Setting Standards for Summer Storms

Posted on August 13, 2012. Filed under: Uncategorized | Tags: , , , |

Are you worried about the possibility of losing power for a week because of a summer storm? At this time last year, thousands of Connecticut residents suffered through that experience because of Tropical Storm Irene. Then the freak Halloween snow storm arrived in late October and plunged many of us into darkness again.

Government officials pledged to take action to ensure that power companies will be better prepared for future emergencies. After months of debate, two weeks ago, Governor Malloy signed An Act Enhancing Emergency Preparedness and Response into law.

Does the law establish strict new standards for utility companies? Or find funding sources to pay for projects that move overhead wires underground? Or create new teams that can help clear our roads after weather emergencies?

Well … not exactly. Although Section 3 of the Act does require the “Public Utilities Regulatory Authority (to) initiate a docket to establish industry specific standards for acceptable performance,” it does not actually establish any standards. Nor does it explicitly identify any sources of funds to finance new teams or other response capabilities.

Instead, the Act appears to call on our existing government officials to work with our existing utility company executives to modify our existing plans and standards. Will this result in any improvement to the status quo? We can certainly hope so … but we might also wish to replenish our supplies of candles and bottled water, just to be safe!

Contributed by Michael Kraten, PhD, CPA, Accounting Professor at Providence College and President of Enterprise Mgt. Corp.

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A Question of Priorities

Posted on November 7, 2011. Filed under: Uncategorized | Tags: , , , |

Do we want a nanotechnology research complex in the State of Connecticut? Or do we want underground power lines?

As Connecticut continues to stagger to its feet and restore power to its residents a week after the Halloween Nor’easter, some Nutmeggers are asking why more hasn’t been done to prepare for such events after Hurricane Irene knocked 800,000 residents off the grid two months earlier.

Consider the actions taken by New York Mayor Michael Bloomberg, for instance, after being heavily criticized for the city’s slow response to a post-Christmas snowstorm last year. Commentators as far away as Los Angeles praised Bloomberg for implementing a new “weather emergency” system, staffed by an “army of city workers.” He even began equipping snow plows with GPS tracking technology to coordinate clean-up efforts!

Meanwhile, here in Connecticut, some citizens are suggesting that the state’s electric utilities begin burying power cables underground. But CL&P President Jeff Butler believes that the cost of doing so would be cost-prohibitive; his spokesperson Katie Blint estimates that the cost would be $1 million (or more) per mile.

The Governor’s FY 2012-2012 Biennium Budget Recommendations calls for a total appropriation of over $20 billion during the fiscal year 2012-2013. To place the CL&P cost estimate in context, a $1 billion investment — equivalent to 5% of the state’s total annual budget — could bury as many as 1,000 miles of power lines. By spreading the investment over ten years, the 5% one-year cost would thus be reduced to 1/2 of 1% per year.

The administration asserts that the nanotechnology complex now being funded by the State of Connecticut’s $291 million investment (plus another $153 million in interest charges) will bring at least 300 jobs from Maine over a 10-year period; the government hopes that many additional jobs will eventually materialize as well. But should the state’s priority be the development of projects like the nanotechnology complex? Or would we be better served by investing in more mundane projects … such as reconstructed power lines?

Contributed by Michael Kraten, PhD, CPA, Accounting Professor at Providence College and President of Enterprise Mgt. Corp.

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