In this developed, civilized, picture-perfect world that we live in, it's easy enough to forget that creating electricity is, at its core, a dangerous job. From Three Mile Island to Fukushima, disaster can strike when we least expect it. This past week, tragedy hit home at Edison International (NYSE:EIX) when an explosion resulted in the death of a Southern California Edison (SCE) lineman.
Every utility has strictly regulated safety standards, but power problems might be more common than you think. A company that keeps its employees safe is a better company. Let's take a look at a few of the most recent utility issues to see whether there are lessons to be learned.
Last Thursday, distribution lineman Jose "Raul" Ros was working in an underground electrical vault at a SCE Menifee substation when an electrical explosion and fire left him dead and three others injured. Ros had worked at Edison for 11 years. "We are deeply saddened by today's tragic event and we extend our heartfelt condolences to Mr. Ros' family," said SCE President Ron Litzinger in a statement.
Since the first announcement, the other three employees have been released from the hospital and a memorial fund has been set up in Ros' honor, to which Edison International made the first donation of $25,000.
Southern stays silent
Unfortunately, Edison isn't alone. On April 4, a routine maintenance outage went awry when an explosion occurred at Southern Company's (NYSE:SO) Georgia coal-fired Plant Bowen. In its release, Southern noted that "no serious injuries have been reported" and that the explosion presented no danger to the community.
In the last three weeks, the company has remained silent on the subject. An email correspondence with the investor relations office noted that Southern will "release more details after our investigation is complete and thoroughly vetted," but the company's Q1 earnings have come and gone with no mention of Plant Bowen. The facility accounts for 7.3% of the utility's overall generation capacity and, with the limited information available, seems to remain offline.
Exelon's precautions kick in
Most recently, Exelon (NYSE:EXC) took its nuclear Clinton power station offline on Friday after observing low hydraulic pressure on one of the unit's main turbines. The station first came on line in 1987 and generates just over 1,000 net MW.
Exelon relies on regulation- and safety-heavy nuclear for 55% of its generation capacity, and works daily with the Nuclear Regulatory Commission to ensure strict oversight.
What can we learn?
An anonymous commenter on a Valley News article identifying himself as "Northern SCE Family," summarized the situation perfectly:
This theory that all accidents are preventable is only good in theory. There are safety protocols in place to prevent such losses. We as electrical workers can follow all OSHA and company policies and the simple fact is, accidents do happen. Investigations will be conducted by appropriate authorities and we as electrical workers need to rally around the families and let them know that we support them. Your SCE Family in central California is praying for all the families involved.
Accidents happen, but there's no reason to think that investors can't or shouldn't consider employee safety when making their investment decisions. A safe employee is a happy employee, and a happy employee is a productive employee.
Duke Energy (NYSE:DUK) CEO Jim Rogers recently pointed to Stakeholder Theory as a means for "higher investor confidence, more stable earnings, and a better share price." This type of corporate governance includes, among other things, finding a balance between the interests of all stakeholders – including employees.
Rogers' words might seem counterintuitive to any investor looking to make the most profit possible, but safety standards are absolutely essential for long-term value. Edison International's tragic event serves as a reminder that we, as investors, have the power to dictate that balance and demand enduring value and employee safety over cost-cutting and short-term profiteering.