Eversource CEO expects regulators to allow $341M spent on Tropical Storm Isaias to be collected from ratepayers

The Office of Consumer Counsel urged regulators this month not to approve costs assigned to ratepayers when the utilities were at fault in preparing for the storm.

“Unfortunately, there is an additional adverse effect of the (utilities’) storm response yet to be incurred: the financial impact upon Connecticut ratepayers, who should not carry the burden of costs arising from areas of that response that were impaired by inadequate communications or insufficient planning,” the agency said in a filing.

PURA is investigating the response by Eversource and United Illuminating to the Aug. 4 storm. It has not yet begun considering how much ratepayers will be required to pay for power restoration, prompting Eversource to protest regulators’ demands for cost details as part of the separate probe.

Under a new state law, the company is required to pay residential customers a maximum of $250 for spoiled food and medication due to power outages lasting more than four days and credits of $25 a day for residential customers for outages lasting more than 96 hours.

The largest share of Eversoure’s cost was $206 million for contractors and vendors to restore power after the storm that at its peak left 875,000 customers without electricity for days. About 1 million were affected, including customers of United Illuminating.

“We expect, as we have in the past, that cost recovery would be allowed for these costs, as they were prudent,” Judge said in response to an analyst’s question on a conference call discussing Eversource’s fourth-quarter and 2020 financial results.

“We’re confident that we assembled the largest workforce ever in the state of Connecticut for that storm response and the vast majority of the costs that are being reviewed have to do with bringing in those external resources either from other utilities or from contractors,” he said.

Costs also included $31 million for labor, $13 million for food and lodging, $7 million for payroll overhead and $6 million for materials, Eversource told PURA in its lengthy filing. Eversource said it estimates at least $75 million is not yet billed by outside vendors, representing about 40% of external crew costs.

Eversource told PURA it submitted cost estimates for the “limited purpose” of complying with regulators’ “assertions that the storm costs and associated documentation are relevant to its investigation.”

Utilities typically submit cost details in a separate filing to persuade regulators to allow the companies to recover the expenses from ratepayers.

Sen. Norm Needleman, co-chairman of the legislature’s energy and technology committee, said he is “content with” legislation that imposed more restrictions on forcing ratepayers to pay for utilities’ storm-related costs.

“If PURA deems it a reasonable expense then it will approve (a rate) recovery,” he said.

Legislators, angry at the response to the storm by the utilities, enacted legislation signed by Gov. Ned Lamont that provides residential customers with a maximum of $250 from electric utilities for spoiled food and medication due to power outages lasting more than four days. The bipartisan bill also includes credits of $25 a day for residential customers for outages lasting more than 96 hours.

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