For Immediate Release - December 11, 2012

AG Statement on the DPU Issuance of More Than $24 Million in Storm Fines Against Utility Companies

Decision Comes After AG Coakley Investigation and Recommendation of Record $30 Million in Fines; AG Applauds Decision to Return Fines Back to Ratepayers

BOSTON – Massachusetts Attorney General Martha Coakley today issued the following statement regarding the Department of Public Utilities (DPU) decision to issue record fines against National Grid, NSTAR and Western Massachusetts Electric Company (WMECO) for their failed storm response to the October 2011 snowstorm and Tropical Storm Irene.

“Today’s record fines issued by the DPU send a clear signal that utilities will be held accountable for their failures in preparing for and responding to major storms. Our investigation found that the utilities’ preparation for these storms was woefully inadequate and their slow responses to downed wires created dangerous public safety situations across the Commonwealth. We recommended record penalties against the utilities, and the fines issued today send a clear message that customers deserve better in future storms. We are also pleased that the DPU accepted our recommendation and has ordered that the fines be returned back to the ratepayers.

“While today’s action holds utilities accountable for prior storms, we are also pleased that the DPU has agreed with our recommendation to review the service quality standards utilities are held to moving forward. We will file our recommendations very soon in an effort to make sure people receive the service they are paying for.”

BACKGROUND:

After an investigation by the AG’s Office determined that the three major utilities failed to adequately prepare, respond, and communicate during Tropical Storm Irene and the October 2011 snowstorm, the AG’s Office recommended millions in fines against the companies with the DPU, which has the authority to impose the fine.

In July, AG Coakley recommended that the DPU levy $16 in fines against National Grid for alleged violations occurring during both storms. The AG’s office also recommended $4 million in fines against WMECO for its response to the October 2011 snowstorm.  In August, AG Coakley recommended to the DPU that NSTAR be fined close to $10 million for inadequate response to both storms.

Also in July, AG Coakley announced that her office was launching a review of the standards used to measure the overall service quality of utility companies. As part of that review, the AG’s Office has been studying alternative ways to measure service quality so that utilities improve the maintenance of their distribution systems and increase the quality of service delivered to customers. Improved distribution system maintenance can prevent or reduce the duration of outages. AG Coakley announced today that her office has nearly completed that review. 

Finally, in November, AG Coakley also asked that all fines by the DPU be returned directly to customers. AG Coakley argued that the new 2012 law should apply to the 2011 storms because it went into effect in August before the DPU’s final decision on the penalties. The law established that penalties levied against public utility companies for inadequate response shall be refunded to the Company’s customers, rather than given to the Commonwealth’s General Fund as under prior law.  AG Coakley had argued for this change as a matter of fairness for ratepayers.

The Attorney General’s Office of Ratepayer Advocacy is by statute the utility ratepayer advocate for Massachusetts and is authorized to intervene in or institute administrative and judicial proceedings on behalf of consumers in connection with any matter involving the rates, charges, prices or tariffs of any gas or electric company doing business in the Commonwealth.

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

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