Lamont, top utility regulator back performance-based pay

Bill would have utilities paid based on cleanup, power restoration effort

The Lamont administration and Connecticut’s top utility regulator said Tuesday they will back state legislation that would penalize electricity utilities for failing to prepare properly for storms and restore power quickly.

The draft measure, responding to public outrage at large-scale power outages after Tropical Storm Isaias in August, would require the Public Utilities Regulatory Authority to establish by September 2022 performance-based rate-making rewarding Eversource Energy and United Illuminating for working quickly to restore power and imposing penalties for extended outages.

Eversource and UI have defended their storm response. They say that with the exception of the unusual October 2011 snow storm, Isaias

was the biggest storm to hit Connecticut and power was restored more quickly than in previous disastrous storms.

Jim Judge, chief executive officer of Eversource, told lawmakers on a daylong web-based “listening session” that tight deadlines established to restore power would result in a “massive cost” to pay for hundreds or thousands of crews and bury power lines.

“This cost will hit customers hard, very hard, particularly customers in need who you are thinking will benefit from these payments and penalties,” he said.

In written testimony, UI said its emergency response plan was developed “based on comprehensive planning and rigorous review” andthat it may be time to review the plan and determine if it should be revised to “reflect changing priorities in the balance between performance and cost.”

Performance-based rates “must have clear and measurable metrics” and must account for the severity of the storm and resources available to UI, the utility said.

Katie Dykes, commissioner of the Department of Energy and Environmental Policy, told the General Assembly’s energy committee that establishing performance-based rate-making is a “cornerstone of the reform that’s necessary to assure that the utilities are driven not just to earn based on how much infrastructure they build, but based on how well they perform.”

Gov. Ned Lamont has called for performance-based regulation.

The legislation proposes to establish standards and metrics for objectives that may include reliability, emergencyresponse, cost efficiency, affordability, customer satisfaction and other factors.

Marissa Gillett, chairman of the Public Utilities Regulatory Authority, said the agency backs the legislation in its entirety. She cited a section authorizing regulators to fine utilities for failing to comply with “any standard of acceptable performance in emergency preparation or restoration of service.”

Penalties will “hold utilities accountable,” she said.

The legislation requires utilities to credit residential customers $125 a day for service outages more than 72 hours after an emergency, exempting emergencies causing outages to more than 870,000 customers.

Utilities could not recover costs for credits, which Gillett criticized, saying utilities should not be allowed to charge customers to recoup payments to compensate for outages.

Utilities also would be required to provide up to $500 for any medication expiring or spoiling due to a power outage of 72 hours or longer. Claims for losses of more than $250 must have evidence of payment.

Dykes told legislators she supports a provision of the legislation requiring regulators to initiate a proceeding to consider an interim rate decrease, low-income rates and economic development rates for nonresidential customers.

PURAwould extend its deadline to have hearings on mergers or other changes in corporate control of utilities to 90 days from 30 and its deadline to approve or disapprove mergers to 350 days from 120.

Gillett said current rules for how long regulators have to review mergers is “absurd, to be frank, and grossly out of alignment with time lines of other states.”

Eversource pushed back, saying this would make it difficult for the utility to take advantage of low lending rates that would ultimately cost ratepayers.

And the measure would establish the post of independent consumer advocate on the utilities’ boards of directors; require the Public Utilities Regulatory Authority to establish minimum staffing levels for electric utilities, including linemen and tree trimming crews; direct utilities to establish regional service centers permanently staffed by Connecticut-based workers.

Lawmakers are planning a special legislative session later this month to take up the energy measure. Lamont said at a briefing at the Capitol he would put “energy at the top of the list” for lawmakers to consider.

The public hearing was the third in recent weeks by the legislature’s energy committee and PURAreviewinganelectricrateincreasethattook effect July 1 and the utilities’ response to Isaias.