EDITOR’S NOTE: A previous version of this story misstated Northeast Utilities’ insurance payout
Embattled Northeast Utilities says it will seek to recover $289.5 million in uninsured damage from two major storms from its New England ratepayers, according to a regulatory filing and company officials.
Over its Connecticut, Massachusetts and New Hampshire electric subsidiaries, NU incurred $202.5 million in restoration expenses from the Oct. 29 snowstorm and another $102 million from Tropical Storm Irene in late August, they say. Save for a $15 million insurance payout, the utility parent eventually will seek to recover the uninsured costs from ratepayers.
The rates for the Connecticut Light & Power subsidiary are set through mid-2012, and NU may defer seeking recovery of those costs until as late as 2014. The recovery costs for Irene and the snowstorm will be filed with regulators separately and spread out over a number of years, said NU spokesman Al Lara.
NU’s 8-K filing Wednesday with the Securities and Exchange Commission contains the most detailed public breakdown to date of the extent of the financial damage the freak snowstorm caused its New England network.
According to the SEC filing, NU subsidiary Connecticut Light & Power’s $162.8 million bill for damages and costs to restore power to 830,000 of its 1.2 million customers who lost power was the biggest of all NU’s operating units.
NU said it will seek to recover these costs from Connecticut consumers; but the company will shoulder its $30 million pledged to help Connecticut consumers recover from the storm, the filing said.
“Storm recovery is part of the rates every year,” said Al Lara, NU spokesman.
The $30 million fund was established after NU came under increasing scruntiny from the public and Gov. Dannel Malloy for its efforts following the snowstorm outages. With the fund, the company will give one-time bill credits between $100-$200 to roughly 200,000 customers who were without power after noon on Nov. 5.
From the fund, NU expects an after-tax charge of $18 million, which will not come from ratepayers or the company philanthropic arm, the NU Foundation, Lara said.
“Absolutely nothing is coming from rates. It will all come through shareholder funds,” Lara said.
NU subsidiary Western Massachusetts Electric Co. sustained $23.5 million in costs to restore 140,000 customers following the snowstorm. Public Service Co. of New Hampshire’s tab was $16.2 million to return power to 230,000 customers, the filing said.
In addition to these snowstorm costs, NU incurred $102 million from restoration efforts following Irene, said Lara. CL&P incurred $92 million of these costs while the remaining $10 million came from WMECO and PSNH.
Following Irene, NU received a $15 million payout from its catastrophic insurance provider to cover its restoration expenses. That payout maxed NU’s insurance payouts for the year, so the company wasn’t eligible for insurance from the snowstorm.
The company will seek to recover the remaining $289.5 million through rates from its Connecticut, Massachusetts and New Hampshire customers, Lara said.
These are the first estimated costs for the storm, and the amounts may change when the subsidiaries make their official filings with the appropriate regulatory agencies, Lara said. In Connecticut, the regulatory agency that would review CL&P’s request is the Public Utility Regulatory Authority.
NU has deferred the recovery of the storm costs until as late as 2014, Lara said. At that point, the recovery costs will be spread out over several years so the entire expense isn’t reflected in one year’s electric rates.
“It wouldn’t be the full amount all at once,” Lara said. “It is not unusual to carry a cost like that and break it up over five years.”
In a report released by Malloy’s office on Friday, Washington, D.C.-based Witt Associates said CL&P and NU were not prepared to handle an outage of this magnitude; did not in advance of the storm secure enough contract and mutual aid crews to help with the restoration efforts; and left one executive – Jeff Butler, now former CL&P president and chief operating officer – with too many duties during the restoration, impeding his ability to effectively accomplish any of them.
Meantime, in the same 8-K regulatory filing on Wednesday, NU has pushed back the projected closing date until next year for its $4.7-billion merger with Boston utility NStar, citing a delay in getting Massachusetts regulators to sign off on the deal.
NU expects approval from the Nuclear Regulatory Commission by the end of the year, but the company doesn’t expect Massachusetts to agree to the merger until sometime during the first quarter. The Massachusetts proceedings have been delayed as NU and NStar negotiate with the state Department of Energy Resources over its concerns regarding the financial and environmental benefits of the merger. NU and NStar also asked for several delays in regulatory hearings as the utilities work on storm restoration.
NU and NStar had an initial deadline of Oct. 16 to complete the merger, and the companies agreed to a six-month extension. The new deadline is April 16.
NU released all this information in the Wednesday SEC filing because Chief Financial Officer David McHale is speaking with investors in the coming days about these topics.
