Last week, Connecticut Light & Power officials asked regulators to allow them to increase their rates to recover $414 million for five major storms over the last two years, including Tropical Storm Irene and the October 2011 snow storm, which caused power outages that lasted more than a week for some customers and led to widespread criticism of the utility.
U.S. Sen. Richard Blumenthal and U.S. Rep. Joe Courtney held a press conference Monday to urge regulators not pass the cost of the storms unto ratepayers.
In a letter to regulators, Blumenthal, Courtney, and U.S. Rep. Rosa DeLauro, noted that the Public Utility Regulatory Authority reviewed CL&P’s performance after the October storm and found it to be “deficient.” The utility is seeking to collect $175 million in costs associated with that storm.
“It is simply inconceivable that any costs associated with this storm should be recovered from the same ratepayers who struggled without power and without any information on how much longer the utility would need to restore their electricity,” they said.
Blumenthal and Courtney also urged that ratepayer funds not be used for any expenses stemming from CL&P’s failure to adequately communicate with local officials or to provide sufficient and timely resources in the aftermath of Tropical Storm Irene.
Tropical Storm Irene was the first of the five major storms and it may have been the first indication that the utility was unprepared for widespread power outages. About 700,000 of its 1.2 million customers lost electricity in that storm. Then less than two months later the state was hit by a Nor’easter that knocked out power to more than 800,000 customers. An independent report later revealed that the company hadn’t planned for that many outages and were tardy in calling for outside help to ensure that it would arrive in a timely fashion.
Instead of preparing for a storm where 500,000 customers would be without power, the utility was prepared for a storm with more than 100,000 customers out of power, or about 10 percent of CL&P’s customer base. According to a report commissioned by Gov. Dannel P. Malloy and compiled by Witt Associates, preparing for a 10 percent outage was a dramatic underestimation.
The utility admitted it was visited by Mother Nature’s wrath, but maintains that as a regulated utility it is allowed to file for recovery of those storm-related costs.
“Connecticut saw epic devastation in the 2011 and 2012 storms that caused major damage to CL&P’s electric system,” the utility said in a statement. “While we recognize there’s always room for improvement in responding to storm emergencies, and that our response could have been better in 2011, preparing for and responding to such devastating storms is very expensive and something for which we, our customers and our regulators rightly expect we’ll continue to do in the future.”
CL&P is allowed to file for recovery of storm-related costs to bring in outside line and tree workers, replace damaged equipment, and to staff the response effort.
“Like countless Connecticut households and businesses, we have no doubt that CL&P incurred heavy costs as a result of these storms. However, when requesting to recover those costs from the same ratepayers that experienced significant outages in service as a result of the above-referenced shortcomings, we believe that PURA has a responsibility to consider not just CL&P’s actions during the storms but also their commitment to ensure that it is fully prepared to respond to future storms as well,” Blumenthal, Courtney, and DeLauro wrote.
But there’s increasing public pressure for regulators to scrutinize the request carefully. From online petitions to press conferences by elected officials, the public outrage over CL&P’s response to the storms remains.
In order to make up for its failings following the October 2011 Nor’easter, CL&P shareholders refunded 192,000 customers, who were out for more than a week, about $30 million. That came out to about $140 per customer. The utility initially offered to refund $10 million, which Gov. Malloy called inadequate.
If regulators approve the $462 million rate hike to allow CL&P to recover storm costs, rates will not increase until Dec. 1, 2014. A typical CL&P customer would see their rates increase $3 a month, according to the utility.
Here’s the summary of the costs the utility is trying to recover from each of the five storms.
—October 2011 Nor’easter snowstorm: $175 million (1.44 million customers restored).
—Storm Sandy, October-November 2012: $156 million (856,184 customers restored).
—Tropical Storm Irene, August 2011: $111 million (1 million customers restored).
—June 2011 storm: $11 million (209,045 customers restored).
—Sept. 2012 storm: $9 million (80,575 customers restored).
