In proposed deal, Eversource to return millions of dollars to Connecticut customers over Isaias response and yields to demand for local control

Eversource Energy has agreed to a $103.4 million proposed settlement with the state over its much-criticized handling last year of Tropical Storm Isaias, Gov. Ned Lamont and Attorney General William Tong announced late Friday.

The deal must be approved by the Public Utilities Regulatory Authority. Spokeswoman Taren O’Connor said the agency will not comment on the “merits or substance of the settlement until a later date.”

The deal is the latest in a string of actions following the Aug. 4, 2020, storm that left as many as 800,000 Eversource customers without power at its peak. The utility’s response enraged customers and state officials who sought significant monetary penalties.

State officials did not spare United Illuminating from criticism, but Eversource took the brunt of official censure.

The agreement directs Eversource to return $65 million to customers in two credits, on their December and January bills. The average credit will be $35.

The utility also agreed to not appeal a $28.4 million penalty imposed by state regulators due to the “inadequate response” to the storm, Lamont and Tong said. Ratepayers currently see this as a credit on their bills under “TS Isaias Performance Penalty.”

The remaining $10 million will be used to assist customers who are having difficulty paying their utility bills.

Eversource said in an emailed statement the settlement “provides tangible relief” for customers as the utility continues to deal with COVID-19 and prepare for the heating season.

“We are intent on winning over ‘hearts and minds’ in Connecticut by demonstrating our commitment to both customers and Connecticut leadership at a time when we must work together to deliver a new clean energy future,” the utility said.

The settlement also requires Eversource to establish a Connecticut-based president of the subsidiary Connecticut Light & Power and add state representatives to its board of directors. Eversource has offices in Hartford, but Connecticut officials, ratepayers and consumer advocates have long groused about the loss of a state-based electric company when Connecticut Light & Power’s parent company, Northeast Utilities, purchased Boston-based NStar in 2012. The merged company soon changed its name to Eversource.

Sen. Norman Needleman, co-chairman of the General Assembly’s energy and technology committee, said he hears Boston accents when listening to Eversource executives.

“Not that I don’t love Boston and the people up in Boston,” he said.

Needleman, D-Essex, said he has not read the settlement, but that PURA has been “pretty tough” on Eversource and is not bound by the agreement negotiated by Lamont and Tong.

A particularly tough penalty by PURA — a reduction in Eversource’s return on equity, a measure of profit estimated at costing $25 million to $30 million a year — could be eliminated as part of the settlement.

PURA is still reviewing the agreement, but an “initial read does suggest that it would preclude the authority from imposing” the financial hit, O’Connor said.

Lamont said his focus has been on accountability to Connecticut ratepayers by establishing greater local control and oversight.

“With this settlement, ratepayers get some well-deserved relief in the short term, and in the long term they get more security that something like this won’t happen again,” he said. “The reforms to CL&P required in this settlement will provide greater local control and oversight of the local utility, and an improved consumer experience for ratepayers.”

Tong said the agreement “forces significant governance changes at Eversource to bring much needed local control and oversight.”

PURA issued a scathing decision in April following an eight-month investigation of Eversource’s handling of Isaias. Regulators rebuked Eversource for numerous failures, with “inactions or deficiencies” creating a significant risk to public safety.

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