By the time the Connecticut legislative session is over in May, electric utilities Connecticut Light & Power and United Illuminating will be forced to meet a certain performance levels with penalties coming for failure to meet those standards
But the shape of those standards, how they’ll be implemented and the long-term effect on rates will be decided in the coming weeks.
The legislation drawn up in response to the two large-scale power outages in 2011 caused by storms in August and October passed out of the Energy & Technology Committee in March with the consent of all sides involved, including the utilities.
“There’s no question it will pass,” said State Sen. John Fonfara (D-Hartford), co-chair of the energy committee. “Everybody has an interest in it.”
But the General Assembly still must iron out specific points of contention, such as utility staffing levels, how much discretion to give regulators, and who will pay for the costs of improving the system to prevent further outages.
Among state officials, the dividing point is how specific the law should be in laying out the performance standards. Gov. Dannel Malloy’s plan gives more flexibility to the personnel at the Public Utilities Regulatory Authority to determine utility performance in the case of emergency. The plan offered by State Rep. Vickie Nardello (D-Prospect), co-chair of the energy committee, provides much more specifics on performance for size and duration of outages.
“I’m somewhere in the middle,” Fonfara said. “We’ll probably pass something that’s more in the middle.”
PURA officials have far greater expertise in utility management and performance, he said, so policymakers need to put their trust in them to decide how well the utilities are responding in emergencies.
“We don’t have to be so specific to take away the ability of regulators to take what they’ve learned and weigh policy after that,” Fonfara said.
Writing exact rules and standards for emergency response is difficult because each event will have its own unique problems and challenges, said Michael West, UI spokesman.
“That’s really the crux of the issue,” West said. “Every storm has been different.”
The need for performance standards came out of several investigations into the response to the 2011 storms, especially at CL&P. Tropical Storm Irene in August caused more than 750,000 ratepayers to lose power. The Oct. 29 snowstorm cut power to more than 830,000 ratepayers as heavy snow caused leafy tree branches to collapse on power lines. Some CL&P ratepayers were without electricity for as long as 11 days.
In the aftermath, CL&P President Jeffrey Butler resigned, and the utility’s parent company — Northeast Utilities — provided a $27 million rate credit to customers.
The lasting impact on CL&P and UI will be the performance standards with enforcement penalties put in place by the legislature and Malloy this year.
“We were never against the performance standards, but if we are going to have them, they need to be fair and reasonable,” said Mitch Gross, CL&P spokesman.
CL&P and UI have resisted efforts to increase their staffing levels. Both utilities staff only to levels needed for normal activities and rely on outside utilities to provide mutual aid in the case of emergencies. One of the major problems after the Oct. 29 snowstorm was the mutual aid system, as surrounding utilities were unable to send crews to help CL&P because of the large regional impact of the storm.
The mutual aid system remains the most cost-effective system, West said. Increasing staffing to emergency levels would be costly, especially because those workers wouldn’t have anything to do the majority of the time.
“We have the appropriate staffing levels year-round, and the ability to ramp up in times of an emergency,” West said.
Lost in much of the talk in the legislature about performance and penalties was the cost of the standards and how the utilities would pay for them, Fonfara said. If the state wants to increase staffing at CL&P and UI, then ratepayers will suffer higher electricity prices to cover those costs.
Connecticut has some of the highest electricity rates in the country; in 2010 and 2011, the state ranked behind only Hawaii in highest annual electricity prices, according to the U.S. Energy Information Administration.
For the past several years, policymakers and their constituents have been so focused on reducing rates that there was less investment in protecting the electric infrastructure against outages, Fonfara said. Proactive efforts such as undergrounding power lines and trimming trees were ignored in favor of slashing costs.
“A lot of what we do in the legislature is a reaction to something that happened,” Fonfara said. “There has to be a realization that there has to be an investment in the system to reduce the number of outages and the length of those outages.”
In March, Northeast Utilities agreed to invest $300 million in upgrading its electric system to help prevent future outages. Almost all of those costs will be passed onto ratepayers spread over several years.
After the two 2011 storms, CL&P, UI and the state Department of Energy & Environmental Protection increased tree trimming efforts around the state, trying to minimize the number of outages caused by down wires. Those efforts have been met with resistance by municipal officials and residents in places such as Simsbury, who don’t want their foliage removed.
These complaints from people who talk about wanting to prevent outages but are unwilling to bear the cost and consequence of the protective measures leaves the legislature and the utilities in a bind, Fonfara said.
“Nothing frustrates me more as a policymaker,” Fonfara said. “We live in a culture where people want their cake and want to eat it, too.”
Since this year’s legislative action came directly out of the public outcry following the 2011 outages, Fonfara fears the mild winter and the easy summer months will blur ratepayers’ hindsight, and everyone once again will focus on reducing electric costs at the expense of protecting the system.
“I am hoping the public will stay focused on this and push us to stay focused on this,” Fonfara said.
