The most thankless CEO gig in NY - American Business Media

CRAIN’S
NEW YORK BUSINESS
®
JOE LHOTA
FOR MAYOR
GREG DAVID
opines on Superstorm
Sandy’s unlikely hero
PAGE 11
VOL. XXVIII, NO. 46
WWW.CRAINSNEWYORK.COM
NOVEMBER 12-18, 2012 PRICE: $3.00
Fiscal cliff
casts dark
shadow
over city
If the nation goes
over, New York
would be hit harder
than other places
bryan smith/zumapress.com
BY AARON ELSTEIN
Kevin Burke, the man charged with keeping New York’s power flowing,
can measure how unpopular he is at any moment with exacting precision.
That’s because on the top floor of Consolidated Edison Inc.’s headquarters
near Union Square, in a room stocked with employees working the
phones, scrutinizing maps and pounding at keyboards, there is a chart on
NEWSPAPER
The
most
thankless
CEO gig
in NY
Power. It’s all
relative when
you run
Con Ed
IN THE SPOTLIGHT:
Consolidated Edison
Chief Executive
Kevin Burke
a wall showing how many customers still haven’t had electricity restored
since Sandy stormed through. By the middle of last week, the number on
the wall read 67,000. “That chart shows how many people are mad,” said
the 61-year-old chief executive.
In some ways, the number was impressively small, considering that a
whopping 1 million Con Ed customers had lost power nine days earlier.
But as Mr. Burke glanced at the wall, he was already bracing for another
See THANKLESS on Page 23
REPORT HEALTH CARE
How Obamacare could make insurance
brokers irrelevant Page 13
THE LIST Largest health insurers Page 16
BY ANNIE KARNI
New York City would fall harder and
faster than the rest of the nation if
Congress fails to avoid the fastapproaching
fiscal cliff—that combination
of federal tax hikes and spending
cuts set to take effect Jan. 2.
The city has long suffered an imbalance
in terms of the money its high
earners send Washington in the form
of taxes and the funds returned as federal
services.New Yorkers get about 79
cents for every dollar sent to the capital.
The one-two punch of spending
cuts and tax hikes would make that im-
See FISCAL CLIFF on Page 24
THE INSIDER
NY Senate
shift irks
business
Democratic victories
trigger concerns of
Albany dysfunction
BY ANDREW J. HAWKINS
AND CHRIS BRAGG
For a brief two years, Albany seemed to
work. Shrugging off its reputation for
dysfunction, Gov. Andrew Cuomo and
legislative leaders restructured the state’s
spending practices and passed a property-tax
cap, new income-tax brackets, an
ethics bill, same-sex marriage and other
landmark legislation. The disciplined
Republican Senate majority was Mr.
Cuomo’s close partner.
But with Democrats gaining an
edge in the Senate with election victories
last week, business leaders fear a
return to the circus-like atmosphere
See STATE SENATE on Page 6

IN THE
BOROUGHS
STATEN
ISLAND
UNDER WATER
STREET—
LITERALLY: A
damaged storefront
in lower Manhattan
last week
New York’s
saddest
biz strip
Hylan Boulevard, an
economic lifeline, is
teetering on the edge
buck ennis
RETAIL
Bleak Friday
The holidays are already over
for shops slammed by storm
BY ADRIANNE PASQUARELLI
Denise Carbonell and her husband, Derek Dominy, started prepping for
the holiday retail season in May. They handcrafted jewelry, metal furniture,
wall hangings and pillows in time for the rush of shoppers that normally
arrives in November. Instead, a severe tropical storm called Sandy
blew in, causing such extensive damage that their holiday business will be
essentially wiped out.
“It’s our stock and our equipment to make the things we do,our tools and
molds,” said Ms. Carbonell, who is dealing with $150,000 worth of damage
at her store, Metal and Thread, in Red Hook, Brooklyn. “We do more in
those two months [November and December] than in the entire year.”
Across the Northeast, retail experts estimate that stores lost about $4
Items
made by
hand
cannot be
replaced
billion in sales for the
week that Sandy hit.
Footwear seller Steven
Madden Ltd., a public
company with 100 outposts,
took a $1 million
hammering, for example,
from the weeklong
closures of nine local
stores. Chief Executive
Ed Rosenfeld said in a
conference call that this
translates to about one or
two pennies off the company’s earnings
per share—hardly a
lethal blow. But scores
of merchants like Ms.
