Eversource Energy and United Illuminating have appealed in state Superior Court the decision by state regulators targeting a measure of their profitability over their preparation for, and response to, Tropical Storm Isaias last summer.
The state Public Utilities Regulatory Authority in April rebuked Eversource and United Illuminating for the utilities’ handling of the Aug. 4 storm that left 1 million customers without power for days. Customers and elected officials were furious at the utilities, creating intense political pressure that led to state legislation and public hearings and investigations by lawmakers and PURA.
Regulators ordered a reduction in Eversource’s return on equity by 0.9%, which amounts to about $31 million a year, and a 0.15% cut for UI, amounting to about $1 million a year.
Return on equity is a measure of a corporation’s profitability.
In a filing Thursday in New Britain Superior Court, Eversource said PURA’s decision ordering a reduction in the return on equity “appeared without warning” and failed to provide due process, giving Eversource no opportunity to offer evidence.
PURA criticized Eversource for numerous failures, with “inactions or deficiencies” that created a significant risk to public safety.
UI said in its appeal filed Friday in New Britain Superior Court that PURA did not seek to link the reduction to “any particular findings of deficient performance by UI, and it did not provide criteria for how and when the return on equity reduction can be eliminated.”
PURA was less critical of UI’s performance before and after Isaias than of Eversource, but said it was “underwhelming in certain areas.”
The utility, which serves customers in the New Haven and Bridgeport areas, said PURA concluded that it took a “reasonable, prudent and appropriate approach” in judging the severity of Isaias, was reasonably well-prepared with adequate line resources for power restoration, performed acceptably and met applicable performance standards.
UI said PURA failed to identify “any evidence supporting” its decision to cut its return on equity or explain how it determined the penalty “in light of its particular findings.”
Eversource spokeswoman Caroline Pretyman said customers in every town the utility serves experienced outages, “yet we restored power safely and faster than in previous major storms.”
“Our appeal addresses critical legal aspects of PURA’s decision and the serious implications the decision will have on future storm response efforts,” she said.
In response to Eversource’s legal challenge, PURA said it “would prefer to avoid continued litigation of Eversource’s universally-recognized deficient performance in preparing for and responding to Tropical Storm Isaias.”
Regulators said they would “rather that Eversource prioritize its responsibilities as a public service company and use its resources on operating a reliable and resilient distribution system and improving its emergency response instead of expending resources on further litigation.”
PURA said it will “rigorously defend” its decision and is confident the public process “will shed further light on the company’s deficient performance in response to Tropical Storm Isaias.”
Eversource said PURA was to consider financial penalties in a separate phase of its proceeding. However, regulators did not ask Eversource for evidence or briefings, the utility said.
“Instead, PURA capriciously issued a final decision imposing a return-on-equity penalty of $31 million annually, applicable indefinitely,” Eversource said.
PURA said an indefinite reduction in Eversource’s return on equity of 0.9% is reasonable and consistent with previous actions and “sufficient to properly incentivize improved storm response performance by Eversource.”
Stephen Singer can be reached at email@example.com.