The return of David Flanagan last week as executive chairman of Central Maine Power Co., which he last headed 20 years ago as chief executive officer, was treated as major news – and may prove to be.
CMP, Maine’s largest electric utility, serves two-thirds of the state’s population and has been reeling from a series of mishaps and unforced errors that have brought customer confidence to perhaps an all-time low.
The disastrous rollout of a new computer billing system that CMP trumpeted as “state of the art” – yet produced bills double or triple what some homeowners were used to paying – has consumed most of the ink and investigations. The Public Utilities Commission recently fined CMP $10 million for the failures, while finding the billing system is now working properly, despite continued customer distrust.
Yet a more telling sign of CMP’s disarray may have been its public response to the nearly simultaneous October 2017 rain-and-windstorm that briefly knocked out power to nearly 500,000 customers. Although power was restored relatively quickly, since infrastructure damage was minor, some customers went without electricity for eight days. They couldn’t have been pleased to hear top company officials, the night after the storm, congratulating themselves on the good job they were doing.
The 2017 outage response drew a sharp contrast with 1998, Flanagan’s fourth year with CMP, when a devastating three-day ice storm crippled CMP’s lines, snapping 2,000 utility poles and requiring replacement of 5,200 transformers – damage on a scale never before seen in Maine. The recovery effort was well-coordinated and widely praised, elevating CMP line workers to near-heroic status, and completed CMP’s turnaround from 1994, when Flanagan started his first rescue mission.
Interviewed last week from his home in Manchester, Flanagan, 72, said he confronted a different set of problems back then. Customers were angry about big rate increases that, in his view, stemmed largely from the Legislature’s mandate that utilities divest their generating assets.
“In theory, competition between producers can benefit consumers,” Flanagan said. “But Maine was in a unique situation. CMP had 491 megawatts of hydroelectric power that operated at two cents a kilowatt. Under divestiture, we were buying it back for eight cents.”
CMP downsized, rates moderated, and Flanagan took a buyout when a holding company, Energy East, bought CMP in 2000. Energy East was subsequently sold to the Spanish conglomerate Iberdrola, and is now operated by its Avengrid subsidiary.
Flanagan’s new challenge is clearly more complex. Can he succeed in turning CMP around again?
Tony Buxton, an attorney with Preti Flaherty who has long represented industrial customers before the PUC and the Legislature, said much depends on whether Flanagan can restore “local control of the local utility.”
Flanagan said one of the contrasts between his 1994 hiring and today is the quality of management.
“Back then, we had a highly qualified team that John Rowe (a predecessor) put together,” Flanagan said. Starting with Energy East, a lot of that talent was deployed elsewhere in the Northeast, he said, leaving a leadership deficit.
By the time the malfunctioning billing system started up, the lines of authority were blurred.
“It starts with the little things, but they become bigger when you don’t respond well,” Buxton said. “You have to get out in front of it, apologize, and fix the problems.”
Until it was far too late, he said, “CMP didn’t do that.”
Asked about whether he believes the company’s assurances that the billing problems have been fixed, its new CEO demurred. “That’s something I’m going to have to find out for myself,” Flanagan said.
For Buxton, the contrast between the 1998 and 2017 storms couldn’t have been greater. During the ice storm, the utility had damage surveys for each line completed daily, so work crews knew exactly what to do. During the wind storm, two days into the outages, CMP hadn’t even completed its first surveys.
“Maine is highly vulnerable to outages, because of its coastal population and dozens of peninsulas,” Buxton said. “The question is, are they ready for the next storm?”
There’s one job Flanagan won’t have to take on: The controversial New England Clean Energy Connect project planned to bring Quebec hydropower to Massachusetts, will be managed separately by Avangrid, with Flanagan overseeing only utility operations.
Challenges could also emerge from a restive Legislature. Rep. Seth Berry, D-Richmond, House chairman of the Energy, Utilities and Technology Committee, has become CMP’s most vocal critic and is pushing a bill to convert the utility to public ownership.
“I’d like to welcome my friend David Flanagan back to the world of utility leadership – and if he’s interested, encourage him to apply to become executive director of a consumer-owned, not-for-foreign-profit successor to CMP: the Maine Power Delivery Authority,” Berry said in an email.
Buxton expects Flanagan won’t be fazed by such distractions.
“He’s very proud of his work with CMP,” he said. “It isn’t about the money.” And he thinks CMP’s 835 employees will respond: “They want to be proud, too. They’ll work hard to make it happen.”
Flanagan offers no promises, though joking with reporters that, “I’m not just a pretty face.” If nothing else, his experience should give him some breathing room to earn trust, and begin the management rebuilding he believes is essential.
“There’s no mystery here,” Flanagan said. “I know what I need to do, and I think I’m capable of doing it.”
Douglas Rooks has covered Maine issues for 35 years as a reporter, editorial writer, columnist and former editor of Maine Times.