Carbonell who already
struggle to compete
with their larger chainstore
rivals face far more
meaningful losses. In
addition to potential
sales, many entrepreneurs
lost merchandise,
store fixtures, tools and
infrastructure. Most
See HOLIDAYS on Page 21
NONPROFITS
Giving season was supposed
to save charities. Until Sandy
BY THERESA AGOVINO
A few weeks ago, Citymeals-on-Wheels Executive Director Beth Shapiro
wasn’t especially worried that donations were down slightly since July.The
holiday giving season was approaching,along with the nonprofit’s 26th annual
Women’s Power Lunch, its largest fundraiser, which was expected to
raise $1.2 million for the charity.
Then Superstorm Sandy bore down on the city and Ms. Shapiro’s anxiety
rose.
In the 10 days after the storm, donations to Citymeals, which delivers
food to the homebound elderly, dropped about 50% when compared with
the corresponding period last year. Meanwhile, the nonprofit gave out an
unplanned 50,000 meals to those affected by Sandy, consuming $500,000
of its annual budget of $17
million.
“Of course we wanted
to help,” said Ms. Shapiro.
“But we need money to
prepare meals.”
Citymeals is one of
scores of charities that rallied
to help those affected
by the storm, donating
food, money and other
supplies. Dozens of other groups
did the same, even as they were
forced to cancel or postpone
fundraisers due to the bad
weather or out of respect for
the storm’s victims.
Now nonprofit executives
are grappling with how
they will recoup the money
they lost. And as the traditional
giving season begins,
these executives can’t help
but wonder if donors will be
more likely to open their
wallets to Sandy-related charities,
leaving their organizations strug-
See CHARITIES on Page 22
BY ALI ELKIN
Many waterlogged south shore
Staten Islanders, for whom a car is a
necessity, need a mechanic these
days. But last week, they couldn’t
find one at Guy’s Tire Buys on Hylan
Boulevard.
Its other store,on higher ground
elsewhere on Staten Island, mainly
sells tires and parts. But the Hylan
shop does more complex repairs—
at least before Superstorm Sandy.
Last week,though,it was still without
power.
“We’re operating with half a facility,”said
Frank Carbonaro,a parttime
manager at the store. “We’re
losing business
terribly.”
Hylan Boulevard,
the 14-
mile-long commercial
artery
that is the
lifeblood of
Staten Island’s
south shore,
took the brunt
of Superstorm
Sandy. The
storm didn’t just
fill homes and
shops with sea-
HIT BIG
14
HYLAN BLVD.’s
length in miles
$2M
MAX. SBA
disaster loan
10
HEIGHT, in feet,
of debris piles
outside homes
water and
sewage and push boats into backyards.
It shut down the businesses
that cater to the needs of daily life—
supermarkets and salons, dry cleaners
and delis.
In the two weeks since Sandy
struck, much of Hylan Boulevard
remained closed for business. Larger
stores—a ShopRite, a CVS—
were able to reopen quickly, but the
mom-and-pop shops that had
thrived in recent years, providing
services and employment for the island’s
growing population, were in
the dark last week, their steel shutters
closed.
Some may never come back.
“We have a limited number of
businesses,especially the middle- to
large-size businesses,” said Linda
Baran, president of the Staten Island
Chamber of Commerce. “Our
economy would take a huge hit, and
we would hate to see them leave our
borough.”
The rising cost of Sandy could
total $33 billion for the state. Lost
economic activity for city businesses
is estimated to be around $5 billion,according
to the city comptrol-
See SADDEST on Page 22
November 12, 2012 | Crain’s New York Business | 3

SMALL BUSINESS
Plenty of work for cleanup
firms. Now try to get paid
Cash-flow problems
confront some
companies racing to
undo Sandy’s harm
BY CARA S. TRAGER
Mike Conlon’s business,
360 National
Restoration Ltd.,
is deluged with
jobs—literally.
From 23rd Street to Wall Street
and from Long Island to New Jersey,
the 10-employee Manhattan firm is
pumping out water and dehumidifying
properties while assisting maintenance
companies in cleaning up
the soggy mess left behind by the
overflowing Hudson and East rivers.
