The Connecticut Light & Power Co.'s "deficient" response to two storms last year may mean a lower rate of return for investors in Northeast Utilities, the electricity distributor's owner.
The Connecticut Public Utilities Regulatory Authority said Wednesday in its final decision on CL&P's preparation for and response to Tropical Storm Irene and an October nor'easter that it will consider forcing the company to pay for its poor performance last year by imposing financial penalties when it next tries to raise its rates for electricity.
CL&P was "deficient and inadequate" in preparing employees for service restoration as well as in its communication to customers, the agency said in its decision.
"The authority concludes that CL&P's performance in the areas regarding communication to customers, other service providers and municipalities was so deficient as to be less than adequate and suitable and to warrant regulatory sanction," the decision said.
The agency indicated the sanction would likely take the form of a reduction in the company's allowed return on equity "as a penalty for poor management performance and to provide incentives for improvement."
CL&P said in a statement by spokesman Mitch Gross that the company already has taken steps to improve its emergency response. The procedures were put to the test during a four-day statewide drill last month that state and local officials applauded.
"We continue to make significant upgrades to our system and improvements to our emergency response plan that will have a positive impact on our ability to restore power in future storms," Gross said in an email.
Regulators said they will consider CL&P's upgraded plans and procedures when the company seeks recovery costs for damage caused by last year's storms, but they also will consider CL&P's deficient response to the emergency. It ordered CL&P to develop a plan to improve the company's response to future storms, including issues ranging from tree trimming to lining up mutual assistance.
Gross pointed out in a phone interview that CL&P has not sought a rate increase since the storms, nor has it yet filed to recoup storm-related costs. Whether it will seek compensation for the costs is "still to be determined," he added.
The utility regulator did not outline sanctions for United Illuminating Co., but said it reserves the right to take the company's performance into account when it reviews future requests to recover storm-related costs.
The agency also outlined steps that other utilities can take - including the telecommunications, cable service, gas and water companies - to improve storm responsiveness. Among the orders were that several of these companies set up websites devoted specifically to communicating information about storm-related issues.