For Immediate Release - November 12, 2009

GOVERNOR PATRICK PROTECTS MASSACHUSETTS CONSUMERS WITH SIGNING OF NEW UTILITY OVERSIGHT LAW

New statute codifies storm plan requirements, authorizes Department of Public Utilities to levy financial penalties, and gives courts ability to appoint temporary receivers if utilities fall short

LUNENBURG - Thursday, November 12, 2009 - Accompanied by officials and residents of Lunenburg and surrounding areas affected by an ice storm that led to lengthy power outages last December, Governor Deval Patrick today signed legislation that strengthens consumer protections, provides the necessary tools to the Department of Public Utilities (DPU) to levy financial penalties if utilities do not follow approved storm plans, and puts into law existing requirements for utility storm restoration plans.

On the heels of a DPU order this month that faulted Unitil - the utility that serves Fitchburg, Lunenburg, Townsend, and Ashby - for failing to provide safe and reliable service in preparation for and response to the December 2008 storm, the new law allows courts to appoint a temporary receiver in the event that a utility of Unitil's size is unable to perform its duties.

"Last year I saw firsthand Unitil's disappointing response to December's storm and the hardship and suffering that it caused," said Governor Patrick. "With these new powers, utilities can be held accountable to their customers."

Following the December 2008 storm, Governor Patrick requested that the DPU investigate Unitil's performance. In a sweeping order issued on November 2, 2009, the DPU ordered the company to conduct at its own expense an independent management audit, marking only the second time in 50 years that the DPU has invoked its power to order a comprehensive audit of an electric utility. The audit must address the company's management and control, and specific areas where its performance was found severely lacking. Results of the audit could inform future actions by the company's board of directors and the Commonwealth.

"The 2008 Ice Storm caused significant damage and extreme hardship for the customers of Lunenburg, Ashby, Fitchburg and Townsend while exposing a utility that failed to plan for such an event and was unprepared to adequately respond. The bill signed into law by the Governor today provides the regulatory framework and accountability to ensure that history does not repeat itself in north central Massachusetts or any other part of the Commonwealth. We appreciate the leadership of the Legislature-particularly that of the local delegation and the Chairmen of the Joint Committee on Telecommunications, Utilities and Energy-in addressing this important issue," said Attorney General Martha Coakley.

"We can never have a repeat of December 2008," said Senate President Therese Murray. "Utility companies have a responsibility to respond to their customers. This bill makes sure they live up to that responsibility."

"This new law will help protect people when power outages due to extreme weather strike," Speaker Robert DeLeo said. "With its passage, Governor Patrick, Senate President Murray and I are standing together to ensure that the state has the right tools to address weather-related utility problems and that utilities make adequate plans to prepare for severe storms."

"This legislation addresses shortcomings in our legal framework that came to light during the DPU's recent investigation," said Secretary of Energy and Environmental Affairs Ian Bowles, whose purview includes the DPU, an independent regulatory department. "These important changes will strengthen the DPU's hand in dealing with any future deficiencies in service on the part of public utilities, and I commend the Legislature and the local delegation in particular for taking prompt action to enact them."

The DPU concluded that the primary contributor to Unitil's failure was lack of planning and training for a significant storm event, which left it unprepared to respond to the magnitude of damage caused by the storm. The order made clear that the company's poor performance would weigh heavily during DPU review of future Unitil filings seeking to recover storm-related costs, and in a rate setting case expected within a year.

The new law creates the following new powers for state regulators:

  • Under a declared state of emergency, the Governor may authorize the DPU Chairman to issue extraordinary temporary orders on utilities to expend funds and redeploy resources to restore service. These actions could include expenditures for personnel, equipment and other assets of an alternative utility to assume responsibility for service restoration if the Chairman determines the affected utility is incapable of restoring service in a timely manner.

  • Failure to carry out such an order is subject to investigation and a penalty of up to $1 million per violation.

  • The Attorney General on her or his own initiative, or by petition of the DPU or municipalities, may petition the Superior Court to appoint a temporary receiver for small utilities (fewer than 100,000 customers) if they fail in their duties.

  • The Act codifies existing requirements for utilities to file storm restoration plans and creates significant new financial penalties for late filing and for any failure to implement such plans - the latter is capped at $250,000 per day per incident, with a maximum penalty for a series of violations of $20 million.

  • Each utility is required to submit annual emergency response plans for DPU review and approval. Failure to do so carries a $500 penalty for each day the violation continues.

"It is important that we hold our utility companies accountable for their emergency response plans, and that we have oversight and adequate penalties in place. I am grateful for the work of the Fitchburg area delegation striking the right balance in this bill," said Senator Michael Morrissey, Senate Chair of the Joint Committee on Telecommunications, Utilities and Energy.

"If the utility companies cannot get the job done, we will now have the ability to put in a receiver who will get the job done," said Representative Barry Finegold, House Chair of the Joint Committee on Telecommunications, Utilities and Energy.

"The passage of this legislation in less than a year is symbolic of the level of importance this matter had for our area delegation of state legislators. We are giving the DPU the tools they need to hold companies such as Unitil financially responsible in instances such as last December. I am thankful to all my colleagues that worked alongside me to make sure this got done and that it got done correctly," said Senator Jennifer Flanagan.

"I am very happy with the legislation we passed on Tuesday regarding accountability for public utility companies. Our experience in Lunenburg was horrific but it has served as an important example of how our current system lacked much needed protections. This legislation includes multiple layers of protection, oversight and penalties for companies unable or unwilling to serve their ratepayers. Governor Patrick interceded on our behalf in December and has continued to support our efforts and it is fitting that he sign this important legislation in Lunenburg," said Representative Jennifer Benson.

"This is a victory for the ratepayers in Fitchburg, Lunenburg, Townsend and Ashby. We hope we never repeat the events of December of 2008, but if we ever do this bill will certainly provide much greater relief to the citizens of Fitchburg than ever before," said Representative Stephen DiNatale.

"I am very pleased that the efforts of our local delegation resulted in a bill that will protect ratepayers through a combination of fines, performance standards, and most importantly, the threat of receivership. The recent DPU order regarding Unitil's totally unacceptable performance during last year's ice storm clearly showed that the local delegation was right to file this bill and to work successfully for its swift passage," said Representative Robert Rice.

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