Mr. Conlon said 360 National
was still “getting a lot of phone calls”
but was “handling the volume” of
work, thanks to alliances with other
companies that have supplied his
firm with additional labor and
equipment.A veteran of the restoration
field who launched 360 in
2011, Mr. Conlon said that a profitable
firm’s revenue can fluctuate
from year to year and can exceed
$3 million annually.
Throughout the city, small companies
providing disaster recovery
and tree-removal services are striving
to keep up with the onslaught of
business.With more work than they
had ever imagined, these firms are
doing everything from giving top
priority to clients in the most hazardous
circumstances to hiring more
employees to handle the sudden influx
of jobs.
Emergency loans
But there’s a flip side to the post-
Sandy boom in business. Many
companies are experiencing the
same challenges as some of the customers
seeking their help—no electricity,depleted
fuel tanks and erratic
phone service.
“It’s an unprecedented challenge,”
said Damon Gersh, president
of Manhattan-based Maxons
Restorations Inc., which regularly
tackles flood, water, fire and smoke
damage for its customers. “Cell
service is spotty,and workers are living
in blackout conditions.”
Mr. Gersh said business is “far
outpacing” his 50-employee firm’s
manpower and equipment. “With
9/11,people had dust and could wait
a few days, but they can’t wait with
water,” he said. “Everyone’s clock is
ticking at the same time—commercial,
industrial, homes, small businesses—and
the jobs we have are
very labor-intensive.”
Making matters even worse,
To sign up for Crain’s
SMALL BUSINESS newsletter, go to
www.crainsnewyork.com/smallbiz.
buck ennis
GROWING DEMAND: To help storm-battered customers, garden expert Bill Logan has shifted his
focus to removing downed trees.
‘Everyone’s
clock is ticking
at the same
time’
many small firms are already experiencing
cash-flow problems, courtesy
of hiring more workers and
buying additional equipment to
meet the demand for their services.
In the past week,Rohit Arora,CEO
of Biz2Credit, which specializes in
small business finance, said his
Manhattan firm has helped 35 service
companies, including tree- and
trash-removal firms, apply for loans
from banks and from the U.S. Federal
Emergency Management
Agency through the U.S. Small
Business Administration.
Mr. Arora anticipates an even
greater need for small business financing
in the next week to 10 days,
as more homeowners and business
owners return to their properties
and seek to repair them but opt to
wait until they receive checks from
their insurance companies to pay
for the work. In good times, it can
take anywhere from 45 to 60 days
for insurance firms to cut a check
for reconstruction projects, he said.
With as many as 40 jobs underway,
including 25 that run “several
hundred thousand and higher”—as
in a large TriBeCa garage submerged
in 16 feet of water—Mr. Gersh has
partnered with a half-dozen companies
from beyond New York City to
secure additional personnel and
equipment. And for his own arsenal
of machinery,which encompasses 20
water pumps and 15 generators, he
has purchased more than 50 of each
for an expenditure of more than
$300,000.
Depleted gas tanks
“Our expenses have gone up
tremendously, so having a good
banking relationship at this point is
pretty helpful,” said Mr. Gersh. Although
he declined to reveal the
profitable firm’s annual revenues, he
said post-Sandy business could
double Maxons’ annual revenues
within a two-month period.
Three-employee firm Erik Maldonado
Landscaping in Jamaica,
HOW TO FILE A POST-SANDY
COMMERCIAL PROPERTY CLAIM
GETTING AN EARLY START is essential to speeding reimbursement for
damages.
According to Eqecat, a firm that tracks hurricanes and analyzes their
damage, estimated losses from Hurricane Sandy could be between
$30 billion and $50 billion and economic damages between $10 billion and
$20 billion. The city is offering small and medium-size businesses whose
operations were interrupted an emergency loan of up to $10,000, but for
many that won’t be nearly enough to get them up and running again. They will
be relying heavily on their insurance coverage.
Flooding, a common problem from the storm, however, is “one of the more
challenging parts of insurance,” said Rick Miller, managing director of Aon
Risk Solutions Property Practice. Aon has a substantial number of clients in
New York City, and its largest office is on Water Street (and was knocked out
of service by the storm). So what do you do if you have a commercial property
claim Here’s some advice from Mr. Miller:
● CALL YOUR AGENT RIGHT AWAY. Even if you haven’t completely assessed
the storm’s property damage, contact your agent or broker—it’s best to use
the claim hotline—and get the ball rolling. “Even if you can’t give specific
information, give a general assessment, like ‘The storeroom has several feet
of water.’ Making contact is critical,” said Mr. Miller. Keep in mind that your
insurance company is going to be dealing with thousands of claims, and the
process of adjusting those claims takes time. “The sooner you can get to your
insurance company, the better,” he said.
