AG seeks to limit utility’s storm-cost recovery
Attorney General George Jepsen called for “meaningful” penalties on Northeast Utilities, months after the company agreed to reimburse Connecticut ratepayers $30 million for widespread outages after Tropical Storm Irene and the October nor”™easter.
In a first quarter conference call, Northeast Utilities indicated it would seek to recover some of its storm costs over a six-year period, in a rate case before the Connecticut Public Utilities Regulatory Authority (PURA) ”“ some $290 million, according to Jepsen.
To win regulatory approval for its merger this spring with Massachusetts-based NStar, Northeast Utilities committed to a Connecticut Light & Power distribution rate freeze until December 1, 2014, at which point it can file to recover some of its storm-related costs.
In a 54-page brief filed with PURA, Jepsen said the company should not be allowed to recover the full amount of its storm-recovery expenses, on the theory that forcing Northeast Utilities to eat a bigger portion of the costs would encourage it to respond better in future storms.
Jepsen asked PURA to issue a finding of “imprudence” while information is fresh in people”™s minds, rather than waiting two years when the authority may have different directors or memories have faded.
“CL&P has a history of promising improvement, but then slipping back into laxity after the immediate uproar has passed,” the report continued. “The authority should keep the pressure on CL&P to make a sustained effort to improve its management before the next rate case two years down the road. Two years is a long time, and Connecticut may well see additional severe weather events during that time. Putting the company on notice of the penalties PURA intends to impose should provide CL&P with strong incentives to improve its performance.”
Adding insult to injury, Jepsen”™s report repeatedly misspells the name of former Northeast Utilities CEO Chuck Shivery.
Connecticut suffered some 1.5 million household and business power outages between the two storms, with many customers in the dark for more than a week.
“They, over the years, have been called to task for inadequate management in storm response; and as recently as ”¦ 2010,” Jepsen said in a press conference webcast on the Connecticut Network. “They had a 250,000 (customer) regional event. It”™s pretty easy to infer from that that their planning ”“ which contemplated at most 100,000 people being out of power ”“ was completely inadequate, and so at a minimum they should have been ramping up for the clearly foreseeable, much larger events.”
Northeast Utilities defended itself in its own brief filed the same day, stating that its overall restoration performance was “consistent with industry norms,” citing two independent reviews in the wake of the outages, and asking PURA to affirm that statement.
PURA is scheduled to make a decision in early to mid-July; Jepsen said any decision does not preclude his office from filing a lawsuit.
He said the company repeatedly set dates under which it would restore power to neighborhoods, only to miss those deadlines and further inconvenience customers.
“It induced reliance by businesses who told employees to show up on Monday morning,” Jepsen said. “It induced reliance by consumers, many of whom were making decisions about when to move back to their homes. How do you put a price tag on (that)? In some cases you could say there”™s clear economic loss.”