Dim bulbs at Allegheny, PSC foul up on conservation plan

January 18, 2008

Scorched by a firestorm of criticism over an ill-conceived plan to send all of its customers energy-saving light bulbs - and then add the cost to users' bills - Allegheny Power officials apologized Wednesday and said the company would rescind the charges.

The apology came after a scolding by members of Maryland's Public Service Commission, who should not escape criticism for their role in the matter.

While PSC members talked tough, they offered no excuses for their approval of the plan in September. Nor did they express any regret for not following up to see how the plan had been implemented.

And so while PSC Chairman Steven B. Larsen was correct when he told utility officials that " doesn't sound like you really listened to what we asked you to do," the PSC apparently didn't know what Allegheny had done until The Herald-Mail wrote a story about it.


The PSC's Web site notes that the agency does more than regulate rates, but also inspects equipment, does audits and "reviews plans for service."

On that last job, the PSC certainly failed. The light-bulb promotion contained the seed of a good idea, but failed for one big reason.

That was the idea of having consumers pay for the bulbs at a time when the company's finances were on the upswing.

In October, MarketWatch reported that Allegheny's earnings for the three months prior to Sept. 30 rose nearly 3.7 percent and that its stock price had hit "a record-high $58.04."

That same month, Allegheny reinstated its dividend on common stock, promising 15 cents a share to shareholders of record as of Dec. 3.

The company could certainly have paid the $2 million bulb distribution cost, especially in view of the fact that this unwise action probably reaped $10 million in bad publicity, not to mention the possibility that it could inspire restrictive state legislation.

Allegheny Energy's action also undermined good will the utility must have, as energy prices rise when residential caps put in place in 1999 expire at the end of this year.

And even though the amounts involved weren't large - less than $15 per household - consumers were left with the feeling that the power company was trying to pull a fast one.

That's not Allegheny Power's legacy. Before its financial troubles began, the company was known as a good corporate citizen, contributing to public causes and lending its managers to charitable efforts such as the annual United Way campaign.

Somehow, even with such a philosophy, the utility made money and provided many good jobs. Change was certainly necessary to rebound from its financial reverses, but a good reputation and the goodwill of customers and legislators isn't easy to find, once it's been lost.

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