What can state officials do to punish CenterPoint

HOUSTON – The Houston Chronicle reports that Hurricane Beryl was not the first storm to test the performance of a Texas utility company after paralyzing much of East Texas’ power grid. Entergy, the utility company that serves areas north and east of Houston, became so overwhelmed during its response to a rare ice storm in 1997 that municipal employees handled live wires on their own in the company’s absence. It took the company seven days to restore power to 120,000 customers during a week of freezing temperatures. Not only was Entergy’s emergency response found lacking — much like critics have found CenterPoint’s hurricane response problematic — state regulators discovered that the company had slashed its maintenance spending, enhancing the storm’s natural ability to take down power lines.

“The January 1997 ice storm was certainly a severe storm that would have adversely affected even the best-maintained distribution system,” the state’s Public Utility Commission said in a 1998 order denying Entergy millions in profits it requested. “(Entergy’s) distribution system, however, is not the best-maintained.” The 26-year-old case shows the rare but not unprecedented mechanism that the state’s regulators can use to hold utility companies accountable for failures when they find them. In the wake of Beryl, it could serve as a model for how the PUC might penalize CenterPoint if it is found to have acted negligently. CenterPoint’s profits are guaranteed as part of the regulated monopoly it maintains in Houston, where the utility owns the network of electrical poles and wires carrying power into homes and businesses. Yet regulators have demonstrated they have discretion to reduce those profits when a utility fails to provide adequate maintenance and service to its customers. During an interview Tuesday, former PUC Chairman Pat Wood recalled being inundated with complaints from Southeast Texas after the 1997 storm. The regulatory investigation that followed found “egregious” failures on Entergy’s part.