Eversource took a pounding on Monday during a Zoom public hearing hosted by PURA (Public Utilities Regulatory Authority).
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Both Republican and Democrat elected officials called out the utility during nearly 90 minutes of comments.
With power outages taking more than a week for Eversource to restore following Tropical Storm Isaias, and with the backdrop of both a global pandemic and a heat wave, and with customers having just received electricity bills with sharp increases, the hearing was timely.
US Senator Richard Blumenthal suggested freezing fees and ordering refunds to consumers. He described Eversource’s response to Isaias was an abject failure.
“The time for tinkering is over,” he said, going on to suggest PURA consider breaking up Eversoruce and creating a consumer based utility, perhaps with public ownership.
“In Norwich the rates are 24% lower and response times in repair are much higher – two days compared to 8, 9, or 10 days on the part of Eversouce,” Blumenthal said of Norwich Public Utilities, which is owned by its customers and the City of Norwich.
“There was clear warning that an extraordinarily severe storm was coming,” he said, adding rates should be linked to performance.
“There is nothing novel or untried about it, as the staff of PURA know well. These kinds of cooperative ownerships and locally responsive utilities have precedent,” he said.
“PURA should do a break up of Eversource, establish a public utility solely for the benefit of Connecticut rate payers, and enact a performance based model, without any guaranteed rate of return.”US Senator Richard Blumenthal
“It is deeply and flagrantly unfair (customers) are paying the highest rates in the continental US for some of the worst performance,” Blumenthal said. “This storm, and the failure of Eversource to do better, while paying its top executives tens of millions of dollars – and after a quarter when its profits were seven times what they were in the previous comparable period – is a call to action. It should be an alarm bell for consumer protection.”
Governor Lamont said the days of getting a 9.5% rate of return for just showing up are over. He said he was shocked by the disconnect between pay and performance.
Compensation for Jim Judge, CEO of Eversource was $16.8 million in addition to a $3 million bonus this year, totaling nearly $20 million.
Lamont said the recent power outages had impacts beyond turning off lights.
“It was nursing homes that were on the last gasp of a generator, and seniors with 90° weather and whether they’d be able to keep going…the water systems and Katie Dykes (DEEP commissioner) saying out filtration systems and fresh water and sewage treatment were at risk. We also heard from individuals, and many people rely on wells, and without electricity couldn’t get water. And seniors at home with medications in the refrigerator that wouldn’t survive.”Connecticut Governor Ned Lamont
Lamont recalled his experience with Eversource when he ran a cable company. “We had remote status monitoring. We could tell what end-user had service and who didn’t remotely,” he said. “We were driving all over the State waiting for Eversource linesman often driving down from Maine.”
Lamont urged PURA to act. “Let’s not let this crisis go to waste. Let’s totally reform how we do regulation.”
He said Eversource’s response after Isaias was not an aberration, and that given climate change storms will become the norm.
State Rep Steve Meskers, (D-150) whose district represents the shoreline in Greenwich, agreed with Senator Blumenthal that a consumer-based utility should be explored.
“I’m not convinced we have a good alignment between the senior management of Eversource and the shareholders and ratepayers,” he said. “We need to make sure the ratepayers aren’t the sole victims who suffer from structure and mismanagement in the company.”
Gail Lavielle, (R-143) representing most of the town of Wilton and parts of Westport and Norwalk, said it didn’t look as though Eversource had been investing its rate increases in improvements.
She said during days of Isaias outages, it was absolutely shocking that communication was so badly neglected by Eversource.
“Everyone was both literally and figuratively in the dark during this experience,” Lavielle said.
Lavielle said she was previously senior VP of Corporate Affairs worldwide for the water utility division of Suez Environment. “I know something about the rules for crisis communications that exist. Eversource broke every one of them.”
“The first thing to do is come out immediately to the press and on the radio and say the company is sorry for what happened. …Explain that damage must be fully assessed before restoration begins and make sure to text the message to all customers. Assign a dedicated company contact person to every town. Have them keep the lines open permanently…If Eversource did underestimate the power of the storm, say so. Say, ‘We made a mistake. We’re doing everything we can to fix it.'”
