Off With Their Heads

Politicians are all over the CT power outage story. And you’d expect them to be. After all, they know how to stoke the justified anger of their constituents.

Not only are Sen. Dick Blumenthal and CT Attorney General George Jepsen threatening to investigate CL&P for its lousy response to the freakish October snowstorm damage, but state lawmakers are calling for a special session and are threatening to pass laws that would impose heavy fines on power companies that fail to meet new restoration standards.

Rep. Vickie Nardello and House Speaker Chris Donovan appeared on Fox-61′s The Real Story this morning to talk about possible legislative remedies, but it’s pretty clear they want to model CT’s laws on those enacted a couple years ago in Massachusetts, where companies can “be fined up to 2.5 percent of their transmission and distribution revenues which by the way, translates into approximately $20 million,” Nardello said. Donovan added:

If fines are a way to induce companies to do that, we will look at that. Massachusetts has twice the number of crews that we have and they’re restoring it at a better pace. so apparently there’s a difference between Massachusetts and Connecticut.

If there is no other way to force CL&P to get its act together, I’d say the Nardello-Donovan proposal sounds like a reasonable response, especially if they crafted the law in such a way as to prevent CL&P from passing the cost of the fines on to ratepayers. But before endorsing such a remedy, I’d have to ask if there are other ways to achieve the same goal without passing laws that CL&P might be able to finesse anyway.

Whenever regulated monopolies such as CL&P want to increase their rates, they need to get permission from the former Department of Public Utility Control (now called the Public Utility Regulatory Authority). How about basing the companies’ rate increase requests, in part, on satisfactory performance in the category of service restoration? Do a lousy job and you’re stuck charging your old rate even if your costs are rising.

Be that as it may, I also like the whole idea that the costs of restoration be the responsibility of the shareholders and not ratepayers. Otherwise, the arrangement reeks of crony capitalism: the company gets the benefits of the risk while ratepayers assume the liability of failure.

As the durability of CL&P’s stock after Hurricane Irene attests, utility investments have long been viewed as a safe bet . Maybe they won’t be if this kind of legislation catches fire in the rest of the nation. Then again, the industry has some powerful lobbying muscle behind it, so don’t bet on it. Heck, you might even be safer betting on a electrical utility stock to rise no matter what.

P.S. Here’s one thing I’d like to ask Nardello and Donovan. Who pockets the $20 million fine? The state or ratepayers? I think we all know the answer to that question.

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  • Green Machine

    Nothing is going to happen to CL&P, not as long as they (or NU) are paying Billy DiBella $150k/year to lobby and Billy’s boy John Fonfara chairs the energy committee.

  • Jerry O’Connor

    Connecticut residents leave themselves little choice. We don’t want more nuclear or fossil fuel fired powere plants in any of our towns. Nor do we want a gas pipeline in the Sound. And if you try to cut our trees down we’ll sue you. Yet we don’t want to pay more for elctricity. And we expect great service. If the CT Legislature was in charge of power restoration we’d all be eating Thanksgiving Dinner in the dark. (But then if Congress was in charge we’d be opening our Christmas presents by flashlight!)

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  • Terry

    Jerry, you hit the nail on the head. Everyone wants the energy but no one wants to put up with the extraction and distribution of it:
    http://www.ctnewsjunkie.com/ctnj.php/archives/entry/post_irene_our_love_hate_relationship_with_energy/