadian province of Quebec through its public utility Hydro-Quebec is currently undertaking a massive project to dam rivers in the north of the province and harvest hydroelectricity.

Much of that power is slated for southern New England.

NSTAR and Northeast Utilities have for years been partners in the construction of a $1 billion, 1,200 megawatt transmission line to bring the power south from Quebec through New Hampshire and into Massachusetts and Connecticut.

Part of the commercial appeal of hydroelectric power is that several states classify it as “renewable,” which increases its value for state’s who need to meet self-imposed energy efficiency targets.

Hydro power does not currently qualify for Connecticut’s renewable energy portfolio, though the Department of Energy and Environmental Protection is studying whether or not the state will join Vermont as the only states in New England that class hydro as renewable.

Last month, the Massachusetts legislature voted to “encourage” hydro power, but declined to include it in the state’s renewable portfolio standards.

Both the New Hampshire transmission line and the Quebec damming project have come under fire from activists and environmentalists, but May said it wouldn’t be a barrier to bringing the electricity to market.

“I have never seen a project that everybody loves. There’s always resistance theres alway groups that will picket. The special interest groups will find something wrong with the project. so that does not surprise us. It’s nothing we didn’t expect,” May said.

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