Apr 30
jonpeltoCL&P, DEEP Commissioner Dan Esty, Ethics, Malloy, Northeast Utilities CL&P, Dan Esty, Malloy, NU
As Connecticut residents are now learning, one of the primary speakers on a recent Northeast Utilities/UBS Wall Street conference call with more than 150 analysts, stock brokers and investors was Connecticut’s Commissioner of Energy and Environmental Protection.
The issue was the development of a new set of electric transmission lines that would allow Canadian company, Hydro-Quebec, to deliver its electricity to southern New England, providing Hydro-Quebec and Northeast Utilities with hundreds of millions of dollars in new revenue and hopefully lowering electric rates for Connecticut consumers.
According the CTNewsjunkie, “Malloy said he read the transcript of Department of Energy and Environmental Protection Commissioner Daniel C. Esty’s call with UBS investors and saw nothing wrong with what he said…’I read the entirety of the transcript,’ Malloy said. ‘Everything he said there he’s said elsewhere. Almost everything he said I’ve said publicly time and time and time again.’”
Malloy, Esty and others have been strong supporters of Northeast Utilities and the project, but Commissioner Esty’s direct involvement in a UBS investor call generated a swift response from groups ranging from the Connecticut Citizen Action Group to the Connecticut Republican Party.
Calling for a full investigation, the chairman of the Republican Party wrote, “The first question is why did the Commissioner even participate in this call in the first place? There appears to be no State or public interest served by participating in the conference call…It appears that Commissioner Esty, who received $205,000 in consulting fees from Northeast Utilities prior to being appointed as DEEP Commissioner, was trying to curry favor with an entity that formerly employed him.”
Prior to the Republican’s call for an investigation, the CTMirror reported that “Gov. Dannel P. Malloy said earlier today that it is important for him and his commissioners to be explaining public policy to the widest possible audience.”
In this case, UBS had already up-graded NU’s stock from “neutral” to a “buy.”
You can read the latest on the expanding story here: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/malloy_defends_esty_canadian_hydro/ and http://www.ctmirror.org/blogs/ct-gop-chair-asks-ag-investigate-esty-investor-call and http://www.ctmirror.org/blogs/malloy-defends-esty-message-not-delivery-stock-analysts.
Mar 11
jonpeltoBen Barnes (OPM Secretary), Malloy, Northeast Utilities Heating Assistance, NU
[For those of you who want a break from reading about “education reform” here’s one for you. It is long and “rambling” but I think you will find it interesting].
It was a riddle. A really big riddle.
Why didn’t Northeast Utilities say a word when the Malloy Administration announced a plan last summer that would reduce the company’s revenue by more than $60 million?
Back during the harsh winter of 2010-2011a record 118,000 Connecticut households received government-funded financial help with their winter heating bills.
Then, late last summer, faced with the proposed federal budget cut to the Low Income Home Energy Assistance Program (LIHEAP), Governor Malloy’s administration proposed a new plan for helping people who could not afford to pay their heating bills during the upcoming winter of 2011-2012.
Malloy’s plan was to provide financial aid to about 37,000 households that used oil to heat their homes leaving approximately 80,000 families with no heating assistance whatsoever. The unfortunate 80,000 households that were set to receive no heating assistance were the households that used electric or gas to heat their homes – and nearly all of those lived in major urban areas.
According to Malloy’s budget chief, Ben Barnes, the administration’s approach was to devote the limited funds to those who used oil to heat because Connecticut state law mandated that electric and gas companies cannot shut off utilities for non-payment between Nov. 1 and May 1. More
Feb 02
jonpeltoCL&P CL&P, NU
Connecticut Light & Power – otherwise known as CL&P – Northeast Utilities’ Connecticut subsidiary knew they had a public relations nightmare on the hands.
The “freak” storm of October 2011 hit and hit hard leaving over 800,000 people without power.
Day after day after day…hundreds and hundreds and hundreds of thousands of Connecticut families and households went without power.
Connecticut’s Governor held countless news briefings and status updates from the State’s “Emergency Operations Center.” Often, Jeff Butler, CL&P’s President and CEO as this side updating the media and through them the public about CL&P’s round the clock efforts to get power back on for the people of Connecticut.