● KEEP SPECIFIC RECORDS, AND PHOTOGRAPH DAMAGE. Ultimately,
insurance claims require proof. Mr. Miller suggested writing down and
describing everything you see that either is damaged or is causing damage,
whether it’s wrecked equipment, a broken freezer with food rotting, three feet
of water on the floor or a hole in the roof. Be as specific as you can, he said,
and take photos and videos documenting what’s been damaged. “If you can
bring some chronological order to what happened and how it happened, that
will help support your claim,” said Mr. Miller. “Having a lot of information may
also move you up in the adjustment process.”
● EXPECT TO TAP SOME OF YOUR OWN RESOURCES. Flood claims can be
trickier than other claims, said Mr. Miller, and flood insurance is one of the
more restricted coverage areas within property insurance. “You may have a
certain damage limit for flood, and there can also be some qualifying
situations—meaning if you’re in a flood-susceptible area, you may have
limited coverage. So don’t rely only on the insurance because it may not cover
everything.”
If you can, get the process of restoration and recovery started on your
own, said Mr. Miller. No matter what amount of money you ultimately receive,
with a catastrophic event like Sandy, it will likely take a while for the insurance
company to process your claim.
—EILENE ZIMMERMAN
Queens,has brought in an additional
worker to handle the upsurge in
business, which includes tree removal
and leaf pickup. But, according
to owner Erik Maldonado, fallen
trees blocking side streets and the
gas shortage have cut into his company’s
ability to meet the surge in
demand for its services. Mr. Maldonado
said the firm, which generates
annual revenue of $100,000,
anticipated pulling its trucks off
the streets because of depleted
gas tanks.
With a 12-person crew, Bill Logan,president
of Urban Arborists in
Brooklyn, said emergency “triage
work,” including removing a large
tulip tree with a vertical crack on the
Lower East Side, represented his
immediate priority. The profitable
firm, which generates more than
$1 million in annual revenue,is generally
handling one to three jobs a
day.Urban has no plans to hire more
employees because its projects require
“highly skilled” workers, Mr.
Logan said.
While Urban’s tree-removal fees
can go as high as $10,000, depending
on a tree’s size,condition and location
and whether equipment is required,
the post-superstorm work,
said Mr. Logan, comes at the expense
of designing gardens and fall
plantings, which represent “a great
deal” of the firm’s revenue.
Tree-removal jobs also take their
toll on the human spirit. “It’s exhausting
and sad work,” said Mr.
Logan.“We love trees and don’t like
them destroyed.”
bloomberg news
20 | Crain’s New York Business | November 12, 2012

IN THE BOROUGHS STATEN ISLAND
Saddest biz strip in NYC
Continued from Page 3
ler’s office. It’s unclear how much
money Staten Island will lose, but
given the storm’s impact in a borough
where every business counts,
the losses could have an outsize
effect.
On the island last week, Hylan
Boulevard served as a dividing line
between the neighborhoods that
were decimated and those slightly
upland that were “merely” battered
by the flood.
Last Wednesday, snow began
coating the 10-foot-high piles of
rotting furniture and rugs in front of
each house along the island’s hardhit
south shore. Cleanup crews
scooped up muddy debris.On many
windows, amid tattered Halloween
decorations, were yellow signs from
the city’s Department of Buildings
declaring homes uninhabitable.
While relief centers are providing
basic survival materials,borough
leaders are trying to ensure the survival
of local businesses. Many business
owners never anticipated the
high water, and were not insured
against it.Those without power as of
Thursday lost precious revenue in
the nearly two weeks they have not
operated. And the businesses that
are back open are waiting for customers—themselves
waiting for rationed
gas—to return.
The U.S. Small Business Administration
has opened a disaster
recovery center at the College of
Staten Island that is aimed at businesses.The
SBA can give loans of up
to $2 million. The Staten Island
Chamber of Commerce and the
Staten Island Economic Development
Corp. recommend that businesses
with losses not covered by insurance
seek loans from the SBA.
