Connecticut regulators propose a maximum penalty of $30 million against Eversource for Tropical Storm Isaias failures

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Connecticut regulators on Thursday proposed the maximum allowed penalty of $30 million against Eversource Energy and another $2.1 million against United Illuminating for failures to prepare properly for and respond to Tropical Storm Isaias last August.

The civil penalties proposed by the Public Utilities Regulatory Authority are the first since the agency was authorized by state law to consider fines after destructive storms in 2011 and 2012. PURA said the fines were in response to the utilities’ failure to “comply with standards of acceptable performance in emergency preparation or restoration of service in an emergency.”

“Eversource failed its customers and put Connecticut families at risk after Tropical Storm Isaias. Eversource must pay for their failures,” Attorney General William Tong said in a statement released by his office. “This penalty is a strong first step to hold Eversource accountable for their disastrous performance,.”

The Eversource penalty, if upheld, would require Eversource to return $28.4 million to its ratepayers in the form of credits and pay a fine of $1.6 million to the state. United Illuminating faces a total civil penalty of $2.1 million for alleged violations related to Tropical Storm Isaias, of which $1.8 million would be returned to ratepayers and $360,000 to the state.

The utilities may ask for a hearing to appeal the fines. A final decision by PURA may be appealed to state Superior Court.

Eversource spokeswoman Tricia Taskey Modifica said the Berlin utility is reviewing the notice and looks forward to getting through the “final stages of the process.”

“While our employees worked tirelessly to restore power as quickly as possible, we recognize the hardships our customers and communities experienced, and we acknowledge there are areas for improvement,” she said. “We are working — and will continue to work — in good faith with our communities, customers and regulators to improve our performance.”

UI spokesman Ed Crowder said the utility, which serves towns and cities along the shoreline, is reviewing PURA’s decision and considering its “next step.”

“We are disappointed PURA did not consider the facts we presented during the investigation,” he said. “The facts show that we faithfully followed our emergency response plan. We will continue to work with PURA to improve our preparation for and response to storms and other emergencies.”

Arthur House, a former chairman of PURA, said regulators fined the utilities following the 2011 storm, a freak October nor’easter, and Superstorm Sandy in 2012. But regulators scaled back the penalties after the utilities took steps to prepare for future storms, he said.

“The point was we wanted the utilities to be vigilant and be prepared,” House said. “The fine was less important than preparing.”

However, regulators now are hitting the utilities hard after Isaias, the third destructive storm in less than 10 years that left as many as 1 million customers of both utilities without power for days. The outages coincided with back-to-back heat waves and the coronavirus pandemic.

The proposed fines are in addition to a pledge by regulators last week that they are prepared in a future proceeding to impose an indefinite reduction in the utilities’ return on equity, a measure of profitability. For Eversource, the annual lost net income that would result is about $25 million a year, using 2020 as a guide. For UI, it would be $1.3 million annually.

In another possible financial hit, the rebuke by regulators could undermine efforts by the utilities to seek permission from regulators to bill customers for costs related to storm cleanup and preparation.

Regulators last week ordered the utilities to increase the number of line workers, damage assessors and liaisons to respond to emergencies. The agency also directed the companies to improve communications with large customers and those with medical hardships.

PURA also said the utilities must undergo management audits beginning this summer, focusing on emergency response procedures, communications, support from company executives and organizational changes that may be needed.

In a scathing report issued in March, PURA accused Eversource of poor communications with customers, a failure to manage municipal liaison programs and an inadequate response to weather forecasts.

Regulators said UI’s performance was at times “underwhelming,” but it met the standards of “acceptable performance.”

Stephen Singer can be reached at ssinger@courant.com.

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