And then people began to realize CL&P wasn’t getting the power back on as promised. In fact, it became increasingly clear that Butler didn’t know what he was talking about.
And then the Governor stopped calling Butler to the microphone.
And soon he wasn’t even allowed into the command center.
Anger continued to grow as hundreds of thousands remained without power and angry politicians and even angrier customers focused their attention on the state’s largest utility company.
The problem wasn’t with shareholders or with Wall Street investors.
When the storm hit, NU’s share prices fell by 3% but by Day 4 it had fully recovered and by Day 12 it was a full half point above its pre-storm share price. If anything, NU and its shareholders were looking at even more inflated portfolios thanks to the increase in the value of NU’s shares.
No, NU’s economic health was fine; it was its image that was tarnished.
So NU did what any smart corporate giant would do.
So it turned to its PR professionals, hired some consultants and it publicly announced…
“As a gesture of goodwill, we have established a fund to provide a credit for those customers hit hardest by the October Nor’easter. As we make changes to enhance our future restoration efforts, this fund is an important step in demonstrating our commitment to our customers, a commitment we take very seriously.”
NU’s concern was so great that they put $10 million into the Fund and then, with people howling with rage, they tripled the fund to $30 million.
NU hired Kenneth Feinberg, the “nationally renowned claim fund administrator” from 9/11 fame and consulted with Governor Dannel Malloy about how to handle the growing anger.
With that done, they “established Saturday, November 5, 2011 as the appropriate time” – meaning if you didn’t have power on Day 7 you got a credit and if did have power by that time…no matter how much damage was done or how big your losses were…you were sh*t out of luck.
With that settled, NU began their public relations campaign to notify customers that they could apply for a credit starting in early December. NU reported that they called customers to tell them about the available credit, they advertised the phone number customers should call to apply for the credit, they put that phone number on their bills, on their Facebook page and everywhere else they could think of.
People were signing up. Perhaps NU could win back the respect and support of their customers.
And then yesterday, the deadline for applying came and went, and Connecticut was informed that a total of 192,000 NU/CL&P customers had applied for their storm credit and their February bills would include a $140.22 credit.
Oh, and NU also announced that a total of 225,000 families and individual customers were actually qualified for the credit by virtue of not having power for at least 7 days but that 33,000 of them had failed to take the necessary steps to get their credit. Therefore only 192,000 were getting credits.
Wait, What?
Say that again?
You heard right. Northeast Utilities KNEW that there were 225,000 customers who were without power on Day 7.
NU put $30 million into a Fund to provide those customers with a special storm credit.
NU announced that the credit per household would range for $100 to $200 an account.
Had NU simply given every one of those 225,000 customers a credit of $133.33 they would have used up the money in the Fund.
However, instead NU set up a complex application process which sheared off 33,000 customers who were entitled to help, while leaving the remaining 192,000 with a credit refund check $140.24.
NU – you paid consultants to design this plan?
NU – You hired a “nationally renowned claim fund administrator” to oversee this program?
NU – You did this as a public relations move to repair your company’s image?
It all makes me wonder if there is something here that I’m missing.
Jan 30
jonpeltoCorporate Viewpoint, Malloy CL&P, Malloy, NU
The 2012 session of the Connecticut General Assembly begins in one week and Northeast Utilities and United Illuminating are gearing up to make sure Connecticut policymakers don’t do anything drastic, like hold the companies accountable for their actions.
Business gearing up for legislative fight – Utilities lead way in registering dozens of lobbyists to gain influence” is the title of a must read story in today’s Hartford Business Journal on-line. The article begins with the news that “State utility companies UIL Holdings Corp. and Northeast Utilities are loaded for a legislative battle this year, with 39 registered lobbyists, more than any other industry group, for the upcoming legislative session where storm preparation and outage response will be key issues.” See http://www.hartfordbusiness.com/news22369.html
Meanwhile, what was that I heard on my local radio news this morning? Something about tomorrow being the deadline to apply for a “storm credit.”