‘Pulling their hair out’
Most businesses were not prepared
for the unprecedented storm
surge,said Frank Rivela,a Staten Island
public claims adjuster. All he
can do for the uninsured is to refer
them to the Federal Emergency
Management Agency. Relief may
not come anytime soon. Businesses
will have to get in line behind all the
residents who have lost their homes.
“If you’re a business owner on
Hylan Boulevard, you didn’t have
flood insurance,” Mr. Rivela said.
“They never thought the water was
going to come that far.They weren’t
in flood zones.”
Businesses in buildings that did
not suffer structural damage or
whose property was not ruined have
Charities lose galas
Continued from Page 3
gling to carry out their work. (See
Helluva Town, page 25.)
“I’m very concerned about our
fundraising now,” said Ms. Shapiro.
She’s planning to make an extra plea
for donations at Friday’s Power
Lunch event. She never considered
canceling the luncheon, because it
isn’t a big black-tie gala despite a
guest list chock-full of luminaries
like Bette Midler and Sandra Lee.
Plus, she added,“We really need the
money.”
Special appeals
To encourage more giving, she
will mention in her holiday
fundraising note the help Citymeals
gave to storm victims. Others will
also make special appeals in
fundraising letters or start new campaigns
to replenish their coffers and
pantries.
But the executives wonder if
their efforts will be enough. The
Fortune Society, which provides
help to the formerly incarcerated,
was forced to cancel its gala slated
for Oct. 29. That cost the group an
estimated $60,000 in donations, according
to Glenn Martin, its vice
president of development. The organization
had already raised
$165,000 toward the gala’s goal of
$230,000.
ali elkin
IN SANDY’S WAKE: Picking up the pieces on Staten Island.
Mr. Martin thinks those attending
the affair would have ponied up
more funds. “The gala is where we
get the face time with the donors,”
he said.“It’s where we tell the stories
that tug at the heartstrings.”
He said the group considered
moving the party to another date,
but all the best nights and venues
were already booked.Now he is considering
raising the ticket price for
the spring fundraiser, which attracts
a younger crowd, to $250 from
$175. That’s still only half the price
of the autumn event. The shortfall
won’t force the wholesale cancellation
of any programs, Mr. Martin
said, since the money was a minor
part of the organization’s $20 million
budget. Yet he worries that he
might have to turn some people
away. “It’s a blow,” he said.
Some organizations are finding
new resources from existing supporters.
God’s Love We Deliver,
which brings meals to people with
AIDS and other illnesses, distributed
8,000 meals it had in the freezer
to those displaced by the storm,
according to the nonprofit’s chief
development officer, David Ludwigson.He
estimated that the effort
cost about $70,000.
Whole Foods is helping by setting
up a food drive in its Manhattan
stores for the nonprofit. “We
nonetheless lost valuable
time being without
power.According
to Consolidated Edison’s
outage map,
about 5,000 customers
on Staten Island
remained without
power as of last
week, many of them
businesses along Hylan
Boulevard.
Even businesses
that can work at full
power are hurting.
LaBella Marketplace,
near Tottenville, opened for
the first time since the storm on
Thursday. The Italian specialty supermarket
posted a note on its website
about delayed delivery orders
due to the gas shortage.
“We had no power for refrigeration,we
couldn’t get any deliveries in,
workers couldn’t make it due to the
rail system being down, and nobody
can actually drive to the store because
there’s no gas,” said Nicholas Pesce,
the store’s assistant manager.“Half of
Tottenville is a war zone.”
Mr. Carbonaro and Mr. Pesce,
though,counted their blessings.They
pointed out that they were lucky not
to have lost their homes,or to work on
the south shore waterfront where
businesses, mainly restaurants, were
destroyed.
“People are walking down there
pulling their hair out of their head,”
Mr. Carbonaro said.“They can’t believe
their whole life has been
washed away in one wave.”
have an urgent need, and we are
happy Whole Foods stepped up,”
said Mr. Ludwigson.
Bill White, chairman and chief
executive of strategic consulting
firm Constellations Group, hopes
the public and corporations will answer
his call for help when he
launches a major fundraiser on behalf
of the Intrepid Fallen Heroes
Fund. The organization needs to
raise $70 million to build treatment
centers for veterans with brain injuries
and traumatic stress.The fund
has already raised $30 million and
started two of the nine planned
locations.
