AG Seeks $16 Million Fine Against National Grid for Irene, October Snowstorm Response

The state Attorney General's Office on Thursday announced it is seeking fines against the utility National Grid.

The utility, meanwhile, strongly disagrees with the conclusions drawn by the AG and will file a response with the Department of Public Utilities.

After an investigation by her office determined that utility giant National Grid failed to adequately prepare, respond, and communicate and the , Attorney General Martha Coakley’s office is seeking a $16 million fine against the company – the largest penalty ever recommended against an utility in Massachusetts.

National Grid provides electric service in Hamilton and Wenham.

The AG’s Office made the recommendation in a brief filed Wednesday with the Department of Public Utilities, which has the authority to impose the fine. According to the AG’s brief, National Grid officials violated four separate storm response obligations under the company’s emergency response plan (ERP) including:

• Failing to communicate effectively with customers and municipalities throughout the two major storms;
• Failing to provide timely damage assessments;
• Failing to properly staff for the two emergency events; and
• Failing to respond to public safety calls about downed wires.

“Combined, these two storms left nearly a million National Grid customers without power, some for more than a week,” Coakley said. “National Grid’s preparation for these storms was inadequate and its response was unacceptable. The company compounded these mistakes with a lack of communication to municipalities and first responders about restoration efforts, leaving many of them in the dark as they were making critical decisions around public safety and emergency treatment.”

A National Grid spokeswoman said the utility will be filing a formal response on the storm proceeding on Aug. 1, with the Department of Public Utilities, and it will wait to see what they find and recommend.

"While we acknowledge that our storm restoration efforts did not meet our customers' expectations, and there is room for improvement, we strongly disagree with the extreme conclusions the Attorney General has drawn," said National Grid Spokeswoman Deborah Drew. "We will address those issues in our Aug. 1 response to the DPU. We will continue to work to provide the level of service our customers expect and deserve."

According to the AG's office, if the penalties are granted, they cannot be passed on to National Grid customers and must be borne by shareholders. Under current law, the penalties would be paid to the Commonwealth’s general fund. The Attorney General has announced support for pending legislation that would ensure that penalties ordered by DPU would be returned to customers, not the general fund.

“The customers suffer from the utilities’ poor performance and outages, and it is the customers who should receive the restitution as well,” Coakley said.

According to the AG’s brief, National Grid did not respond to emergency calls about downed wires within a reasonable amount of time partly due to inadequate staffing levels as officials were hesitant to classify either storm as a level five event. A level five event affects more than 113,000 customers and lasts longer than 72 hours. Company officials testified that they do not use computer models or tables to predict a storm’s severity and instead rely on the experience of top level officials.

, electric distribution companies along the east coast requested an additional 7,000 personnel, but National Grid only received 24 as other utility companies had already contracted the available extra workers from mutual assistance and other resources. The AG’s brief alleges that if National Grid had used more scientific methods of predicting storms than merely relying on personal experience, it may have gained a greater level of assistance.

There were approximately 13,000 , and approximately 22,000 . A downed wire presents a significant threat to public safety and should be attended to immediately.

In fact, the brief alleges that there was such a lack of staffing and communication that towns were forced to leave firefighters at downed wires to ensure public safety. According to Pembroke Fire Chief James Neenan, “we had no available apparatus or people left to respond because they were standing by downed wires and we couldn’t leave in the interest of public safety.”

The AG’s recommendation to the DPU is $4.6 million in fines for National Grid’s response to Tropical Storm Irene and $11.7 million for its response to the October 2011 snowstorm.

On July 11, AG Coakley also announced that her office has begun a review of standards used to measure the overall service quality of utility companies to determine if they are adequate or effective.

“The fact that utilities can achieve high marks from the DPU under the existing standards, yet sustain devastating long term outages such as the ones we saw in these storms, shows that something is not working right,” said Coakley. “Utilities routinely request and receive rate increases to improve their infrastructure and overall service quality. It’s time to make sure ratepayers are getting the benefits they’re paying for.”