For Immediate Release - September 04, 2014

AG Statement on Today’s SJC Decision Upholding Record Fines Levied Against Utilities for Storm Response

BOSTON – Massachusetts Attorney General Martha Coakley today issued the following statement in response to the Supreme Judicial Court’s ruling that affirms the Department of Public Utility’s (DPU) authority 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.

“Our investigation found that the utilities’ preparation and response to these storms was woefully inadequate. We recommended record penalties against the utilities, and the fines upheld today send a clear message that customers deserve better in future storms.”

BACKGROUND:

An investigation by the AG’s Office determined that NSTAR and National Grid failed to adequately prepare, respond, and communicate during Tropical Storm Irene and the October 2011 snowstorms. It found similar issues in WMECO’s response to the October 2011 snowstorm. AG Coakley recommended that the DPU levy $16 million in fines against National Grid, $10 million against NSTAR, and $4 million against WMECO.

On Dec. 11, 2012, the DPU issued more than $24 million in record fines against National Grid, NSTAR and WMECO.

Today’s SJC ruling upheld the vast majority of these fines, keeping in place nearly $22 million in total fines against the three utilities.  Most importantly, the decision upheld the DPU’s broad authority to issue these fines under state law. 

AG Coakley also announced in July of 2012 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 studied 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. The report by the AG’s Office was filed with the DPU on Dec. 13, 2012. On Aug. 27, 2014, the AG’s Office commended the DPU for adopting its recommendations into the proposed revised guidelines, offering additional changes before the rules are finalized. 

In November 2012, AG Coakley also asked that all fines by the DPU be returned directly to customers. The DPU concluded 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 DPU ultimately ordered that the fine should in fact be returned to ratepayers.

On Dec. 28, 2012, National Grid, NSTAR and the WMECO filed an appeal with the SJC against the fines issued by the DPU. Oral arguments were held in April 2014.

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.

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