Agency calls for CL&P financial penalty
Published 9:37 am, Wednesday, July 18, 2012
Utility regulators on Tuesday said Connecticut Light & Power should be financially penalized for leaving hundreds of thousands of residents in the dark after both last August's Tropical Storm Irene and the late October nor'easter.
The Public Utilities Regulatory Authority's decision caps off what has proven to be an expensive year for CL&P.
PURA's draft decision followed a months-long examination of storm response that concluded Northeast Utilities-owned CL&P's performance was "deficient and inadequate" and worthy of "regulatory sanction."
PURA said such punishment should take the form of cuts to the utility's return on equity in future rate hike requests and future efforts by the company to recover storm costs from customers.
CL&P has until July 23 to respond to the draft decision. PURA will hear oral arguments July 27 and issue a final decision by Aug. 1.
A CL&P spokesman was not immediately available for comment Tuesday. The utility has for months sought to convince ratepayers and elected officials it took their criticism seriously with management shake-ups, storm-related bill credits to 192,000 eligible customers and announcements of internal reforms.
Earlier in the year, the utility said it was doubling its 2012 tree-trimming budget to $53.5 million.
And on July 10, CL&P announced it had filed a five-year, $300 million infrastructure-hardening plan with PURA based on proposals submitted during investigations of the response to last year's storms.
"We are confident that this investment will benefit our customers by improving the day-to-day reliability of our system and making it less vulnerable to outages due to extreme weather," Bill Quinlan, CL&P's senior vice president of emergency preparedness, said this month.
PURA's draft report was only the latest in a series of probes and demands aimed at CL&P and, to a lesser extent, United Illuminating and various natural gas, cable, phone and Internet service providers following public outcry over the utilities' handling of the unique severe weather events that pummelled the state nearly a year ago.
In early December and early January, respectively, two independent studies of storm response commissioned by Gov. Dannel P. Malloy's administration hammered CL&P for its planning, response and communication before and after Irene and the nor'easter.
Subsequently Connecticut, which had taken a hands-off approach to NU's proposed merger with Massachusetts-based NSTAR, reconsidered and PURA decided that agency did have the authority to review and approve the union.
In late March the Malloy administration announced a deal that would allow the NU/NSTAR merger to proceed contingent upon NU's commitment to absorb the first $40 million in storm-related costs associated with Irene and the nor'easter, rather than seek rate increases; freeze rates until December 2014; provide $25 million in rate credits to CL&P customers following the merger; and invest $100 million in immediate system improvements and an additional $200 million in future improvements.
Also during the 2012 legislative session that concluded in early May lawmakers crafted and passed a package of reforms aimed at preventing future widespread blackouts, including requiring PURA establish utility performance standards and related penalties.
PURA, in Tuesday's ruling, said when the time comes to levy actual financial penalties on CL&P, it will weigh "the extent to which (the company) has recognized its shortcomings and taken concrete and measurable steps to embrace the need for aggressive, extensive restructuring of both its attitude toward storm management and establishment of new practices for execution of future storm response."
PURA did recognize the performance of rank-and-file utilities workers, adding, "Through more disciplined and thorough leadership and communication, their collective work could have been more effective and efficient."
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