“Deficiencies” and “Violations”: PURA Imposes Financial Penalties on Eversource for Failures in ​Preparation, Response to Tropical Storm Isaias​

Ruling Mandates ROE Reductions, Comprehensive Management Audits, Improvements to Emergency Response Plans

In August, tropical storm Isaias downed trees and wires around town, and caught Eversource unprepared for the devastation. Many in Wilton were without power for up to a week.

Citing “extensive evidence” that showed deficiencies in meeting standards of performance to ensure public safety, Connecticut’s Public Utilities Regulatory Authority (PURA) issued a ruling Wednesday, April 28, finding that both Connecticut Light and Power/Eversource Energy (Eversource) and United Illuminating (UI) failed in their responsibilities to the public in preparing for, and responding to, Tropical Storm Isaias last August.

Among the consequences PURA announced are significant financial penalties, including lower rates, and management audits and operational changes. In addition, state regulators said additional civil penalties and fines are possible in future phases of the proceedings.

The decision came following an eight-month investigation requested by Gov. Ned Lamont, in response to complaints from residents and municipalities statewide about how the utilities responded to the storm on Aug. 4, 2020. Isaias left more than 1 million residents and businesses without power for up to a week or more during the global COVID-19 pandemic and a summer heatwave.

Read all our coverage from last summer’s Tropical Storm Isaias and the impact the storm had on Wilton.

PURA officials said that testimony was overwhelming in the “universal frustration” with the utilities’ response to the storm. They considered written comments from the public as well as state and municipal officials–including the CT Conference of Municipalities and individuals towns like Wilton, which was named an intervenor in the investigation.

“The overwhelming majority of these comments cited monetary losses incurred from refrigerated items spoiling and other costs associated with buying fuel to back-up generators. Commenters also decried the inability to contact Eversource, and to a lesser extent, UI, to report outages, downed wires and other safety issues in the wake of the storm.

PURA’s decision concluded that “Eversource exhibited multiple deficiencies, failing to satisfy established performance standards for managing its municipal liaison program, executing its Make Safe responsibilities, communicating critical information to its customers, and failing to meet its obligation to secure adequate resources in a timely manner to protect the public safety and to provide for the overall public interest. The myriad failures were particularly poignant in the first 48 hours following the tropical storm when their inactions or deficiencies created a significant risk to public safety.”

PURA chair Marissa Gillett said the decision ordered the utilities to take several quantifiable steps in the current phase of the docket:

  • PURA applied a 90 basis point reduction to the return on equity (ROE) of Eversource. It also applied a 15 basis point ROE reduction to UI. Gillett said these basis point reductions will continue until the performance of both utilities “is enhanced and demonstrably better.” The decision requires Eversource and UI to modify their rates to reflect a downward adjustment of 0.90% and 0.15%, respectively.

The decision explains (p. 128) the much higher basis point reduction imposed on Eversource is because PURA doesn’t trust the utility’s commitment to improving. The decision notes a prior 15 basis point ROE reduction imposed on Eversource after ‘deficient’ response to storms in 2011-2012 [the Halloween Nor’easter in 2011 and Hurricane Sandy in 2012] “did not sufficiently incentivize Eversource to implement long-term improvements to its performance…” and that PURA “cannot reasonably rely on claims by Eversource” that it will improve its emergency response since many of the same problems were evident during Tropical Storm Isaias.

  • PURA ordered both utilities to take several specific actions to improve communication with individual customers and elected officials. The decision underscored the need for elected officials and municipalities to receive consistent and actionable information so that life-threatening blocked roads and other priorities can be addressed in a coordinated and timely manner.
  • PURA’s decision singled out deficiencies in communication by the utilities with medical hardship customers who rely on electric service for life-sustaining reasons.
  • Other directives addressed the deficiency in personnel on the ground, pre-staged and physically located in Connecticut, especially in the first 48 hours following a tropical storm. “There were deficiencies noted, especially with respect to Eversource,” Gillett said, and added that “the emergency response plans of both utilities must be updated pursuant to the directions and today’s decision.”
  • The report ordered comprehensive management audits in response to “violations of acceptable performance standards, and a number of instances in which the management of both Eversource and UI exercised imprudent or unreasonable judgment.”

Wilton was one of the CT towns hardest hit by the storm. For days afterward, high percentages of Eversource customers were without restored power, including some medically vulnerable residents, and several streets remained blocked and impassable–some as many as 120 hours after the storm hit.

Wilton Police Chief John Lynch met GOOD Morning Wilton on one blocked street 48 hours after the storm passed to relay a message to Eversource: “We need help. We need you to be responsible.”

Lynch told GMW about trying to contact the town’s Eversource representative but getting no response.

“This is the worst I’ve ever seen it, and I’ve been through at least four major storms. I understand the first 24 hours is difficult. But they’ve always cut-and-cleared within the first 48 hours. We had crews open the roads–not restore the power, but open the roads–so we can access them. It just seems like it’s falling on deaf ears and I know Wilton isn’t the only town having this issue. Our outage percentage is still 73%–it’s gone up if anything. But in the same breath, Eversource is claiming they’ve restored power to a couple hundred thousand people. I don’t know where that was,” he said at the time.

Scathing Criticism

Gillett said, “Make no mistake – the decision is a commentary on the deliberate decision by Eversource leaders to manage the company as a corporation, rather than as a utility with a statutory public service obligation. The decision is not a reflection on the commendable efforts of the line workers, field crews, damage assessors and others, who came from near and far to assist Connecticut in our time of need.”

She also said she will continue to remind the utilities who oversees whom. “I am not satisfied by the status quo of the utilities treating PURA simply as a body that they report information to – we are their regulator, and continuing to hold them to account will remain my mission for the duration of my service in this position.”

PURA’s vice chairman, John W. “Jack” Betkoski III, said he was moved after spending hours listening to “powerful testimony” of those impacted by the storms. “It pains me that once again during my long tenure as a PURA Commissioner, I am sitting in judgement of our electric utilities’ response to a tropical storm.”

Commissioner Michael Caron said that while PURA has “the utmost respect” for the utility employees who “worked many long and arduous hours bringing the people of Connecticut back online last August,” he blames leadership and management for Eversource’s shortcomings.

“When it comes to ‘Show Time’ and the spotlight goes on, Eversource proceeds to cower in the corner. Worse, decade after decade it is always the same usual suspects: lack of preparedness, lack of communication, lack of coordination and a lack of timely restoration. This is clearly and simply an illustration of a lack of leadership and an upper management team that is all too comfortable in placing profit over people,” Caron said.

Lamont issued a statement following the announcement from PURA. “PURA announced today what we have known since Tropical Storm Isaias hit our state last summer – Eversource and UI were not adequately prepared to serve their ratepayers to keep the lights and air conditioning on during a significant storm. Accountability is critical for all ratepayers across our state and that is what is happening now.”