NY Gov. Andrew Cuomo’s scathing letter to CEO’s of NY power companies demanding accountability for not being prepared for Hurricane Sandy. The letter was sent to the CEOs of six utilities that service New York City and surrounds: ConEd, O&R, Central Gas, Rochester Gas, National Grid, and LI Power. Have a quick read of the letter above if you can before continuing.
The second paragraph is pure shaming the utilities. Basically, “We all knew about the storm. Everyone else was prepared, why weren’t you?!” Pretty strong language. He concludes the letter by warning that NY State is going to take action against the utility companies.
But, to my mind Cuomo is playing power chess. He was NY’s Attorney General - the state’s top lawyer. You have to know your shit to be NY’s AG. It’s one of the most difficult jobs in the country. And I’m not exaggerating, NY’s AG is perhaps second in difficulty only Eric Holder’s job, the Federal Government’s AG.
However, Cuomo is no longer an attorney. He’s New York’s governor now, which means his powers are very limited in conducting a legal action. He can direct the new AG to investigate, or Cuomo can appoint a special panel to conduct a review for malfeasance, but he cannot directly oversee the legal action. But he didn’t ask his AG to act.
So, it seems to me, Cuomo is circumventing his AG in favor of working the system. He’s directed one of the state’s boards review the utility companies’ certificates. If the panel finds error, they have the power to pull their certificates, which is what the end of the letter eludes to. The key passage:
New Yorkers should not suffer because electric utilities did not reasonably prepare for this eventuality. In the context of the ongoing emergency, such a failure constitutes a breach of the public trust.
Under such circumstances, I would direct the Public Service Commission to commence a proceeding to revoke your Certificates. With respect to the Long Island Power Authority, I will make every change necessary to ensure it lives up to its public responsibility. It goes without saying that such failures would warrant the removal of the management responsible for such colossal misjudgments.
Strong stuff! But I’m not sure what would happen by revoking a power-company’s certificate. I suspect the utility would no longer be able to sell power and fuel to New Yorkers and other communities.
Assuming that is the case, we have to ask, ‘what happens when a utility leaves their market?’ Suppose one of the six power companies loses their right to sell electricity to New Yorkers due to the panel’s findings. That would leave a gap in the market leaving the other utilities to take over (or the creation of a new utility).
Essentially, it would be a transfer of millions of paying customers from one company to another. In other words, free money to the other utility companies! That’s the exact opposite of the letter’s intent!
To be sure, Cuomo’s letter is a real threat. And the CEOs will certainly take action. Perhaps they’ll take out full-page ads in the NYTimes, apologizing and reassuring New Yorkers et al that everything is A-OKAY-TRUST-US. In the background, the utility companies will have to fix and upgrade some infrastructure, and they’ll have to create better action-response plans for storms and other emergency outages.
But will the letter work? It seems to me that while everyone is applauding Cuomo’s very ballsy letter, it’s really just a stunt to get the utilities to step-up their game. He fires off a popular letter, the public falls in love with the idea, and now the ball is in the utility companies’ court. Let’s hope the gambit works.