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News Analysis

Fortnightly Magazine - February 15 2000

for utilities to keep the lights on - or offer compensation when the lights go out - may come less from fear of regulators and judges, and more from the perennial desire to keep the customer happy. For whatever reason, a shift may be occurring, as attested to by those on the vendor side.

"Three or four years ago, you couldn't talk to anybody about [trouble management], and now, that's all they're talking about," says software vendor Geisler.

Naturally, when a company is no longer regulated, it suddenly falls in the same category as a General Motors or a Microsoft, for whom consumers have no sympathy. In Northern Ireland, from the perspective of the privatized market, McCracken agrees: "The world has moved on. Each company is in the private sector. Customers' expectations have changed enormously."

In the spirit of its search for the "moral high ground" and after dialoguing with various interest groups, Northern Ireland Electricity created a customer charter that outlines its service standards (see http://www.nie.co.uk/). This latest wrinkle since the Boxing Day storm holds the company to reconnecting 87 percent of customers within three hours of a fault on NIE's distribution system, and 100 percent within 24 hours.

The company also maintains a "customer care register" of customers with special medical needs, such as those on dialysis machines and nebulizers. Under its customer charter, the company promises to supply a mobile generator to those customers if needed.

But with customer expectations rising, McCracken warns, it is the utility's job not only to carry out high standards, but also to manage customer expectations and keep them realistic. After all, competition or no, the power industry remains vulnerable to acts of God and technological failure. "[Customers] have to be reminded that technology is fallible," he points out.

If there's another Boxing Day disaster, don't expect the revamped Northern Ireland Electricity to be passing out checks so quickly. In voluntarily compensating customers the last time around, the company acknowledged shortcomings, basically saying, as McCracken says, "We're prepared to be held accountable." But, he reminds observers, "We only compensated because we got it wrong."

Carl J. Levesque is associate editor at Public Utilities Fortnightly.

Outage Liability in a Competitive World

Has deregulation lowered the bar for plaintiffs? The jury is still out.

Pro-Utility Rule:

Last year, the Texas Supreme Court ruled that a disclaimer in a utility tariff was enough to limit liability for outages to the cost incurred by customers to repair physical damage.

The utility escaped liability for profits lost by customers. Otherwise, said the court, damage awards could boost rates "too high." Houston Lighting & Power Co. v. Auchan USA Inc., 995 S.W.2d 668 (Tex.1999).

Pro-Plaintiff Rule:

But an appeals court in Washington state said that a "continuity-of-service" tariff (disclaiming liability for interruptions) did not absolve a utility for business losses suffered by Boeing Co. during an outage.

It allowed an insurance company to sue the utility to recover some $2.9 million it paid on Boeing's $4 million insurance claim. Nat'l Union Ins. Co. of Pittsburgh v. Puget Sound P&L