Step 1: Turn on computer
Step 2: Search for Northeast Utilities or if you are in the know, type in http://www.nu.com/
There is the middle of the page, in small 6pt type, are the words Connecticut Light & Power. Click on that link and you get to http://www.cl-p.com/Home
Step 3: In the midst of a very busy page look for “WHAT’S NEW” under which are the words Applications Now Being Accepted for Storm Fund Credit
Step 4: Click on that link and you reach http://www.cl-p.com/storm_fund
Now down to the middle of that page where the headline reads” “OCTOBER NOR’EASTER ENROLLMENT FUND”
And below that a picture of a CL&P truck and below that the information we’ve been looking for…
“As a gesture of goodwill, we have established a fund to provide a credit for those customers hit hardest by the October Nor’easter. As we make changes to enhance our future restoration efforts, this fund is an important step in demonstrating our commitment to our customers, a commitment we take very seriously.”
Which CL&P customers are eligible for the storm fund credit?
Any residential CL&P customer without power after noon on Saturday, November 5 as a result of the October Nor’easter is eligible for a minimum of $100 up to a maximum of $200 credit applied to their CL&P bill. The actual amount will be determined based on the total number of eligible customers who apply for the credit.”
But wait just a minute – there is nothing here about deadlines and I can’t recall if I even had power on Saturday November 5?
Scanning still lower there are a series of ten links;
2nd link looks a little promising since it is entitled “Will I receive notice from CL&P about how to apply?” Turns out if you click on that the sentence the following appears below it.
“CL&P will begin contacting eligible residential customers on Wednesday, December 7 to inform them how to apply for the credit. Eligible customers may begin applying on that date by calling 888-566-9257 or by going online at www.cl-p.com. Customers must apply no later than 5 p.m. on Tuesday, January 31, 2012.”
Okay, there we go – I don’t recall CL&P contacting me but is says right here that customers must apply no later than 5p.m. on Tuesday, January 31, 2012. (which by my calendar is tomorrow)
But the eligibility requirements are still a bit “vague” so now onward to the 4th link that reads “How was the eligibility criteria determined, specifically the date and time of November 5 at noon?” Again a click on the link and the words magically appear.
“Following our analysis of this storm, and in consultation with Kenneth Feinberg, the nationally renowned claim fund administrator and Governor Malloy, we established noon on Saturday, November 5 as the appropriate time.”
Okay so it was a nationally renowned claim fund administrator and Governor Malloy that decided that if you didn’t have power on November 5th you get the credit.
But wait, I still can’t remember? Who had power on November 5th?
Nowhere – absolutely nowhere – do you find the most critical piece of information of all and that is – You had to have been without power for seven days or more to qualify for a credit.
Now I remember, I did have power on November 5th so despite losing hundreds of dollars worth of food I never was going to qualify for a $100-$200 credit.
Of course, now I wonder if Governor Malloy knows that NU is giving HIM the credit for NU’s decision that anyone who was without power for “only” six days (or less) receives absolutely no compensation what-so-ever for their loses.
In the end, I’m absolutely convinced that they simply could not have designed a system more difficult than the one Northeast Utilities set up for those of its customers who were seeking some financial relief from the storm.
You have to give it to NU. Even after all the hoopla about their “gesture of goodwill” putting up $10 million, no $30 million to “help their customers” NU designs an on-line process that would leave even the most technologically talented customers frustrated.
And with 39 registered lobbyists costing millions of dollars, I’m going to go out on a limb and guess that NU will survive the 2012 Session of the Connecticut General Assembly intact and as profitable as ever.
Nov 03
jonpeltoCL&P, Malloy Energy Assistance, Malloy, NU
Today’s tasks for politicians;
(1) Look busy
(2) Look annoyed
(3) Complain
(4) Demand progress
(5) Set up Commissions
(6) Read materials that were given months ago about the growing crisis of insufficient line crews
(7) Call for new laws, regulations and fines.
And meanwhile… NU stock is up and NU executives and shareholders are making the big bucks.
