October Snowstorm Could Lead to Higher Electricity Rates

Connecticut Light & Power Storm Cost Recovery faces regulator scrutiny as PURA reviews a $100 million nor'easter outage restoration bill; SEC filings, investigations, and ratepayer protections may determine reimbursement and cost allocation across customers.

A rare October snow storm that caused record-breaking power outages could lead to increased electricity costs in Connecticut, where residents who endured days in the dark and cold already pay higher rates than any other state in the continental United States.

The price tag is expected to run to $100 million or more, raising concerns about increased costs in Connecticut for the 12-day campaign that involved crews from as far as Colorado and Michigan in restoring power to more than 850,000 customers.

In a recent financial filing, the parent company of Connecticut’s main electric utility said it expects to recover costs for the Oct. 29 snow storm by going through regulators. With multiple investigations probing the utility’s storm response and metering accuracy across the service territory, however, the state’s energy commissioner and a key state lawmaker told The Associated Press that claims of mismanagement and subpar performance — if proven true — could block the company from passing costs on to ratepayers.

“We don’t know if it’s going to be borne by ratepayers through potential rate increases in some cases. I think it’s very premature to make that statement,” said Connecticut state Rep. Vicki Nardello of Prospect, co-chairwoman of the legislature’s energy committee. She said Connecticut Light & Power has insurance against storms and a reserve account, and state energy regulators can prevent the utility from passing storm-related expenses on to customers if they are deemed to be “imprudent.”

The rare, pre-Halloween nor’easter dumped up to 2 feet of wet, heavy snow that snapped tree limbs and power lines, breaking a state record for the number of customers left in the dark by a single storm that had been set only two months earlier when the remnants of Hurricane Irene slammed the Connecticut shoreline. A week after the storm hit, 176,000 customers were still without power. Electricity was restored to virtually all customers by Thursday.

Connecticut Light & Power has described it as the region’s worst October snow storm in centuries.

Northeast Utilities, the Hartford-based parent company of CL&P, said in its filing with the Securities and Exchange Commission that it expects the storm costs will meet the criteria for reimbursement. A CL&P spokeswoman, Katie Blint, said the utility will make its case to the Public Utilities Regulatory Authority and, as the AG seeks a $4.6M fine related to storm fallout, it will be up to that agency to decide whether ratepayers will bear some of the burden.

An NU spokesman, Al Lara, said it will take weeks or months to determine the total cost of the restoration effort. He said he expected the regulatory review or any federal power complaint review would not be influenced by the investigations targeting the outages.

“I would expect the process to be independent,” he said.

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