Boston Edison Company
Address:
800 Boylston Street
Boston, Massachusetts 02199-2599
U.S.A.
Telephone: (617) 424-2000
Fax: (617) 424-2605
Statistics:
Public Company
Incorporated: 1886 as Edison Electric Illuminating Company of Boston
Employees: 4,026
Sales: $1.55 billion
Stock Exchanges: New York
SICs: 4911 Electric Services
Company History:
Boston Edison Company is a regulated public utility that provides electricity to the Boston area. Its activities include the generation, purchase, transmission, distribution, and sale of electric power. The area served by Boston Edison covers a total of about 590 square miles, all within 30 miles of Boston, and includes approximately 40 cities and towns. The population of the company's service area is approximately 1.5 million. About 86 percent of Boston Edison's revenue comes from retail electric sales. The rest is derived primarily from wholesale sales to other utilities and municipal electric departments. The company's facilities include the Pilgrim Nuclear Power Station in Plymouth, Massachusetts, and non-nuclear generating plants in South Boston and Everett, Massachusetts. These facilities generate electricity for a total of about 651,000 Boston Edison customers.
The Edison Electric Illuminating Company of Boston was established in 1886. From the beginning, the company established a reputation for innovation in its industry, which was itself in its infancy. Among the key figures in the formation of Boston Edison were electric industry pioneers Edward H. Johnson and Henry Villard. Financier J. P. Morgan, who had invested in many of the country's earliest electric operations, was also involved. The company set up its first station in a two-story building that formerly served as a livery stable and tenement house. Early in 1886, Boston Edison began providing electricity for its first customer, the Bijou Theater, which a few years earlier had become the first electrically lighted theater in the United States, using electricity from an isolated power plant.
By 1887 there was already fierce competition for the Boston area's electrical market, with thirteen companies in operation. That year Boston Edison opened a second generating station, installed an underground network to replace its overhead power lines, and hired Charles L. Edgar as a station manager. Edgar eventually became one of the electric industry's most important figures, serving as president of Boston Edison from 1900 to 1932.
During the 1890s, Boston Edison vied with another company, Boston Electric Light Co., for dominance in Greater Boston. Negotiations for a merger took place around the turn of the century, but plans for uniting the two companies were shot down by some of Boston Edison's directors, including Edgar. Boston Edison effectively put an end to the territorial battle by purchasing a third rival, Suburban Light and Power Company, in 1901. Boston Electric Light Co. was finally merged into Boston Edison in 1902, and the company became the area's sole provider of electric power.
The period between the turn of the century and the Depression was one of immense territorial growth, as well as tremendous advances in marketing and engineering, for Boston Edison. In 1903 alone, six neighboring power companies were acquired, including Milton Light & Power Company, Framingham Electric Company, and Somerville Electric Light Company. As the company increased its geographical range, it continued adding generating capacity at its existing plants. This enabled the company to meet the increasing power needs of Bostonians as well as those of its new customers outside of the city. Electricity also became less expensive, with the price per kilowatt-hour in Boston dropping by half between 1886 and 1909.
In the early part of the century Boston Edison launched several successful marketing campaigns to spur the use of electricity, some of which involved demonstrations of electrical appliances. The company also staged exhibits around the area, such as the "Farm of Edison Light and Power" and the "Colonial House of Edison Light." In 1911 Boston Edison became active in the development of electric vehicles. Although electric cars eventually lost the battle against the internal combustion engine, the company's efforts were not entirely wasted. Before World War I, many private fleets of electric vehicles, mostly used for delivery, were in operation around Boston.
In 1912 Boston Edison invested heavily in its employees, establishing an Employee Loan Fund, an Accident Prevention Committee, and a Medical Department. In addition, the company built a large recreational and technical complex containing a library, dining room, tennis courts, auditorium, pool tables, and many other amenities. The onset of World War I placed an entirely new set of demands on the nation's utility companies. Although restrictions were placed on lighting and other uses of electricity in order to conserve fuel, the needs of military manufacturing increased the overall demand for electrical power, improving Boston Edison's balance sheet.
With the continued increase in the use of electrical appliances and the growth of manufacturing in the 1920s, the demand for electrical power expanded precipitously. In 1923 Boston Edison launched its own radio station, WTAT, which it operated out of the back of an REO Speedwagon. WTAT was the first station to be operated by an electric utility company, and may have been the first portable radio station in the United States. The following year, the company added WEEI, a more powerful station which stayed in one place. WEEI became a fixture on New England's radio dials, providing a full range of music, sports, and news programming.
