Northeast Utilities: Oct. storm cost nearly $203M

Posted Dec. 08, 2011, at 9:20 p.m.

HARTFORD, Conn. — The cost to restore power after the October snowstorm will be more than $200 million, double the initial estimate, Northeast Utilities says, and the utility could try to raise rates to pay for most of it.

In a filing with the Securities and Exchange Commission on Wednesday, the Hartford-based parent company of Connecticut Light & Power and Western Massachusetts Electric Co. said costs will be $202.5 million. Most of that, $162.8 million, is for restoration efforts at CL&P. About 830,000 Connecticut customers were without power, some for more than 10 days after the October storm.

The utility could seek as much as $144 million from Connecticut ratepayers to finance the cost, and spokesman Al Lara said Thursday that Northeast Utilities expects to ask state regulators to review that amount for reimbursement “sometime in the future.”

Northeast Utilities will capitalize $18.8 million for equipment, using an accounting method to put off expenses by posting the costs as assets.

The utility said restoration costs at Western Massachusetts Electric are $23.5 million and $16.2 million for a third subsidiary, Public Service Co. of New Hampshire.

Massachusetts customers could see a rate request of $20.4 million and ratepayers in New Hampshire could be asked to shoulder costs of $14.3 million.

Sen. John Fonfara, Senate chairman of the Connecticut legislature’s Energy and Technology Committee, said utilities must be reimbursed for “prudently made decisions” and that the Public Utilities Regulatory Authority would closely scrutinize any rate request to decide if CL&P’s decisions were prudent. State regulators have the authority to reject any request by the utility for reimburs ement that resulted from poor decisions, he said.

However, he said the utility has a strong case for reimbursement of costs.

“You can’t have power remain on immediately after a storm or have it turned on 24 hours after a massive storm,” he said. “You’re going to have to pay for it.”

Dennis Schain, spokesman for the regulatory agency, said Northeast Utilities has not submitted any paperwork that would trigger consideration of a rate change. CL&P’s rates are in place through mid-2012.

The utility could seek a special rate request to handle storm expenses or put off a request and include it as part of an overall rate request, he said. Any request would require review of documents demonstrating a need for ratepayers to bear additional costs and public hearings, Schain said.

In early November, CL&P President Jeffrey Butler, who has since resigned, said the utility expected to spend as much as $100 million for cleanup and restoration. Lara said Thursday the estimate was before the utility completed damage assessments.

Even the costs outlined Wednesday are the “best estimate we can make at this time,” he said.

The cost for cleanup and restoration from Tropical Storm Irene will be about $92 million, Lara said. Power outages after the late-August storm were less extensive and did not last as long.

Northeast Utilities said its fourth-quarter earnings will not be materially affected by the storm, except for an $18 million charge to investors, or 10 cents per share, for a fund to reimburse some costs for residential customers.

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