Here are the Facts:
CL&P (Northeast Utilities) stock started this year at $31.88. Since then NU has consistently out-performed the S&P 500, the Russell 2000, the NASDAQ Composite and the NYSE Composite.
When Irene hit, NU’s stock fell to below $31 but it was back to its previous level four days later, long before many residents even got their power back.
Then on Friday October 28, 2011, the day before the “freak storm hit”, NU’s stock was up to $34.58.
On Monday, 10/31 it closed down at $34.57, Tuesday 11/1 it dropped to $33.59.
But yesterday (Wednesday 11/2/11) NU’s stock was back up to $34.22 and at last check with 424,000 Connecticut residents still out of power, their stock price was up to $34.67 (up 1.32% on the day) and above the level it was before the storm hit.
The all powerful stock market knows two important things; (1) tough talk doesn’t add up to action and (2) the Company, its shareholders and its executives will always win out.
Why….
Take a look at just two sections in NU’s last annual report:
“CL&P’s 2010 distribution segment earnings were $20.1 million higher than 2009 due primarily to the DPUC distribution rate case decision that was effective July 1, 2010. The decision allowed CL&P to defer operating and maintenance expenses for the last six months of 2010 in lieu of cash rate relief until new rates begin on January 1, 2011. CL&P’s 2010 earnings also benefitted from lower depreciation expense as authorized in the distribution rate case decision, lower interest expense as a result of the favorable resolution of state tax audits in the fourth quarter of 2010, and lower uncollectibles expenses. CL&P’s distribution segment regulatory ROE was 7.9 percent in 2010 compared to 7.3 percent in 2009. We expect CL&P’s distribution segment regulatory ROE will be approximately 9 percent in 2011.”
And if that isn’t clear enough – not only will they come back looking for all the money they are spending to get people back on-line but to Governor Malloy and those who said don’t worry about cutting 70,000 people off winter heating assistance this year, the electric companies will pick up the tab….
And in another section of that NU shareholder report, the company explains;
“Our expense related to uncollectible receivable balances (our uncollectibles expense) is influenced by the economic conditions of our region. Fluctuations in our uncollectibles expense are mitigated from an earnings perspective because a portion of the total uncollectibles expense for each of the electric distribution companies is allocated for recovery to the respective company’s energy supply rate and recovered through its tariffs. Additionally, for CL&P and Yankee Gas, write-offs of uncollectible receivable balances attributable to qualified customers under financial or medical duress (hardship customers) are fully recovered through their respective tariffs.”
So rate payers will end up paying to get power back on line and then rate payers will pay again when state government fails to provide adequate heating assistance to those in need.
Sure Jeff Butler, Connecticut Light & Power’s President and Chief Operating Officer purportedly makes millions and has a generator at his Avon home but he is just a bit player in this much bigger game.
NU’s Chairman and CEO makes $8.3 million, while one NU executive vice president makes $5 million and the other $4.3. One of their senior vice presidents makes $3.7 million while another makes a paltry $2.3 million.
And we haven’t even gotten to the remainder of the senior management team nor the NU Trustees, a few of whom are well known Connecticut corporate leaders and have worked closely with Governor Malloy. In fact, Malloy has even appointed one of them to a key state board.
More background can be found in some of my earlier blogs following Tropical Storm Irene. Start with http://jonpelto.wordpress.com/tag/nu/ .
So everyone, including our elected officials can complain and threaten all they want but until we have a rate setting system that punishes executives and shareholders for corporate failings we’ll be stuck right where we are – paying for the privilege of getting electricity, losing electricity, getting our electricity back and each and every step in between.
For more reading on the topic also take a look at Lon Seidman’s blog today http://www.lonseidman.com/2011/11/what-clp-needs-to-do-right-now/
Sep 02
jonpeltoCorporate Viewpoint, Malloy CL&P, Malloy, NU
Cross-posted from Pelto’s Point at the New Haven Advocate)
“Malloy Urges Patience, CL&P Defends Business Decisions” (CT Newsjunkie)
Faced with mounting criticism that hundreds of thousands remain without power, Connecticut Light & Power’s CEO Jeffrey Butler argued the case for CL&P and its parent company NU saying “We have a business to run.”
