| Conn. Light & Power / Yankee Gas: Regulating Power |
| Utility | |||
| Written by Eric Slack | |||
| Friday, 29 February 2008 | |||
 Ray Necci tells us how these Northeast utilities are dealing with high costs and high demand.
 Ray Necci, President and COO Since deregulation also forced the company out of generation of electricity, the only way CL&P could bring value to its customers was through transmission. The company invested $2 billion over the last few years in upgrades to its transmission infrastructure to help alleviate the strain caused by importing electricity. Necci said the company saved customers more than $130 million a year through these investments. “Since we’re not in generation, our way of trying to solve the customers’ problem is to open up the transmission highway between Connecticut and other states, allowing us to bring in lower cost power,” Necci said. In 2005, after Connecticut passed an act encouraging more distributed generation, the state ordered the utilities back into the planning process. According to Necci, one of the fallouts from deregulation was a lack of oversight of the planning process. No one was making decisions about what type of conservation, demand management, construction, and power plants were needed. Early this year, both major electric utilities in the state filed a joint plan, finally beginning an integrated resource planning process. “Now we’re moving to a hybrid market where you have merchant generating plants, maybe some utility plants in there, and you have the utility and the state doing some integrated planning,” Necci said. Together we can CL&P and Yankee Gas are both part of North-east Utilities (NU), which runs the largest utility system in New England. Including Public Service of New Hampshire (PSNH), Western Massachusetts Electric, and NU Transmission, the combined organizations serve more than two million electric and natural gas customers in Connecticut, Western Massachusetts, and New Hampshire. Although CL&P and Yankee Gas are technically separate companies, the two entities are kindred spirits. More than 20 years ago, Yankee Gas was a part of CL&P. When NU bought PSNH in 1992, CL&P was forced to divest itself of Yankee Gas because of regulations in place at the time. After eight years on its own, NU reacquired it. Today, CL&P and Yankee Gas work together on things like distributed generation and providing natural gas supply to turbine generators. The two also share essentially the same corporate management team. According to Necci, the relationship the two companies developed after the split benefits not only the companies but also the customers. “As the largest electric company in the state, it is a nice fit to also be able to provide gas services. Eighty percent of Yankee’s customers also get their electricity through CL&P,” said Necci. “There are some synergies there, and we’re moving toward a new billing system so that customers will get one bill for the two companies.” Improving billing is just one aspect of the companies’ commitment to customer service. Necci said customers now expect more out of utilities because of the cost of services. With the lingering effects of deregulation combined with the rising cost of materials, energy prices aren’t likely to decrease as market conditions are keeping prices high. Necci believes the higher costs make gauging and responding to community concerns all the more important. “We recognize that customers are very concerned about how we spend our dollars, so we do several customer surveys to find out what they think is important,” said Necci. Something that has clearly become important to private citizens and policy-makers alike is the need for cleaner, renewable sources of energy. CL&P and Yankee Gas believe conservation and education is the first step, and according to Necci, the companies are trying to determine how to implement technological change without disrupting economic growth. “Over the next 10 to 20 years, there will be a move toward limiting greenhouse gasses and looking for alternatives. We need to do it in a way that balances environmental aspects with economic growth,” Necci said. “We don’t want to stifle growth, but we need to be aware of the issues around global warming and the carbon footprint this business has.” Continuing internal efforts to streamline processes should hopefully reduce operating costs. On the electric side, the company installed a new outage management system four years ago, improving day-to-day operations in outage management and maintenance. CL&P also downsized to one operations center and has a centralized storm center for problems caused by inclement weather. The companies put in a new work management system two years ago. It allows employees to do design work online, monitor work as it is done in the field, and measure productivity. The NU system as a whole is also making improvements, consolidating from six customer service centers to two and combining three customer service systems into one early this year. Although the companies are faced with issues surrounding an aging workforce, proactive recruitment and training programs are keeping critical positions filled. For Necci, the most serious challenge ahead is keeping prices affordable in the face of rising demand, external costs, and the push for greener energy. “It’s very difficult to get enough energy from renewables, and we’ve become a nation that uses a lot of energy. There is a big gap between those who are struggling to pay energy bills and those it doesn’t really affect,” Necci said. “But more and more of the public, between heating their homes and keeping the lights on, are going to be challenged as prices go up.” |
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© 2008 American Executive - RedCoat Publishing. All rights reserved.
American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
