Utility restructuring seems to prompt more lawsuits by customers.
In Chicago, Commonwealth Edison Co. settles a class action lawsuit for a heat-wave outage, paying $2.5 million for items including "food spoilage," to customers served by certain city substations. In California, Pacific Gas & Electric Co. spends $8.3 million to resolve 98 percent of some 6,600 outage-related claims. In New York City, Consolidated Edison rushes to offer reimbursements of up to $100 for residential and $2,000 for commercial customers following a July 1999 heat-related outage in New York City, but that doesn't discourage a spate of lawsuits.
Harbinger of a changing landscape or just a run of bad luck? With "ratepayers" becoming "customers," utilities may end up digging deeper into pocket books when the lights go out. Power users today appear quicker to sue for outage-related damages. Eyeing that trend, insurers and technology vendors have stepped in to help utilities manage the risk. In the long run, however, the driving force behind efforts to mitigate liability from outages may come from the utility's simple desire to protect its reputation.
"We're the only industry that can, if you like, instantaneously disappoint 200,000 people," observes Harry McCracken, managing director of Northern Ireland Electricity. It's a fact known by anyone in the power industry, whether they provide service in the United States or the recently privatized United Kingdom.