A release from Senate Democrats outlined proposed “Take Back Our Grid” legislation, which reflects a new approach to utilities.
Senate Democrats said that for decades, every major storm or weather event in Connecticut has produced widespread and prolonged power outages, and that after each storm passes, utility companies claim to have learned their lesson, but their performance continues to disappoint. “It’s time to demand better,” they said.
On Tuesday State Senator Alex Kasser (D-Greenwich) announced her support for the “Take Back Our Grid Act,” proposed legislation to ensure that Connecticut’s public utilities are truly accountable to the customers they serve, rather than to shareholders
“After Tropical Storm Isaias, I received dozens of calls and emails from homeowners who had done everything right and still were not getting the response they deserved from Eversource and Optimum. A week later, some still did not have full service restored,” Senator Kasser said in the release. “This was an epic failure of the public utilities and, to a large degree, it was avoidable. For too long, utility companies have been enriching themselves at the expense of consumers and taxpayers. Major reform is needed to recalibrate the power dynamic in favor of customers; that’s what the Take Back our Grid Act does.”
Kasser vowed she would fight for the bill along with her colleagues and continue to fight for smart investments in Connecticut’s infrastructure, “From roads and rails to storm resiliency – with a much-needed State Infrastructure Bank.”
Senate Democrats said the Take Back Our Grid Act would:
I. Justice for Ratepayers: Hold Electric Distribution Companies Legally Liable
Currently, the law essentially absolves electric distribution companies from being held liable for costs incurred by citizens during extended power outages. That must change. Electric distribution companies are a critical infrastructure supplier, and our legislation will hold them liable for any interruption of service.
Compensation for Consumers & Required Back-Up Generation
During power outages, this legislation requires the electric distribution companies to compensate each residential customer who loses power and does not have it restored within 48 hours $100 a day until their power is restored. The legislation also requires the companies to compensate customers up to $500 for medication that expires due to a commercial power outage lasting 48 hours or longer. In neither case will the company be able to seek rate recovery for this customer compensation. While our legislation cannot assist customers harmed by the utilities’ response to Tropical Storm Isaias, we urge power companies to voluntarily embrace this opportunity to do right by their customers and offer compensation for food and medication spoilage.
Furthermore, for those residential customers with “critical needs” (i.e. medical hardship customers), the electric distribution company will be required to provide back-up generation until those customers have regular electric service again in the event that a commercial power outage is expected to continue for more than 24 hours. The legislation further proposes more permanent solutions for “critical needs” customers served by consistently unreliable portions of the electric grid. If a feeder experiences a threshold number of outages in a calendar year, the electric distribution company will be required to install, at no cost to the customer, an on-site energy storage device with islanding capabilities and at least a 5kW power rating for all critical needs customers on the feeder.
Bolster the Civil Penalty Authority of PURA
Existing statutory authority permits PURA to impose civil penalties on the electric distribution companies, and prohibits the companies from recovering those penalties from ratepayers. If a civil penalty is issued by PURA in the course of investigating the electric distribution company’s emergency preparation and restoration of service, this legislation authorizes PURA to return that penalty to customers in the form of an immediate bill credit, energy assistance grants, and/or to offset the cost of necessary system upgrades.
Change Legal Liability of Utilities
Currently, electric distribution companies include overly broad disclaimers in their tariffs that attempt to limit their liability for direct or consequential damages resulting from the interruption of service. The companies must be prohibited from attempting to shirk their financial liability for damages incurred by customers as a result of the companies’ acts or omissions.
II. Reforms and Requirements for Electric Distribution Companies
Require Minimum, In-State, on Direct Payroll Staffing Requirements
For over a decade, our electric distribution companies have outsourced the power grid management to sub-contractors, while reducing their in-house, directly employed grid and powerline service workers. This legislation will require power companies to maintain proper staffing on their direct payroll to ensure rapid, local response for both expected and unexpected events. The minimum staffing requirement will be imposed by PURA, in consultation with the legislature, and will become effective immediately upon issuance of a PURA decision. The minimum staffing requirement will be determined using a cost-benefit analysis that looks at resources expended in response to the last five storm events classified as a Level 3, 4 or 5, as well as damages suffered by citizens during those outages prolonged by the unavailability of in-state personnel.
Additionally, our legislation requires the electric distribution companies to reopen shuttered regional service centers and suitably staff them with Connecticut-based grid and powerline service workers employed directly by the company and answerable to a permanent, Connecticut-based incident command management team.
Mandate the Burying of Power Lines
Our legislation requires the electric distribution companies bury power lines where possible, and mandates it in the case of new residential, commercial, industrial developments. While above-ground lines may be cheaper to maintain, protected underground power lines are more cost effective for consumers and ultimately provide greater economic benefit for the state by preventing outages. Our legislation directs PURA to develop a strategic undergrounding proposal that takes into consideration the benefits of undergrounding in light of continued and worsening storm projections, and the diminishing returns of wildly expensive vegetation management policies. In developing its strategic undergrounding proposal, PURA will be directed to consider metrics for situations in which an electric distribution company would be prohibited from recovery of the incremental costs associated with the undergrounding project, such as if customers on a specific feeder experienced more than 72 hours of outages in a calendar year.
