Federation of Connecticut Taxpayer Organizations

The state could essentially take over Connecticut Light & Power � the target of continuing scorn over its response to the Oct. 29 snowstorm � if the move were for a �public purpose� and the company was paid for its investments, according to the nonpartisan research arm of the General Assembly.

In a report issued less than three weeks after that storm, an analyst for the Office of Legislative Research wrote that Connecticut could acquire CL&P�s assets by condemnation if it complied with �the jurisprudence on the Taking Clauses of the federal and state constitutions.�

Electric companies in Connecticut act as �common carriers� with regard to their transmission and distribution systems, the analyst said, and the U.S. Supreme Court has deferred to legislative bodies in its determination of what constitutes a �public purpose.�

The veteran OLR analyst who prepared the report, Kevin McCarthy, added that were Connecticut to acquire CL&P�s assets by condemnation, it would have to pay the company �just compensation� to avoid violating the federal and state constitutions.

The seven-page document was prepared at the request of Rep. Sean J. Williams, R-Watertown, a member of the legislature�s Energy and Technology Committee, who asked OLR two questions.

He wanted to know whether the state could adopt legislation to break up CL&P�s service area and require it to sell its assets to other utilities that would operate them.

The lawmaker also asked whether the state could take over the entire electrical transmission and distribution system in Connecticut and allow private companies to bid to serve regions under private-public partnerships � and if other states had taken such measures.

McCarthy cautioned Williams that the OLR wasn�t authorized to give legal opinions and that, while the report covered major issues raised by his questions, it was �not exhaustive.�

Break-up possible

Nevertheless, the analyst concluded that the state could break up CL&P�s service territory and transfer responsibility for the customers in those areas to other utilities. He explained that CL&P was created pursuant to state charter and operates as a state-regulated utility.

�But doing so would require extensive legislation as well as compensation to CL&P for its investments that are not recovered in the sales of its assets to its successors,� he said. �Transferring CL&P�s responsibilities to other utilities probably would require the approval of the Federal Energy Regulatory Commission, the Independent System Operator-New England, and possibly, other entities.�

McCarthy said it also appeared that the state could take over the entire transmission and distribution system and allow companies to bid to serve regions under private-public partnerships. But he added that �this option raises similar questions.�

The analyst said there �appears to be precedent� in Connecticut and other states for the first option and in New York for the second.

He cited the Connecticut statute that partially de-regulated the electric industry here, saying it effectively required CL&P and United Illuminating to sell their power plants to other companies.

While the law didn�t technically require the utilities to sell those assets, he said, they would have risked losing billions of dollars on �stranded costs� they incurred with the approval of state utility regulators. Their �continued recovery in rates was jeopardized with the opening of the supply market to competition,� he said.

McCarthy also cited another Connecticut statute as a possible model for transferring responsibility for utility service. It allows the state Department of Energy and Environmental Protection to order a water company or municipal water utility to acquire a water company that is �economically non-viable� or has failed to comply with a DEEP or state Department of Public Health order regarding water quality or quantity.

�The legislature could develop similar provisions for troubled electric companies,� he said.

Long Island model

McCarthy also said New York created the Long Island Power Authority, which acquired the transmission and distribution system of the former Long Island Lighting Company, then entered agreements with a private company to operate and maintain the system.

CL&P spokesman Mitch Gross said today that while he hadn�t seen the OLR report, �on its surface this raises more questions than answers.

�Obviously, we think it�s a bad idea,� he said, referring to any break-up or sell-off. �This is a state that has struggled to close significant budget gaps, and how could the state possibly afford such an undertaking?

�And where are the other regulated utilities in this formula?� he added.

CL&P, a Northeast Utilities subsidiary, has been widely lambasted for its response to the freak October snowstorm, which knocked out power to more than 800,000 customers and led to the abrupt resignation of its president and chief operating officer, Jeffrey D. Butler.

The utility reportedly had posted healthy profits for years while refusing to spend money to bring outside crews in before storms, including those that recently left thousands without power for as long as 10 days.

Leaders of unions representing CL&P workers have blamed the extended power outages from the October storm on lower staffing levels and an unwillingness to allow longer shifts.

NU said this week that it might have to ask customers to pay its costs resulting from the October snowstorm and Tropical Storm Irene � which it put at almost $163 million. But the company said it wouldn�t decide any time soon whether to seek to pass the cost on.

