In an unprecedented move, state regulators imposed nearly $25 million in fines Tuesday against three power companies for their response to two major storms last year, saying the utilities’ missteps had left thousands in the dark for days on end.
State officials levied the stiffest sanction, $18.7 million, on National Grid, citing “systematic and fundamental failures” in its preparation and response to Tropical Storm Irene and last October’s surprise snowstorm, which caused extensive damage to large swaths of the state.
NStar, which has 1.4 million customers in Massachusetts, was fined just over $4 million, and Western Massachusetts Electric Co. was ordered to pay $2 million. Both companies said they would appeal the fines to the Supreme Judicial Court, while National Grid said it needed time to consider its options.
It was the first time state regulators had fined utilities for their response to storms, under a 2009 law that spelled out penalties for faulty storm response. State officials said they hoped the substantial penalties would spur utilities to improve their performance.
If upheld, the fines would be returned to utility customers. Whether it would be done by issuing credits, sending a check, or some other mechanism has yet to be determined. It was not known Tuesday how much a typical refund would be.
“It’s a very significant precedent,” Ann Berwick, chair of the Department of Public Utilities, said at a morning press conference. “We intended to send a very strong message.”
“We expect our orders to make it clear that robust and systematic planning for major events is a fundamental responsibility of utilities,” she added.
At the height of Tropical Storm Irene in August 2011, some 560,000 NStar and National Grid customers lost power, compared with about 500,000 during the worst of the October snowstorm. In some cases, families were without power for many days, sparking intense public frustration with the pace of repairs.
Berwick said National Grid did not secure enough work crews in a timely fashion and failed to coordinate efforts with affected towns in both storms, in some cases leaving local public safety officials standing by downed wires for days.
“Failures in one area often had cascading effects,” Berwick said.
Companies were penalized for not meeting performance benchmarks in a range of areas, including damage assessment, clearing downed wires, and communicating with towns and residents.
“We will not tolerate inadequate responses to local public safety officials,” Berwick said.
Regulators said NStar performed “reasonably” during the storms, but took too long to respond to public safety officials about downed wires and did a poor job communicating with customers. In the October snowstorm, for example, many customers received inaccurate calls that told them their power had been restored.
In announcing their intention to appeal the fines, NStar and Western Massachusetts Electric Co. criticized the penalties as unfair and said state regulators did not appreciate the magnitude of the storms.
“The amount of devastation our system sustained last fall cannot be understated, with an estimated 80 percent of our overhead circuits damaged after Irene alone,” Werner Schweiger, president of NStar Electric, said in a statement. “We were essentially rebuilding the electric system as we restored power.”
Western Massachusetts Electric Co., which has 210,000 customers in Western Massachusetts, said it had mobilized hundreds of crews and other workers to restore power “in a safe, responsible, and methodical way under extremely difficult conditions.”
“We strongly disagree with the DPU’s finding and are disappointed they have chosen to take this path,” said Peter Clarke, the utility’s president.
The company was fined for its response to the October snowstorm, as its coverage area did not sustain widespread damage during Irene.
National Grid, which has 1.2 million customers in the state, said it understood that customers were frustrated by the outages last year and said it had made a series of changes to its emergency response efforts since the 2011 storms.
State regulators said they had cited National Grid for similar failings during a December 2010 storm and ordered the company to conduct an independent audit of its emergency program.
The utilities have 20 days to appeal the fines to the state’s highest court. The attorney general’s office, in its role as an advocate for ratepayers, will represent state regulators.
Richard Sullivan, the state’s secretary of energy and environmental affairs, said utilities must be subject to sharp oversight given an apparent increase in the number of severe storms.
“It is clear the number of serious weather events in the Commonwealth is rising,” he said. Utilities must be made aware that there will be a “price to pay” for poor planning and execution, he said.
Officials said the utilities did a far better job responding to superstorm Sandy, which at its peak left some 380,000 customers without power.
Rob Thormeyer, a spokesman for the National Association of Regulatory Utility Commissioners, said the nearly $25 million in fines was strikingly high. The financial hit, combined with the blow to utilities’ reputation, should command the companies’ attention, he said. “That’s a big number,” he said.
Martha Coakley, the state’s attorney general who had recommended that the utilities be hit with substantial fines, said the penalties would have a “substantial deterrent effect.
“They send a clear signal that utilities will be held accountable for their failures,” she said.
Coakley said her office’s investigation found that the utilities’ preparation for the storm was “woefully inadequate.”
Customers said they were pleased that the companies had been fined, but worried that they would offset the cost by cutting back on maintenance or raising the rates that much more. Others said the potential reimbursements, while welcome, wouldn’t begin to cover the actual cost of losing power.
Josh Rose, a Wayland resident who lost power for several days last Halloween, said he still had the receipt for the hotel he checked his family into once the temperature at his house dropped below 50 degrees, not to mention the $500 or so he lost in spoiled food.
“Does that really make up for it?” he asked. “I don’t think it does. It would be nicer if we could simply submit our receipts.”