III. Ratepayers Needs, Not Corporate Greed: Curbing Excessive Profits of Electric Providers
The present compensation system for upper management in the electric distribution companies incentivizes and rewards shareholder returns over customer service and ratepayer value. By tying C-Suite executives’ compensation, stock options, and retirement packages to stock performance, a “race to the bottom” has been created, placing the needs of consumers last. As a regulated utility, ratepayers and front-line utility workers — not shareholders and C-suite executives — need to be the priority.
Public Hearings on How Rates are Developed
Our legislation directs the Public Utilities Regulatory Authority (PURA – the regulators who set utility rates and regulate the utility’s operation) to open a “docket” to examine exactly how the electric distribution companies construct their rates so we can demystify why our electric rates are so high.
It further takes immediate action to strike statutory provisions that have been relied on by the electric distribution companies to justify automatic cost recovery; every charge on a customer’s bill should be subject to PURA’s prudence review, and we commit to scrutinizing future legislation in which the utilities insert cost recovery language that binds PURA to approve pass-through charges. The legislation also directs PURA to review whether it is appropriate for the utilities to continue taking advantage of decoupling mechanisms, which allow the utilities to reconcile under-recoveries that occur when customers consume less energy. Finally, the legislation authorizes PURA to deny or otherwise limit cost recovery for carrying charges that are associated with the utilities’ bad debt, or for costs incurred as a result of administering a state-mandated contract. Simply put, the utilities should not make a profit on pass-through expenditures.
Ensuring Representation of Relevant Stakeholder Groups in PURA Dockets
PURA is a quasi-judicial agency and must base its decisions on evidence presented by parties that enter legal appearances in its proceedings. This leaves citizens, low-income advocates, environmental justice advocates and even our regulators, at a distinct disadvantage to the multi-billion dollar utility companies. The current model in which we rely on the Office of Consumer Counsel to represent all customer classes and groups is vastly outdated, and clearly is not yielding results in which all customers feel represented. Instead, this legislation proposes a participant compensation model utilized in other states, which provides a mechanism by which nonprofits and customer groups can hire representation to participate in PURA proceedings.
Proposed Rate Increases Tied to Corporate Profits
When determining whether a rate increase is justified, this legislation will require the regulators to analyze the entirety of the electric distribution companies’ profits, not just the Connecticut component, prior to approving any rate increase. The legislation also empowers PURA to consider ratemaking principles that can generally be understood to make utility company executives accountable to ratepayers.
More Electric Options for Consumers & Decentralizing the Grid
Our legislation will create a more competitive marketplace by removing laws and regulations preventing customers to operate “off the grid” through solar, battery storage, and other emerging technologies. The legislation encourages the acceleration of PURA’s Equitable Modern Grid proceeding, and enhances its effectiveness by authorizing PURA to hire several key ombudsman positions that cannot be recovered for by the utilities in customers’ electric rates. Specifically, it allows PURA to hire a division of ombudsman dedicated to investigating, mediating, and resolving complaints between the utilities and customers who are trying to timely interconnect and bring on-line distributed energy resources like solar and storage.
New Local Renewable Energy Options & Further Decentralizing the Grid
This bill provides for state funding, bonding, and support for new municipal and neighborhood-sized renewable energy microgrids. These new sources of renewable energy will provide options for consumers and increased competition to the major electric distribution companies, which should drive down rates for all.
Freeze on Rate Increases
Finally, and perhaps most significantly, neither electric distribution company will be allowed to seek any new rate increases associated with the operation and maintenance of its distribution system for a minimum of two calendar years. This rate freeze will ensure a much-needed pause while the state and regulators complete the Equitable Modern Grid proceeding before PURA, which seeks to map out a comprehensive approach to modernizing the electric grid while attracting private capital and empowering consumers. Importantly, the legislation does not excuse the companies from making needed investments during this timeframe that are necessary to ensure the reliable delivery of service; rather, it puts the onus on shareholders to shoulder the costs until the companies can demonstrate that investments were made prudently and in the best interest of ratepayers. Much like any other company, they must find a way to enact these changes within their existing revenue structure – one which has provided them with almost $2 billion in profits over the last two years.
Further, even after the two-year rate freeze expires, this legislation prohibits the electric distribution companies from filing for a rate increase on a going forward basis unless the company can demonstrate that it has under-earned on its allowed recovery by a minimum of 25% for at least two consecutive calendar years. Moreover, it places a permanent prohibition on the egregious practice of utilities who seek reimbursement of costs associated with appearing in proceedings before their regulators in base rates. That is a cost of doing business that the companies should internalize.
Lastly, the legislation explicitly ties utility cost recovery associated with storm preparation and response to the performance of the company during the restoration process. Transparent metrics for response times, communication and coordination efforts, and global restoration efforts will serve as the basis of evaluating the utility’s response, along with mandatory after-action reports timely provided to the regulator in a public forum.