Meanwhile, the company continued to expand its generating capacity. A major expansion of its L Street Station, acquired in the Boston Electric merger, was completed in 1920. In 1925 operations began at the company's new Edgar Station in Weymouth. This facility was the first "high-pressure" central station in the world. The following year, the company was awarded the Charles A. Coffin award, one of the industry's most prestigious, in recognition of its many technological and marketing innovations.
The onset of the Depression in 1929 brought about a reduction in the use of industrial energy, which was reflected in a reduction in Boston Edison's revenues over the next several years. Offsetting the decline, however, was a rise in residential use of electricity, as more and more electrical devices made their way into American homes. The company continued to devise creative marketing and promotional ideas through the 1930s, including the "Friendly Kitchen," an ongoing demonstration of electric cooking techniques. The further expansion of the WEEI radio station provided still more promotional opportunities.
In 1932 Edgar died, and Walter C. Baylies took his place as company president. By the middle of the 1930s, the Depression had caused even residential use of electricity to level off. During this period, the company was unable to begin any major construction projects, and some employees were forced to take wage cuts. In 1937 the company's name was officially changed from Edison Electric Illuminating Company of Boston to the less cumbersome Boston Edison Company. The following year, Edison's workers joined the wave of unionization sweeping the country. The United Brotherhood of Edison Workers was made the official collective bargaining representative of company employees.
As the 1940s began, mobilization for World War II began to increase the demand for power. Around this time, Edison president Frank D. Comerford, who had succeeded Baylies in 1935, announced plans for a large new generating station to be built on the Mystic River in Everett, Massachusetts. The first of Mystic Station's three units went into service in 1943. When Comerford died suddenly in 1941, James V. Toner was chosen as his successor. By the end of the war, Boston Edison's geographic expansion had ended, but growth continued as a result of rising consumption among its customers. The company's power plants were generating more than two billion kilowatt-hours of electricity a year. That total was double the amount generated ten years earlier, despite the fact that the company's service area and population had remained relatively stable during that period.
The boom years that followed World War II created a bigger demand than ever for electricity, with the proliferation of washing machines, refrigerators, vacuum cleaners, and other household appliances. Boston Edison sold and actively promoted the use of electrical appliances, selling 861 electric ranges in 1950 alone. The widespread introduction of television also increased company revenues, accounting for an estimated $1.5 million in sales for 1950. During this period, Boston Edison met increased demand by adding capacity to its existing facilities. Many of the company's technological advances at this time were in the areas of transmission and distribution. New cable technology allowed more power to reach customers more efficiently.
In 1952 the company reorganized its corporate structure. Two new operating organizations were formed: the Engineering and Construction Organization, headed by John T. Ward; and the Steam and Electric Operations Organization, led by Hugo Wellington. By the mid-1950s, demand in the suburbs of Boston had increased so much that six new substations had to be built in 1955 alone. A wave of new industrial and commercial development, particularly along Route 128, made Greater Boston a leading center of high-technology manufacturing in the late 1950s, and Boston Edison prospered. Its largest customer, and the area's biggest employer, was Raytheon Corporation. Other major users of Boston Edison power located along that corridor were Singer Sewing Machine Co. and Union Carbide.
The development of computer technology in the 1950s and 1960s enabled Boston Edison to run its operations at new levels of efficiency. The company installed its first computer, an IBM machine used for accounting, in 1954. In 1959 Boston Edison became the first utility company in New England to install a mainframe (a Univac II), and over the next few years computers became an integral part of every major phase of the company's operations. As its customer base in the outlying areas grew in the late 1950s and early 1960s, the company began establishing service centers to provide technical support in those areas.
In November 1965 a huge blackout struck the entire Northeast; in its wake, most utilities changed the way they operated. Boston Edison installed special jet engine backup generators and changed its switching and communications systems to reduce the likelihood of system failure. The blackout also prompted greater coordination between the various utility networks in the region. Boston Edison joined several interutility organizations over the next several years, including the Eastern Massachusetts and Vermont Energy Control in 1967; the Rhode Island-Eastern Massachusetts-Vermont Energy Control in 1969; and the New England Power Pool in 1971. Each of these networks served to centralize, to various degrees, the dispatching and transmission of electricity, thereby maximizing efficiency over a larger area.
In late 1967, Boston Edison began construction on the Pilgrim Station, a nuclear generating facility in Plymouth, Massachusetts. By 1969, company revenues had passed the $200 million mark. Commercial and residential electricity sales each made up about one third of that total, while industrial sales, sales to other utilities, sales of steam, and street lighting made up the rest. The company's customer base of 583,000 was not much bigger than it had been a decade earlier, but those customers were using more than twice as much power as their 1958 counterparts. As the 1970s began, Boston Edison benefitted from a rush of commercial development around the Boston area. Among the construction projects that added significantly to the area's power demands were the Marriott Motor Hotel, a Christian Science Church office complex, and the John Hancock Building.