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Malloy confirms aid fraud accusations

By Ed Jacovino� Journal Inquirer

Published: Friday, December 9, 2011 11:15 AM EST

HARTFORD � Gov. Dannel P. Malloy on Thursday confirmed that many of the first 15 state employees accused of lying about their income and other information to receive federal emergency aid are high-earners, and he apologized that little other information has been disclosed.

�This is an investigation that�s ongoing,� Malloy said. �Until such time as we gather an appropriate amount of information I think that we�ll work with the agency and the potential prosecutorial body.

�But I think you�ll know a lot more at some point than you know now, and I apologize about that, but we have to protect the investigation first,� he continued.

Malloy was speaking about the 15 state employees his administration identified Wednesday for disciplinary action associated with receiving aid under the Disaster Supplemental Nutrition Assistance Program, or D-SNAP, which was doled out in late September to state residents who lost property during Tropical Storm Irene.

Nearly 24,000 residents received the aid, collecting about $12.4 million. About 800 of the recipients were state employees. All are being investigated, Malloy has said.

Malloy confirmed reports that the first 15 are high wage earners, with some earning more than $100,000. But he indicated they also are employees who earn substantial amounts of overtime.

�I don�t want to be limiting the issue to salary as such because it�s total compensation,� Malloy said. A source familiar with the investigation told the Journal Inquirer on Wednesday that all of the 15 earn more than $100,000.

Malloy and other administration officials said many details were being withheld at the request of criminal investigators.

The governor hasn�t released details of what state agencies the employees work for. The source told the Journal Inquirer that most of the 15 are employed in the departments of Developmental Services, Children and Families, and Mental Health and Addiction Services.

Malloy also hasn�t said how many are managers or unionized employees. Andrew McDonald, Malloy�s general counsel, said that was information that investigators asked to be withheld. The source told the JI that all 15 are unionized employees.

Investigators are looking into each state employee�s claim for the aid based on how much state records show that employee making, Malloy said.

�If we know what someone�s making and it�s greatly in excess of the maximum amount allowed for a family of eight, then it was easier to do,� he said.

The governor added that many state employees earn salaries that could have qualified them for the aid.

�We believe that a large number of people properly applied and properly qualified,� he said. �We are being careful so that people who didn�t do anything wrong aren�t caught up and hurt while the investigation is ongoing.�

The federal money was given out based on a formula that includes household income and the number of people in the household. The payments ranged from $200 for a one-person household to $1,202 for an eight-person household. The monthly income cutoff to qualify was $2,186 for a one-person household, $3,859 for a household of four, or $4,254 for a household of five.

The figures also applied to cash on hand, so anyone with that much money in a checking account was ineligible. Applicants were asked to bring proof of identity, residency, income, assets, and storm-related expenses.

Malloy also urged state employees with information about fraud to step forward, saying he wants a cultural shift toward openness in state government.

When he was mayor of Stamford, Malloy said, he had an open-door policy.

�I would meet with any employee to discuss an item of concern for them to create an environment in which the free flow of information could take place,� he said.

Malloy said employees will be protected under the state whistleblower laws. But he added that he told department heads that government must go beyond that to create a culture of openness.

Roderick Bremby, commissioner of the Department of Social Services, confirmed reports that DSS employees administering the federal program noticed the names of people they knew to be highly paid state employees. The discovery was made before a required formal audit of the program, Bremby said.

Bremby bristled when asked whether any of the alleged fraud was part of an �inside job.�

He said he didn�t know whether the state employees used connections to avoid the hours-long waits to receive the aid.

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CL&P spent $255M on storm cleanup, may seek to have customers pay

By Harlan Levy�� Journal Inquirer

Published: Thursday, December 8, 2011 12:04 PM EST

Northeast Utilities officials said late Wednesday that it may ask to have customers pay its costs resulting from the Oct. 29 storm and Tropical Storm Irene, but that decision won�t be made soon.

A federal filing made public Wednesday revealed that NU subsidiary Connecticut Light &Power�s cost in Connecticut from the October storm, which knocked out power to more than 800,000 customers, was $162.8 million. CL&P�s cost to recover from Irene was $92 million. NU�s catastrophic insurance policy has already paid its annual maximum of $15 million, and that offsets Irene�s cost, NU officials said.

