Osten, Formica, Needleman Weigh in on Energy Legislation, as it Passes 35-0

HARTFORD — The State Senate passed a bill aimed at improving accountability for storm response of energy providers, like Eversource and United Illuminating, by a vote of 35-0, sending the bill to Gov. Ned Lamont for his signature.

As key legislators representing southeast Connecticut on the Energy and Technology Committee praised the strides they say the bill made, they admitted there was far more work to be done, and promised to consider deeper reforms in the regular session.

“This is an important first step,” said State Sen. Norm Needleman, D-Essex, co-chair of the committee. “There will be more, many more.”

In a statement, Eversource spokesman Mitch Gross said that the company appreciates and understands legislators’ concerns following Tropical Storm Isaias. Gross said the company believes the performance-based regulations will benefit customers.

“This new approach will hold us accountable if we fall short in meeting certain standards, and will acknowledge when we exceed the standards, which we believe will result in better service for our customers,” Gross said. “The legislation also includes an important provision that affirms PURA’s ability to adopt storm performance standards based on industry best practices.”

Needleman and State Sen. Paul Formica, R-East Lyme, congratulated each other and the other leaders of the Energy and Technology Committee for their bipartisan work on the bill.

“This is not a criticism of the linemen and women who work so hard under difficult conditions to restore power, and to keep power running each and every day here in the state of Connecticut,” Formica said. “This is about a management issue that we believe can be fixed.”

Formica said that as East Lyme’s first selectman during the three major storms of 2011 and 2012, the town experienced many of the same problems as during Tropical Storm Isaias. Needleman, who wasalso first selectman of Essex during the 2011 and 2012 storms, said it appears that Eversource has grown worse in communicating with both customers and town leaders.

The bill directs the Public Utilities Regulatory Authority, or PURA, to develop a system of “performance-based ratemaking” that would measure electric companies’ ability to meet customer needs, like reliability, cost and emergency response. PURA would use that system to evaluate requests for rate increases and determine reasonable rates of return for utility companies. 

Needleman said communication and collaboration with towns is going to be one of the critical components of performance-based ratemaking.

“I believe that PURA has been talking about and initiating a docket on this, but we’re sort of mandating that they do this now to make sure it’s not just one thing upon which they’re judged,” Needleman said. “We want them to be judged on an array of things that will improve customer outcomes across the state, and I think this is the perfect way to do that.”

Provisions in the legislation that would would increase the penalties that can be levied on energy providers for failing to meet performance metrics in a storm with widespread outages were met with more concern.

“There are some punitive measures in this bill to get the attention of some of the utilities, but we think that there are opportunities throughout the bill for all of the utilities to be able to adhere to this to develop good, new management practices,” Formica said.

Needleman said that warnings from utility companies that billions of dollars of penalties might be passed on to customers was “misinformation.”

“Let’s take the most recent Tropical Storm as an example. Ninety-six hours after, Eversource had roughly 255,000 customers still out of power,” Needleman said. “Even if we assumed all 255,000 customers were residential and thus entitled to these credits, Eversource shareholders would have had to pay approximately $19 million – roughly what the CEO of Eversource earned last year.”

According to Needleman, energy providers don’t want the public to think about the hundreds of millions of dollars of investment financed by ratepayers over the past decade to avoid such prolonged outages.

State Sen. John Fonfara, D-Hartford, questioned claims that the penalties imposed on Eversource would not be passed on to customers.

Language in the bill states that the costs of penalties and restitution to customers can’t be recovered in rates paid by customers.

Fonfara said that while such language appears definitive, the same is true of rulings from the United States and Connecticut Supreme Courts stating that when companies meet their obligations, they can recover costs from ratepayers.

Customers will have to pay the cost of the penalties, as well as the costs Eversource incurs in trying to meet the 96-hour standards, Fonfara warned.

State Sen. Cathy Osten, D-Sprague, argued that ratepayers needed to have a return on their investment, so tying executive compensation to performance is important. Osten said that Eversource CEO James Judge’s $19 million compensation in 2019 was more than what towns in her district would budget in a single year. 

“I do think we have to revisit this and come back a bit stronger in the next regular session,” Osten said.

Needleman and Formica promised more action to address high energy prices and the reliability of the electric grid in the regular session.

Osten said that staffing had been a concern raised by the Two Storm Panel established in the aftermath of Hurricane Irene and the 2011 October snowstorm, but that panel recommendations hadn’t been specific enough, so nothing was accomplished.

Osten asked that legislators make a specific plan to ensure adequate staffing at the electric companies and for workforce training. Needleman said those measures would be taken up in the regular session.

“Energy is complicated, and one bill is not going to do it,” Formica said. “And I propose that whoever is here on that committee in the January session, coming up in just a few short months, we’ll need to take a look at a variety of situations.”

Formica highlighted several issues for further work, including how energy is generated and transmitted, how to make renewables affordable and available, how to promote energy efficiency, how to make bills more transparent, whether undergrounding wires is feasible, and whether the ISO-New England wholesale energy market works for the state.

“What about our baseload? Are we going to shift away from fossil fuel and nuclear? What are we going to do, what is the plan for the next 10 years?” Formica asked.

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