She said Eversoure must get a list from each town of residents who are infirm, have disabilities or medical issues.
“Get them immediate help. As early as possible let them know which town facilities will be restored first, and in what order. Then come back with the restoration order for neighborhoods and streets. If work is not being done at night, say so. Tell the truth.”
She said the utility must have human beings available on the phone to answer customer calls around the clock.
“Hold daily press briefings and make sure they’re broadcast on radio. Restoration estimates need to go promptly,” she added. “Above all, do not hide the company’s CEO. His absence was shocking…This isn’t customer service, it’s abuse.”
“You’re there, maybe you can do something to stop this company’s unacceptable behavior,” she said to the PURA officers.
Greenwich First Selectman submitted his comments in an email as follows:
Dear Chairman Gillett, Vice-Chairman Betkowski, and Commissioner Caron,
Let me begin by thanking you all for your service to our state, and taking on what can be, at times, a tough job regulating investor owned utility and telecommunication companies. With each company having to strike a balance between duties to shareholders and ratepayers, the only ratepayer guardian is The Public Utilities Regulatory Authority (PURA).
With each significant weather event, it becomes clear that the present system is not working. When Super Storm Sandy hit in 2012, your agency demanded a better plan and performance of Connecticut Light and Power (pre-merger before the company became known as Eversource). Eight years later, we find ourselves in the same position. While I respect the right of shareholders to realize a decent return on investment, and the right for just compensation for management, that realization is coupled with an
expectation of equivalent performance for the ratepayer. What we have continuously witnessed, unfortunately, is an emphasis on the former at the expense of the latter.
In addition to better planning, more accurate forecasting, and an equal focus on the ratepayer, it is time to try new solutions, ones not seriously considered up to now, but desperately needed, those ideas that should be on the table for discussion include breaking the company up in to smaller units, and burying the lines wherever and whenever possible.
Regarding the former, if the excuses being offered time and again are accurate, then changing the business model could be called for to address the reasons stated by Eversource as to the dismal performance. If calling in extra crews (from Canada and wherever else) is left up to estimates on the
storm strength, then we will see many more “bad” calls. The excuse given by an Eversource spokesman was that it makes for bad fiscal policy to err on the side of caution as it would reflect poorly on the balance sheet. That quote, which I paraphrased, is all you need to know as to what is wrong with the thinking of the brain trust at Eversource. It will usually leave the ratepayers on the short end of the stick.
Concerning the latter, we hear that underground wires initiatives are too costly. I would counter that by keeping them above ground, lost power and productivity, spoiled food, and public safety add up to as much, if not more, cost. I recognize that flood zones and areas where ledge is present may not be conducive to underground utility wires, but placing them in other areas where either condition is not present would cut down considerably on lost time due to outages as there would be less area to whichpower would need to be restored.
I believe PURA should incentivize Eversource to endeavor to bury lines in our state wherever possible, and to do so now. A plan should be developed by working with all 169 municipalities to see when and where roads are scheduled to be dug up. That, as an Eversource representative told me at an
underground wire forum I hosted many years ago when I was in the Connecticut General Assembly, is the time to bury them.
I, along with many Connecticut residents, have no issue with the aforementioned CEO compensation and shareholder return on investment if performance is in line with them. However, when we see that revenues were up a combined 11% since 2016, and the CEO being paid $16.8 million on top of a $3 million bonus awarded this year that totaled nearly $20 million, with a continued dismal response to storms, then the patience ends. On top of all this, the recent rate hikes may be the ultimate slap in the
face to every ratepayer in Connecticut.
The time for half-measures, empty rhetoric, and or ignoring the obvious discussions that can, I believe, result in positive solutions, has passed. The people of the State of Connecticut rightfully and respectfully call for change now.
Thank you for your time and consideration.Fred Camillo
First Selectman, Town of Greenwich