Attorney General Jepsen Calls for “Meaningful” Penalties on CL&P
In Wake of Poor Storm Response
CL&P’s “imprudence” in response to October Nor’easter led to crisis
for many in Connecticut
Connecticut Light & Power (CL&P) was imprudent in its preparation for and response to Tropical Storm Irene and the October Nor’easter and should face meaningful penalties, according to Attorney General George Jepsen in a brief filed today in the Connecticut Public Utilities Regulatory Authority (PURA) investigation into utility companies’ responses to the two storms.
“CL&P failed to prepare for major weather events, failed in its assessments and failed to adequately communicate with the public and public officials,” the Attorney General said. “The company’s ‘worst-case scenario' emergency response plan only prepared for 100,000 power outages; they had no plan whatsoever for outages on the scale that we saw not once in 2011, but twice.”
Attorney General Jepsen said, “Connecticut residents and businesses were left stranded in the wake of two of the largest storm-related power outages to ever affect our state because of CL&P’s failures. Any costs related to CL&P’s imprudence should in no way be passed on to ratepayers.”
Attorney General Jepsen is calling on regulators to disallow recovery of any storm-related costs that resulted from CL&P’s imprudent conduct.
In addition, Attorney General Jepsen is calling for PURA to disallow the recovery from ratepayers of a substantial portion, in the range of 30 to 50 percent, of CL&P’s 2011 storm restoration and recovery costs. This penalty fairly reflects the cumulative effects of CL&P’s imprudence in its preparations for and management of these storms, the Attorney General said.
Alternative to recovery disallowance, Attorney General Jepsen said that that PURA should consider reducing CL&P’s return on equity (ROE) in a future ratemaking proceeding – both as a penalty and as a strong warning to the company to improve its management practices. Given the magnitude of the company’s mismanagement, if imposed in CL&P’s next rate proceeding, the penalty should be large enough to be meaningful and sufficient to reflect the full extent of CL&P’s failures in the 2011 storms, the Attorney General said.
“This investigation gives us the opportunity to reverse a trend of mismanagement and unpreparedness in our utility companies,” he said. “In the case of CL&P, I firmly believe that those penalties must be large enough to be meaningful and to strongly incentivize the company to improve its performance.”
According the brief, evidence presented in the case reveals that CL&P was imprudent with regard to its:
• Inadequate preparation for major storms,
• Failure to request the assistance of outside crews in a timely manner,
• Unreasonable damage assessment process,
• Failure to train and support municipal liaisons and defer to local restoration priorities,
• Unreasonable development of estimated restoration times, and
• Mismanagement of communications with the public and public officials concerning estimated restoration times.
Tropical Storm Irene caused more than 700,000 customers to lose power, some for as long as nine days. The Nor’easter interrupted electric service to more than 800,000 Connecticut residents, many for as long as 11 days.
Assistant Attorneys General Michael C. Wertheimer and John S. Wright, with Associate Attorney General Joseph Rubin, are handling this matter for the Attorney General.
Jaclyn M. Falkowski