While saying there will be a time to look at these issues, Governor Malloy defended the company saying “Let’s be honest. There is no way these utilities could supply 900 or 1,200 crews 52 weeks a year . . . and provide affordable electricity.”
And the U.S. Department of Energy rode to the rescue, weighing in on behalf of NU/CL&P, when William Bryan, Deputy Assistant Secretary of Infrastructure Security and Energy Restoration informing the media that when it came to NU’s pace of restoration “I would argue you guys are at par or above par in that case”
Meanwhile we have the International Brotherhood of Electrical Workers who represents CL&P workers that the number of line-crews has declined significantly as NU’s customer base has grown.
Back in 2007, the union told the General Assembly’s Energy and Technology Committee that when the company has 850,000 customers in 1976 they maintained 430 linesmen but by 2005 when the company had 1.2 million customers the number of CL&P lineman had dropped to 190.
At the very least the truth is being told. CL&P argues that it is a business. The U.S. Government says
CL&P is about on par and the Governor tells Connecticut that there is no way the utility company could maintain enough line-crews to deal with this natural disaster without bring in help.
At least the CEO of CL&P gets the credit for being honest and direct. As he said – they have a business to run.
Since the Legislature was told that CL&P’s customer base was up 40% but the number of line crew has
dropped 56%, NU’s earnings per share have increased by 38%. In the last year alone NU’s stock price has jumped about 25%.
Today, NU provides its top 5 corporate executives with a combined $24 million dollars a year including an
$8.25 compensation package for Charles W. Shivery, NU’s Chairman of the Board, President and Chief Executive Officer.
See my August 31, 2011 blog for more details: http://jonpelto.wordpress.com/2011/08/31/malloy-finds-his-calling-clp-tries-to-keep-up-despite-putting-corporate-executives-and-shareholders-first/
So it may be true that Connecticut consumers are angry and frustrated but shareholders and executives must be pretty happy.
When Connecticut decided to deregulate Connecticut’s electricity industry a few years back, government oversight dropped dramatically further shifting control to corporate executives and the marketplace.
The other major “un-sung” players in this whole picture is NU’s Board of Directors who, at least according to law, are supposed to be overseeing the most fundamental issues of how the company balances its role between serving the public and making money for the shareholders.
To perform this task, the members of the Board of Directors are compensated for their work. At NU, Board of Directors members collect about a quarter of a million dollars or more a year.
The NU Board includes;
Sanford Cloud (A former insurance company executive who now serves as the Chairman and Chief Executive Officer of the Connecticut based The Cloud Company. Cloud served on Malloy’s Transition Committee and Malloy has since assigned him the task of chairing the effort to expand the UConn Health Center Board).
Robert Patricelli (Having spent his career in Connecticut’s health insurance and healthcare industry, Patricelli serves as the chairman of the NU Board’s Compensation Committee).
Richard H. Booth (A former Chairman and executive at the Hartford Steam Boiler Insurance Company, Phoenix Insurance Company and AIG).
Dennis R. Wraase (President and Chief Operating Officer of Conectiv. Conectiv is a major provider of electricity transmission, distribution, and supply services in the Mid-Atlantic States).
Kenneth R. Leibler (Former President and executive at Liberty Financial Companies).
Elizabeth Topham (Former President of Mount Holyoke College and an NU Trustee since 1980).
Mr. John G. Graham (Former President and Chief Executive Officer of UMI Insurance Company).
John F. Swope (Former President of Chubb Life Insurance Company of America).
John S. Clarkeson (Former Chief Executive Officer and President of The Boston Consulting Group, Inc).
Cotton Mather Cleveland (President of New Hampshire based Mather Associates a 20 year Trustee at NU).
Public Service Company or “A business to run”. Governor Malloy says there will be a time to explore these issues. Let’s hope he is right.
Aug 31
jonpeltoCorporate Viewpoint, Malloy CL&P, Malloy, NU
Cross-posted from Pelto’s Point at the New Haven Advocate)
Surveying the damage from Hurricane Irene, Governor Malloy’s 80-minute flight on a UH-60 Blackhawk served as the perfect backdrop and reminder that Connecticut’s Governor was in charge and mobilizing a historic response to a major storm.
