AUDIT BANGOR HYDRO

Under an agreement announced last week, Bangor Hydro would avoid an audit by finding savings and efficiencies worth millions of dollars, cutting rates by as much as 12 percent through 2007 and agreeing to penalties if it failed to meet service standards. The agreement comes as part of a restructuring that will result in the utility eventually laying off a third of its work force. If these drastic reforms do not make the Public Utilities Commission wonder what is going on at Bangor Hydro and require an audit to find out, nothing will.

Audits are expensive and time-consuming. They distract a utility from looking ahead and force it to spend countless hours explaining its recent history. Audits, it needs hardly be said, should not be ordered without significant reason. If Bangor Hydro’s five rate increases in the previous five years followed by the requested sixth increase this year were not enough, the rate-plan agreement among Bangor Hydro, the state public advocate’s office, industrial power users and the PUC staff itself, should cause plenty of concern among PUC commissioners.

This is not to say that there is anything especially wrong with the agreement, at first reading. But the fact that Bangor Hydro’s parent company, Emera, is willing to go to tremendous lengths – planning to change the structure of Bangor Hydro, ending or redirecting the careers of at least 153 people on its 425-person staff, agreeing to new reporting duties and service penalties – should make commissioners wonder if and how Bangor Hydro drifted so far from these apparently necessary efficiencies. For instance, if 100 workers (not counting the proposed line company) really aren’t needed, is Emera going to find ways to cover all the work that is being done now or has the local company been grossly overstaffed while the PUC was approving rate hikes? And how is it that the status quo made sense to Bangor Hydro until the audit was requested and then no longer made sense?

Certainly, many changes at Bangor Hydro are because of the purchase by Emera, but given the proposed cure, PUC commissioners must have many questions that are best answered by a thorough, independent review of the company. Ratepayers probably have a few questions of their own.