The 1970s were a turbulent decade for the entire energy industry, including Boston Edison. The longest strike in company history, lasting nearly three months, took place in 1971. In December 1972 the Pilgrim Station went into operation. The following year, the OPEC oil embargo caused huge increases in fuel prices, with devastating effects on companies like Boston Edison that used large amounts of oil. In response, the company ended its tradition of actively promoting the use of electricity, and by 1974 it had closed the last of its appliance stores. Rising energy prices, combined with a growing public awareness of environmental issues, resulted in decreased energy use by the middle of the decade, and plans for another nuclear facility were dropped. Nevertheless, new, more efficient technology enabled the company to thrive financially despite these pressures. The Edgar generating facility was retired in 1977, placing most of the burden on the new Pilgrim plant.
During the 1980s Boston Edison was plagued by regulatory problems, primarily concerning the Pilgrim plant. In 1982 the Nuclear Regulatory Commission (NRC) hit the company with the largest fine it had ever imposed, $550,000, for a litany of management and physical problems at the facility. Boston Edison spent $300 million on upgrades at the plant, but malfunctions continued to plague Pilgrim, which was the source of 40 percent of the company's power by this time. In 1986 the NRC called Pilgrim one of the six worst-managed nuclear plants in the United States, and Boston Edison was forced to shut the plant down to make wholesale improvements. Leadership of the company changed, with Bernard Reznicek replacing Stephen Sweeney as president. Reznicek received permission to restart Pilgrim in 1989 under a plan whereby the company would be rewarded or punished financially based on the plant's performance.
Meanwhile, Boston Edison sought to gear itself for the future. In December 1982 the company launched its IMPACT 2000 initiative, which sought to coordinate the company's conservation, environmental, technological, public relations, and load management goals into a single coherent package. Among the program's results were the conversion of both the Mystic and New Boston stations to dual fuel capability (the ability to burn both oil and gas), and the installation of scrubbers on the company's generating stations.
In 1991 Boston Edison experienced further problems with the NRC, when the Yankee Rowe nuclear reactor in Rowe, Massachusetts--which was ten percent owned by Boston Edison--was forced to close for safety reasons. Nevertheless, the company's financial performance was strong during the early 1990s. With Pilgrim back in operation, Boston Edison was able to improve its position as the second highest-cost electricity producer in Massachusetts in 1987 to the status of second-lowest in 1992. Its financial performance improved accordingly, from a $16 million deficit in 1989 to a profit of $107 million in 1992. As the 1990s progressed, Boston Edison continued to seek savings through improved technology. Among its breakthroughs were the 1993 development of "smart" meters capable of communicating information directly to the company, eliminating the need for meter readers, and the automation of over-the-counter bill payment. Reznicek resigned as chairman and CEO of Boston Edison in 1994 to become dean of Creighton University's business school. He was succeeded by Thomas May, the company's president.
Principal Subsidiaries: Harbor Electric Energy Co.; Boston Energy Technology Group; REZ-TEK International Corp.; Coneco Corporation.
Further Reading:
"Boston Edison Automates Over-the-Counter Payments," Electrical World, July 1993, p. 13.
"Boston Edison Reorganizes," Electrical World, March 17, 1952, p. 29.
Campanella, Frank W., "Big Commercial Demand Sparks Boston Edison," Barron's, September 14, 1970, p. 28.
Cavanaugh, H. A., "Having 'Created the Future' at Boston Edison, Reznicek Returns to Omaha," Electrical World, August 1994, pp. 9-10.
"Earnings Growth Plus Good Yield," Financial World, January 12, 1972, p. 7.
"It Electrified the Proper Bostonians," Electrical World, June 25, 1951, pp. 11-12.
Kripalani, Manjeet, "Who Needs Meter Readers?" Forbes, August 30, 1993, pp. 46-48.
"Low-Cost Facilities Help Fuel Boston Edison Gains," Barron's, June 30, 1969, pp. 29-30.
Sicilia, David B., Boston Edison Centennial 1886-1986: History of the Boston Edison Company, Boston: Boston Edison Company, 1986.
Smith, William D., "Construction Plans for Nuclear Plants Canceled by Utility," New York Times, June 29, 1974, p. 1.
Therrien, Lois, "Boston Edison Gets the Work: Fix the Nuke or Fold It," Business Week, June 30, 1986, pp. 39-40.
Wald, Matthew L., "A-Plant to Close Over Safety Issue," New York Times, October 2, 1991, p. A1.
Source: International Directory of Company Histories, Vol. 12. St. James Press, 1996.