FROM
AROUND
THE CITY
MANHATTAN
Bank for financial
beginners bows
CheckSpring Bank has cut the ribbon
on its first branch in the middle
of the financial crisis in the Bronx.
Despite the inauspicious timing,the
bank’s efforts to persuade inner-city
New Yorkers to step up their financial
dealings from check-cashing
stores to a full-service bank have
paid off. In the past three years,
CheckSpring has doubled the number
of its retail customers to 4,000
and septupled the ranks of its business
customers to 245.
Now the bank will try for a similar
success at a branch it plans to
open Nov.19 on Frederick Douglass
Boulevard in Harlem, another underserved
banking market. There,
more than a third of households
manage their finances without a
bank account, compared with 13%
of families citywide.
Even though CheckSpring will
be renamed Spring Bank by its
Harlem debut, it will continue to
lure customers with discount
check-cashing services and by
forming partnerships with city
agencies and local financial literacy
groups, which have brought in two
out of five of its customers in the
Bronx.
In Harlem, the bank also hopes
to benefit from the rising number of
SPECIAL DELIVERY: Whole Foods is helping God’s Love We Deliver
replenish its supplies by setting up a food drive in its Manhattan stores.
A social-media fundraising campaign
with the aim of collecting $10
million was slated to start on Veterans
Day.It was postponed until after
Thanksgiving because of the storm.
Now Mr. White worries that his
pleas for money may get lost in the
crush of nonprofits seeking holiday
donations and aid for storm victims.
Saving lives
“Sandy will affect our fundraising,”he
said.“But those charities are
out there trying to save lives, and we
are trying to save lives, and you just
have to respect where people decide
to give.”
small businesses in the area.
“We’re excited for more businesses
to find out about us,” said
Vice President Brian Blake.“A bank
survives by making loans.”
—ken m. christensen
BRONX
Filling in the big
Daffy’s retail gap
Just four months after the news
broke that the big Daffy’s store at
the Bay Plaza Shopping Center in
the Bronx would be shuttered as
part of the discount chain’s bankruptcy,
there was some good news
last week. The lease on the 26,500-
square-foot Daffy’s site is going on
the auction block. Bids are due by
Dec. 7.
“Whenever a major block of
space is vacant, it is not good for
neighboring businesses,” said Robin
Abrams, executive vice president at
real estate firm Lansco Corp.“It will
be beneficial to other neighboring
tenants to have the space leased and
filled.”
While the auction’s timing
means a big hole will remain in the
local shopping fabric through the
holiday season, it will at least be
short-lived.
The vacancy comes at a challenging
time for Bay Plaza, which
lies in the shadow of the huge
Co-op City housing complex in the
north Bronx. A new shopping option—the
Mall at Bay Plaza, a
780,000-square-foot center, is expected
to open nearby in 2014.That
property has already signed Macy’s
and J.C. Penney as tenants.
—adrianne pasquarelli
There’s at least one charity that
doesn’t want additional funds—for
now, anyway. Muzzy Rosenblatt,
executive director of Bowery Residents’
Committee, which provides
housing for the needy, asked donors
to give their money to charities
helping those hit hardest by Sandy.
BRC lost a van in the flooding, and
two of its buildings sustained moderate
damage, but Mr. Rosenblatt
put those losses in perspective.
“We need help, but we are
nowhere as in need as others,”he explained.
“Hopefully, when I really
need some help, people will be there
for us.”
buck ennis
22 | Crain’s New York Business | November 12, 2012

Thankless CEO job
Continued from Page 1
round of grim news as last week’s
Nor’easter approached. That storm
knocked out an additional 55,000
customers.
“I wish we could get everyone’s
power back,” said Mr. Burke with a
sigh, in what must be a familiar refrain
for the man with arguably the
most challenging job in the city
these days.“We’re doing everything
we can.”
Yet even as thousands of cold,fedup
customers approached wit’s end,
the people who could really cause Mr.
Burke angst—people like Gov. Andrew
Cuomo or Mayor Michael
Bloomberg—have been relatively
mute. Mayor Bloomberg has saved
his wrath for the Long Island Power
Authority, which serves devastated
Rockaway, Queens. Mr. Cuomo earlier
in the month wrote a blistering
letter to all the chief executives of
utilities serving the New York region,
but mentioned only LIPA by name.
