Updated: Jepsen Says CL&P Should Face Large Penalty For ‘Imprudent’ Storm Preparation

Connecticut’s largest electric utility should be barred from recovering a large part of the costs associated with two major storms in 2011 because it was “imprudent” in its preparation for the bad weather and in its response to the power outages that followed, Attorney General George Jepsen said Monday.

Jepsen said the utility, Connecticut Light and Power should be penalized 30 percent to 50 percent of the recovery costs. That would amount to $78 million to $130 million, based on a figure of $260 million provided by CL&P earlier this year.

Such a penalty would be far harsher than the amount CL&P appears willing to give up. CL&P said in May that it would not seek repayment of about $40 million in restoration costs — about 15.4 percent of the estimated total costs from responding to Tropical Storm Irene and an October snowstorm.

The storms left hundreds of thousands of customers without power, some for a week or more.

Jepsen, a Democrat, suggested the higher penalty in a brief (PDF) filed Monday with the Public Utility Regulatory Authority. He said regulators need to send a message that they intend to hold the utility accountable for its performance during the storms

“Ratepayers should in no way be expected to pay for CL&P’s imprudent behavior,” Jepsen said. “CL&P has a history of promising improvement but then slipping back into laxity when the immediate uproar has passed. PURA should keep the pressure on CL&P to make a sustained effort to improve its management.”

In its own brief filed Monday (DOC), CL&P said it was “proud of its efforts” in responding to both 2011 storms, although it recognized that “there is always room to improve.”

CL&P’s brief said there were 671,000 outages caused by Irene, which hit Aug. 28, and 807,000 outages caused by the Oct. 29 snowstorm.

The brief said CL&P’s response teams “performed well under difficult circumstances,” restoring about 74,000 customers per day in both storms. The company said that rate was faster than its response to two comparable storms, Hurricane Gloria in 1985 and Hurricane Bob in 1991. The company said its call center performed “exceptionally” during both storms and handled a record number of calls.

The brief noted that state consultants and agencies, along with CL&P itself, had come up with 200 changes the utility should make to improve its performance.

But the utility’s brief said state regulators should not order the utility to implement those suggestions, but rather should allow the utility “a reasonable opportunity to complete a “thorough (but timely) evaluation” of the suggestions.

Al Lara, a spokesman for CL&P’s parent company, Northeast Utilities, said the utility’s response efforts were “consistent with industry norms,” in contrast to Jepsen’s assertion.

“I’m not exactly sure how he comes to that estimation, but there were certainly instances where we could have done our jobs better,” Lara said in an interview. “But overall we’re very proud of the work of our crews and we look forward to the opportunity to do even better.”

Jepsen cited as one example of CL&P’s imprudence the company’s decision to cancel a planned emergency response drill in 2010 because it had been able to restore power to 250,000 customers during an event that year. Jepsen said there was no evidence that the utility had planned for an event the size of the storms in 2011.

CL&P has until Thursday to file responses to briefs filed by other parties, such as the attorney general. In mid-July, PURA will release a draft decision on what penalty utilities should face from the storm. The parties involved in the investigation will be able to argue the draft decision before PURA on July 28. The regulatory body will make a final decision Aug. 1.

Lara declined to comment on whether the utility would try to negotiate a final penalty with Jepsen or whether the company is sticking to its $40 million offer, saying that commenting would be “frowned upon” by state regulators.

Several citizens have also filed public comments with PURA as part of the regulator’s investigation into CL&P’s response.

Patrick Duncan, a high school journalism teacher from Roxbury who filed one such complaint, told The Courant in an interview Monday that his family was without power for 6 1/2 days after the October storm.

Duncan, 48, said his family used solar-powered lights from their garden to light the house and walked to the edge of the woods near their home to get cellphone reception to repeatedly call the utility company. He said temperatures in his home dropped to as low as 50 degrees.

Duncan said CL&P had done a poor job of clearing trees around power lines near his home before the storm, which he thinks is the result of job cuts to the utility’s vegetation management crews. CL&P said earlier this year that it is nearly doubling the amount it spends on tree-trimming to about $53.5 million in 2012.

“I was just really disappointed that with austerity measures, CL&P tended to make sure that their stockholders had their guaranteed dividends while the people who are paying those guaranteed dividends were left in the cold,” Duncan said.