In seems almost ancient history now but if former Governor Thomas Meskill holds the record on how not to deal with a storm (he didn’t want to leave his skiing vacation in Vermont when a major winter storm hit Connecticut and ended up not seeking re-election which in turn ushered in the election of Ella Grasso), Malloy has clearly positioned himself at the opposite end of spectrum and will go down in history as the epitome of what a chief elected official can and should do.
Giving credit where credit is due, Malloy has done a great job mobilizing every resource and proving that a state leader and state government can make a difference. Quite frankly, it provides us with a glimpse of what happens when Candidate Malloy steps into the Governorship.
While Malloy’s approach is a tough act to follow, Northeast Utilities and CL&P seem to be trying hard to play a fairly good game of catch-up.
There is no doubt their rank and file employees are working above and beyond the call of duty and the utility company’s leadership seems to be making a major effort to rise to the occasion. Of course, ratepayers will end up paying for the massive expenses associated with this effort but when it comes to getting people back on the electric grid the watchword is “make it happen” and then deal with the expenses and the fall out.
Hidden behind the Northeast Utility’s response is a much bigger issue that undoubtedly will be reviewed and discussed in coming weeks and months.
The fact is, while any utility has a fundamental and legal obligation to their customers they also have a fundamental and legal obligation to their shareholders.
Let’s face it – a utility company – while “heavily regulated” – is still a company and its goal is to make money. And NU is prime example of how it is done in our modern capitalist system.
In the last four years, during this Great Recession, NU’s earnings per share have increased by 38%.
So, sure CL&P has fewer line crews then 25 years ago when Connecticut was hit by Hurricane Gloria but increasing profits means increasing revenue and cutting costs.
Jeffrey D. Butler, the now familiar CL&P President and Chief Operating Officer, was very clear the other day when he said “absolutely I believe it’s probably lower [the number of line-crew]… I can speak for the
behalf of the entire industry, there’s probably fewer line workers within the utilities today than there were in 1985.”
So true it may take longer to get people hooked up and true more crews will need to be brought in from far off places but shareholders do better and when the crisis does hit, those additional costs will be recouped through the rate setting process.
And meanwhile, NU’s profits are up and company executives are receiving generous compensation packages.
In fact Butler is fairly far down the NU corporate executive food chain.
Charles W. Shivery, NU’s Chairman of the Board, President and Chief Executive Officer pulled in a compensation package of about $8.25 million.
Below him come a couple of Executive Vice Presidents (paid $5 million another at $4.3 million).
And then a couple of Senior Vice Presidents (paid $3.6 million and $2.3 million).
And then we get to Butler.
As Butler reminds Connecticut that CL&P is doing everything it can and has flown in crews from Seattle and Vancouver, British Columbia while other crews have driven in from Florida, Ohio, Kentucky, Pennsylvania, North and South Carolina, Alabama and Colorado, SEC filings show that in addition to his $8.25 million salary package, NU’s CEO has also received an additional $10 million in differed compensation. As of the end of last year, if the company’s chief executive voluntarily leaves NU, the company will pay him $31.5 million.
If he is terminated – but not for cause – they must also pay him $31.5 million. Heck, even if he is terminated for cause he will collect an additional $14.5 million.
And other senior executives have proportionately great packages.
Late last night I saw a couple of very tired CL&P line crews in the neighborhood.
I stopped and thanked them for their work. A while later, my power came on.
I truly appreciated their dedication and I feel the same way about the job Governor Malloy has been doing to get Connecticut through the storm.
But it is a sad and frustrating commentary about our system that while the Governor and the line-crews worked through the night, the utility’s corporate executives were pocketing more money in a day then these people make in months.
[Updated at 11:15am to correct the information about Thomas Meskill who did not run in 1972. Initial version incorrectly reported that Grasso beat Meskill. She actually beat Robert Steele who ran when Meskill did not seek reelection. A big thanks to Gary and Michael for reminding me about what really happened].
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