“It seems clear he’s not talking
about Con Ed,”Mayor Bloomberg’s
former press secretary, Stu Loeser,
said about the governor’s comments.
A mammoth task
One reason public officials may
be laying off Con Ed for now is they
understand Mr. Burke has a mammoth
task. Sandy knocked the power
out for about one-third of Con
Ed’s customers, or five times more
than the previous record outage, set
during last year’s Hurricane Irene.
And while people stuck shivering in
the dark for an agonizingly long
time may disagree, Mr. Burke has a
strong record managing Con Ed,
which he has run since 2005. Heading
into this month, the company’s
stock had returned more than double
the S&P 500 and outperformed
Mr. Burke’s
workdays can
stretch 20
hours long
its peer group by 65%.
Mr. Burke also may be getting a
pass from political leaders because
it’s hard to tell how Con Ed’s post-
Sandy performance compares with
utilities in similar situations. Utilities
like Con Ed for years have provided
regulators with data measuring
the frequency and length of
power failures, but those numbers
often exclude the impact of named
storms like Sandy because they are
considered extraordinary events,
noted Steve Mitnick, who was Gov.
Eliot Spitzer’s chief energy adviser.
“Unfortunately, the data is weak
in measuring how quickly utilities
get the lights back on after major
storms,” Mr. Mitnick said.“There is
no real way to gauge what’s success
or failure.”
Of course, the longer the power
outages go, the worse it is for Con
Ed and its customers. Mr. Burke
said his workdays stretch 20 hours
long,a whirl of meetings with everyone
from operations staff,city emergency-management
officials and
even calls with the Pentagon. What
sleep he gets in a room downstairs
from Con Ed’s command center is
sometimes interrupted by a faulty
fire alarm going off.
The CEO, who suffered a minor
heart attack in the spring of 2010,
said he’s pleased that Con Ed has
been able to apply lessons learned
from Irene and other lengthy power
outages of the past.
For example, the Sandy fix-it job
has required bringing in 5,000 employees
from other utilities to supplement
Con Ed’s workforce of
13,000.To house them, Con Ed before
the storm hired a contractor to
install base camps at Rye Playland
and Citi Field filled with trailers
containing three-bunk beds and
kitchen facilities.
“We were ready to go with the
A STOCK WITH JUICE
Shares of Consolidated Edison have
outperformed a key utilities stock
index since Kevin Burke became
CEO in 2005.
Con Ed’s stock price, monthly close
PHLX Utility Index
$70
600
60
50
40
30
20
56.42
457.7
550
500
450
400
350
8/31/05 11/1/12
Source: Bloomberg
camps right after the storm,” said
Mr. Burke, who was awarded $11
million in pay last year by his board,
which proxy advisory firm Glass
Lewis said is typical for a utility of
Con Ed’s size.
Twitter feed nearly quadrupled
The utility has also stepped up
communicating with the public by
hiring a couple of people in their 20s
to post regular updates on Twitter.
By late last week, the company’s
feed had grown to nearly 23,000
followers, from 6,500 immediately
before the storm,and it is filled with
comments from customers thanking
the utility for keeping them
informed.
Mr.Burke is going to need all the
good will he can muster,because later
this month—maybe even before
everyone’s electricity is restored—
Con Ed is due to ask the state’s Public
Service Commission for a rate increase
in anticipation of its existing
rate plan’s expiration in March.The
request seems sure to spark an uproar.
One way Mr. Cuomo could
convey any unhappiness with Con
Ed’s post-Sandy performance
would be to replace two of the five
PSC commissioners who are serving
beyond their terms with people
unfriendly to Con Ed.
Still, significant rate increases
for Con Ed customers may be required
to accommodate post-
Sandy realities. Power lines may
have to be buried, new distribution
centers built and flood walls raised
to create an electrical system that
can withstand the next big storm.
Any of those projects, Mr. Burke
gently reminds, will cost a fortune.
For now,though,he is focused on
the command-center wall that after
last week’s storm showed an unfortunate
rise in angry customers left in
the dark. Until the number on the
wall hits zero, he swears he’ll be on
the job day and night.
“It’s a lot of f-,” Mr. Burke said
before thinking better of describing
his often thankless role as “fun.”
“You get a lot of satisfaction out of
doing this job.”
LISTEN to a discussion at
CrainsNewYork.com/podcasts
November 12, 2012 | Crain’s New York Business | 23