Left in the dark about power failures

Nation's Business, June, 1997 by Stephen Blakely

The electric transformer in front of our company has blown up twice in three years. No one was injured, but the trans: former failures damaged some property--including our company's computer--cut off our phones, and left our 17 employees unable to work for several hours. The utility says it is not liable for any of the damage, and the state public-service agency says it cannot do anything about losses from power outages. Where can a small firm go for help?

L.C., Hialeah, Fla.

Ask your insurance agent about "loss of business" or "loss of income" coverage; it may be expensive, however, depending on your line of business or location. Another possible--and costly--option is to install a generator to make your own electricity during a temporary outage. Check first with your local zoning commission and power company to avoid any permit or equipment problems.

Otherwise, as you have discovered, you're essentially out of luck. In the occasional "act of God" mishaps--as opposed to negligence or chronic service failures--utilities do not compensate customers for losses (whether it's food in your refrigerator or files in your computer), and the state regulatory agency is not obliged to help.

"Mistakes happen. While we have the most reliable utility system in the world, ordinary malfunctions will occur," says Charles Acquard, executive director of the National Association of State Utility Consumer Advocates (NASUCA) in Washington, D.C.; (202) 727-3908. "For ordinary blips, [consumers] don't get anything."

NASUCA's member organizations most often get involved in state-level rate-setting disputes, fighting proposed price increases for energy or telephone services. Service reliability is rarely an issue, Acquard says, and it would quickly get regulators' attention if it became a problem. He adds that regulators are most likely to get involved in situations where uninterrupted electrical service is a matter of life and death--at hospitals, for instance-- rather than inconvenience.

If you're unhappy with the company providing your electricity, however, you may soon be able to switch. Legislation to deregulate the electric-utility industry is pending before Congress, and it may ultimately result in local competition among electric companies.