For Immediate Release - August 07, 2012

AG Seeks Close to $10 Million in Penalties for Inadequate Storm Response by NSTAR

AG’s Brief Details Numerous Violations During Tropical Storm Irene and October 2011 Snowstorm

BOSTON – After an investigation by her office determined that utility giant NSTAR failed to adequately prepare, respond, and communicate during Tropical Storm Irene and the October 2011 snowstorm, Attorney General Martha Coakley’s office is seeking a $9.7 million fine against the company.

The AG’s Office made the recommendation in a brief filed today pdf format of AG Brief to DPU re: NSTAR Storm Investigations
with the Department of Public Utilities (DPU), which has the authority to impose the fine. According to the AG’s brief, NSTAR officials violated three separate storm response obligations under the company’s emergency response plan (ERP), namely:

  • Failing to identify the projected level of severity of both storms;
  • Failing to communicate effectively with customers and municipalities throughout the two major storms;
  • Failing to respond to public safety calls about downed wires.

“NSTAR’s preparation for these storms was woefully inadequate and much of the power loss suffered by hundreds of thousands of customers could have been avoided,” AG Coakley said. “The company’s slow response to downed wires created a dangerous public safety situation for towns across the Commonwealth. These fines are intended to hold NSTAR accountable for these failings and to send a message that customers deserve better in future storms.”

If granted, the penalties cannot be passed on to NSTAR customers and must be borne by shareholders. Currently, any penalties assessed by the DPU will be paid to the Commonwealth’s general fund because the AG’s investigation started prior to the Storm Response Bill being signed into law yesterday. Due to an emergency preamble, the bill went into immediate effect and all recommended fines for future storms will be paid back to ratepayers through a credit.

“This bill ensures that direct rate relief is provided to consumers who have been negatively affected by poor emergency storm response,” AG Coakley said. “It will also greatly assist our efforts to protect ratepayers and ensure public safety by requiring utilities to implement better defined plans to communicate with customers and local municipal officials regarding response efforts during major storms at reasonable costs.”

According to the AG’s brief, even though each storm was classified as a level five event, NSTAR did not prepare staffing levels or respond appropriately. As a result, emergency calls about downed wires were not responded to within a reasonable amount of time because of inadequate staffing levels.

Officials also failed to recognize that the number of affected customers was two to five times the average amount for a level five event equaling 506,000 customers without power during Tropical Storm Irene and 227,000 customers during the October snowstorm. A level five event is defined by NSTAR as 100,000 customers without power for more than 72 hours.           

During Tropical Storm Irene, there were more than 1,000 priority downed wire calls and 235 of those calls were not responded to within 24 hours, creating dangerous public safety decisions for several municipalities. The October 2011 snowstorm brought close to 750 priority downed wire calls, 57 of which were not responded to within the 24-hour mark.

The AG’s brief also alleges that for six days during Tropical Storm Irene and five days during the October 2011 snowstorm, NSTAR failed to appropriately communicate with local officials. During both storms, the City of Newton experienced significant trouble receiving clear and accurate information from NSTAR regarding a number of issues including downed wires and clearing streets of fallen tree branches and other debris.

City of Newton officials testified in hearings that the company’s communications resorted to “reactive” rather than “proactive” statements with “factually untrue” information regarding its storm response efforts. Ultimately, even NSTAR’s estimated times of power restoration to Newton officials directly conflicted with messages on the company’s website.

The AG has recommended to the DPU a fine of a little more than $4 million for NSTAR’s response to the October 2011 snowstorm and $5.7 million for Tropical Storm Irene.

AG Coakley recently recommended to the DPU that fines should also be levied against Western Massachusetts Electric Company for its response to the October 2011 snowstorm and National Grid for alleged violations occurring during both storms.

On July 11, AG Coakley also announced that her office has begun a review of standards used to measure the overall service quality of utility companies to determine if they are adequate or effective.

“The fact that utilities can achieve high marks from the DPU under the existing standards, yet sustain devastating long term outages such as the ones we saw in these storms, shows that something is not working right,” said AG Coakley. “Utilities routinely request and receive rate increases to improve their infrastructure and overall service quality. It’s time to make sure ratepayers are getting the benefits they’re paying for.”

Assistant Attorneys General Sandra Merrick, Charlynn Hull and Paul Stakutis of the AG’s Energy and Telecommunications Division are handling the recommendations to the DPU.

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