Storm woes fading, CL&P wants its $402M tab paid
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Connecticut Light & Power's preparation and response for the snowstorm Nemo that hit New England in February is part of ther reason the utility believes it has improved to the point that it won't have to pay a penalty for its inadequate and deficient response to the 2011 storms.
Connecticut Light & Power is convinced it has earned its way back into the state's good graces since the bitter public fallout over its 2011 storm outages, leading the Berlin electric utility eventually to seek $402 million in outage costs from ratepayers.
When Tropical Storm Irene and a heavy October snowfall hit Connecticut in 2011, more than 800,000 CL&P customers lost power on each occasion — some for more than 10 days. A state Public Utilities Regulatory Authority investigation determined CL&P's response was deficient and inadequate, and recommended the utility be assessed a penalty in its next rate case.
PURA's report said if CL&P made significant improvements to its storm response, the utility could nullify the penalty, which would be assessed by not allowing the utility to recover a portion of its $282 million in 2011 storm costs.
"A penalty would be very disappointing," CL&P spokesman Mitch Gross said. "CL&P's advance planning, preparation, teamwork, and collaboration are stronger than ever."
Northeast Utilities, CL&P's Hartford-Boston parent, declares in its latest mandatory annual report to that it is probable CL&P will recover its storm costs, based on the strength of its improved emergency practices showcased in recent storms. NU further said CL&P could prove its 2011 response was consistent with others in the industry.
Some aren't so sure CL&P deserves to be made whole on its storm-recovery tab.
"Those of us who serve the public and interact with them when the power goes out, we may have a different opinion on whether or not they have to pay that penalty," said State Sen. Bob Duff (D-Norwalk), co-chair of the Connecticut legislature's Energy & Technology Committee. "Under their own fiduciary responsibility to their shareholders, I'm sure they must do everything in their power not to pay that penalty."
The debate on CL&P's storm costs won't come to the forefront until after Dec. 1, 2014 because NU agreed to freeze electric rates until after that date to get Connecticut regulators to approve its $5 billion merger last year with Boston utility NStar.
CL&P can opt to recover the storm costs individually or as part of an overall rate request. The utility hasn't determined when to file or what to ask for, Gross said.
Generally, all of a utility's storm costs are recoverable from its ratepayers. New Haven electric utility United Illuminating has a $40 million recovery case pending before PURA for costs from last October's Superstorm Sandy.
In CL&P's case, it has a $442 million storm bill coming due for ratepayers once the 2014 deadline passes. That doesn't count any costs incurred with 2013 storms, as the utility hasn't yet determined those.
CL&P says it incurred $160 million in Sandy-related expenses. Unless PURA finds CL&P was deficient and inadequate in that 2012 storm, ratepayers are on the hook for those expenses.
The remaining CL&P storm costs are the $282 million from the two 2011 storms.
As another stipulation of the NStar merger, NU agreed to forgo $40 million of the 2011 storm costs, so the most ratepayers could be responsible for from that year is $242 million.
The rest of the ratepayers' bill will be determined by PURA on whether CL&P should be assessed a penalty for its 2011 performance. Attorney General George Jepsen recommends the utility swallow up to half its 2011 storm costs, or $141 million.
"That is a judgment PURA would have to make through a careful assessment of CL&P's storm preparedness and response," said Dennis Schain, spokesman for the state Department of Energy & Environmental Protection, which includes PURA.
So factoring in Sandy, PURA could put ratepayers on the hook for as little as $261 million or as much as $402 million, plus whatever other storm costs are incurred by Dec. 1, 2014.
"CL&P is trying and has tried to do a better job since those early storms, but — as I've said in the past — there is still a long way to go," Duff said. "We want to hold utilities and other entities that serve the public accountable."
CL&P greatly improved its communication and coordination with cities and town since the 2011 storms, proven by its responses to Sandy in October in Nemo in February, Gross said.
In Sandy, more than 850,000 customers lost power — more customers than both 2011 storms — but the power was restored quicker, and CL&P offered state authorities and ratepayers a better restoration timeline.
With Nemo, the utility had 73,000 customers lose power and reached substantial restoration within two days. The utility moved quickly enough to help Connecticut municipalities clear snow, and it sent its crews to help with restorations in neighboring states.
PURA in January approved CL&P's $300 million plan to trim trees, harden electric wires, and installer stronger poles, cross-arms, and distribution equipment.
"CL&P continues to be hard at work providing superior customer and community service," Gross said.
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