For Immediate Release - November 01, 2012

AG Coakley: Penalties from Irene, Snowtober Should Go to Ratepayers, Not General Fund

BOSTON – Any penalties issued against National Grid, NStar, or the Western Massachusetts Electric Company (WMECo) for their failed responses to last year’s storms should be returned directly to ratepayers, Attorney General Martha Coakley argued today. 

AG Coakley previously has recommended to the Department of Public Utilities (DPU) that record fines be levied against the utility companies for their responses to Tropical Storm Irene last August and the October 2011 snowstorm. Under law, at the time AG Coakley filed briefs, any penalties levied against utilities by the DPU would have been returned to the Commonwealth’s General Fund. This summer, however, the Legislature passed a law establishing that any penalties imposed would be returned to ratepayers.

In a motion filed today with the DPU, AG Coakley argued that the 2012 law should apply to the 2011 storms because it went into effect before the DPU’s final decision on the penalties.

“People suffered through extensive hardships due to the failed responses of the utility companies during the 2011 storms,” AG Coakley said. “We have argued for record fines against the utilities for those failures, and believe any penalties levied should be returned to the ratepayers.”

In July and August 2012, after an investigation by her office, AG Coakley filed briefs with DPU recommending record fines of $16 million against National Grid and $9.7 million against NStar for their failed responses to Tropical Storm Irene and the October 2011 snowstorm. She also recommended a fine of $4 million against WMECO for its failed response to the October storm. The case is currently before the DPU for a final decision.

The Legislature passed Chapter 216 of the Acts of 2012, which became effective on August 6, 2012, when Governor Patrick signed it into law. The law, among other things, established that penalties levied against public utility companies as result of violations of the “department’s standards of acceptable performance for emergency preparation and restoration” shall be refunded to the Company’s customers, rather than remitted to the Commonwealth’s General Fund as under prior law.  AG Coakley had argued for this change as a matter of fairness for ratepayers.

In her motion with the DPU, AG Coakley said that the statute is remedial in nature and should be applied retroactively. The DPU previously had the authority to issue penalties and therefore the only thing that has changed is where the penalty monies go. The application of the new law would have no impact on the utility companies’ rights. As a result, since the DPU has not made a final decision on the penalties, AG Coakley believes the DPU should order that any penalties be returned to ratepayers based on the new law.

In addition to her investigations and efforts to hold utility companies accountable for their storm responses, AG Coakley also has argued that further changes need to be made to improve the quality of service by utilities moving forward. On July 11, AG Coakley 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.

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