State regulations permit storm costs to be passed on to ratepayers if the costs are deemed �prudent,� but only after a thorough investigation. In the filing, NU claimed the costs were indeed prudent.

But the utility won�t decide any time soon whether to seek to pass the cost onto customers, NU spokesman Al Lara said. �It�s not anything that�s happening in the next year, and it may be years away. Any request for recovery might take place as late as 2014,� he said.

Irene�s costs have been calculated, but the October costs are preliminary estimates, CL&P spokesman Mitch Gross said. �They are not final, and we have a long way to go. There�s still a lot of counting that needs to take place, and with regard to recovering costs, there is no current schedule and no current plan.�

If NU decides to ask the Public Utility Regulatory Authority to let it recover the money from ratepayers, �we would do that in a way to minimize the impact to customers,� Lara said. �We could do that by deferring into the future or paying it over the course of many years.�

For example, Lara said, �For some of the major ice storms in the past we�ve seen those costs spread over five years.� Lara would not speculate on how much per month that would cost the average residential customer.

Circumstances may arise to offset the costs, Lara said, �like a good operational year, for example, so that we wouldn�t seek to recover as much.�

As for the $77 million cost for Irene, NU has not decided how to recover it, if at all, Lara said.

�That cost could also hit ratepayers,� Lara said, �but we wouldn�t try to recover for two storms at the same time.�

NU also has not decided whether to file for a rate hike for the Oct. 29 storm before Irene, although Irene�s costs have already been calculated, Lara said.

�No timetable has been set up for either event,� he said.

Outside Connecticut, NU subsidiaries Public Service Co. of New Hampshire�s cost to recover from the Oct. 29 storm was $16.15 million, while Western Massachusetts Electric incurred $23.5 million in storm expenses. Lara had no comment on any possible plans to recover those costs from NU�s out-of-state customers.

In related news, NU stated in its filing that it expects its $4.7 billion proposed merger with Boston-based electric and gas utility NSTAR to be �consummated in early 2012.�

The merger, proposed in October 2010, a stock-for-stock deal to create one of the largest U.S. utility companies with an enterprise value of $17.5 billion, has received all regulatory approvals except those from the Massachusetts Department of Public Utilities and the Nuclear Regulatory Commission. NU said it expects that NRC consent will be received this year. Oral arguments on the Massachusetts Department of Energy Resources� request for a stay of the merger proceedings before the Massachusetts DPU have been postponed.

Check CL&P bills

Meanwhile, Lara said CL&P customer should check their bills for November power use. At least one person has complained to the Journal Inquirer that his bill didn�t drop even though he had no power for six days.

Lara suggested he contact CL&P to determine if something was wrong with the meter. �They should not be paying for usage if no power was flowing through the line,� Lara said. �If it�s showing actual usage, that�s not right. We would not be charging customers for using power during an outage.�

ABOUT THE JOURNAL INQUIRER

The Journal Inquirer is published afternoons Monday through Friday and Saturday mornings in Manchester, Conn., and serves 17 towns in the north-central part of the state, including Enfield, East Hartford, and Vernon.

The JI was founded as a daily newspaper in 1968 upon the merger of two weekly newspapers, the Rockville Journal and The Inquirer of East Windsor and South Windsor. It is the only daily paper founded in the last century in Connecticut to have survived.

More than most newspapers, the Journal Inquirer stands for something. It is more questioning and critical than most newspapers. What is published in the Journal Inquirer is less likely to be influenced by considerations unrelated to the news. The Journal Inquirer's news and opinion columns are more accessible to its readers. In these circumstances the truth is more likely to emerge, and the people will be served better.

The Journal Inquirer seeks to inform and to entertain, and, where possible, to inform entertainingly. It seeks not only to watch government but also to reflect the life of its towns so well that the ties of community are strengthened.

We believe that the press has no privileges and no right to be arrogant and that the constitutional guarantees of free expression and inquiry apply to all people equally. But we also believe that every reader places a trust in us and that we become to an extent the public's representative, so in pursuit of the news we must observe what Elmer Davis called "the first and great commandment" - "Don't let them scare you." For if a newspaper is intimidated, whether by a particular interest or by complexity, a community may be manipulated, exploited, and deprived of its freedom.

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