Gov. Cuomo proposes bill to 'dramatically increase penalties' for NY utility storm response failures

Originally published in Utility Dive on October 30, 2020.

Dive Brief:

New York Gov. Andrew Cuomo, D, on Wednesday proposed legislation to increase penalties for utilities that do not adhere to their emergency storm response plans, and to expedite the process of revoking a utility franchise agreement for recurring failures.
The proposal is a response to the slow recovery following Hurricane Isaias in August, which left some customers without power for about a week.
New York is not the only state rethinking requirements for utility storm response. Connecticut Gov. Ned Lamont, D, signed legislation on Oct. 7 implementing a performance-based incentive system that ties earnings and profits to performance and allows for new penalties in the case of extended service disruptions.

Dive Insight:

New York utilities are coping with the remnants of Hurricane Zeta and say they are always working to improve storm response. At the same time, the state is considering stricter penalties for potential failures.

“After every storm we look for ways to improve," Consolidated Edison, the state's largest utility, said in an emailed statement. "We also know that the climate is changing, and New York is experiencing more frequent, damaging storms."

The proposed legislation follows an August storm response widely considered to be deficient. An expedited investigation by the Department of Public Service resulted in notices of apparent violation letters being sent to Consolidated Edison, Orange & Rockland, PSEG Long Island and Central Hudson. 

"It's clear that we need strict guard rails in place to hold these utilities accountable for the failings, we need better consumer protections for our residents, and the state needs to have more flexibility to replace these companies," Sen. Anna Kaplan, D, said in a statement.

According to Cuomo's office, if lawmakers approve the bill it would "dramatically increase penalties" for utilities failing to adhere to emergency response plans, and other violations of the Public Service Law. The bill would apply to electric utilities along with water and communications providers.

The bill would give New York the authority to seek up to $500 per household for consumer damages like spoiled food and lost medications due to extended outages. It would also require a plan for better communications to customers by utilities during an outage.

The legislation requires the Public Service Commission to limit the money ratepayers contribute to utility executive salaries does that apply even if they have good storm response. It would also require the commission to study whether private water suppliers should come under municipal control.

"Right now, there is no salary cap," Cuomo said in remarks about the proposed legislation. "So if they pay the head of the utility $10 million, the ratepayers pay $10 million. It goes into the cost of the utility. The PSC should set a salary cap that the ratepayers will only pay up to X for salaries."

The legislation would also clarify and expedite the process for revoking a utility's franchise agreement in the case of recurring failures. Cuomo's office said there are provisions that address questions including the ownership and transfer of assets such as substations, cables and trucks "to ensure that the ratepayers who funded them are not charged again in the event of a new operator taking them over."

The legislation also calls for appointment of a receiver if the PSC moves to revoke a utility's certificate to operate.

"God did not give the utility company the franchise — the people of the state gave the utility company the right to operate," Cuomo said in a statement. "If the people of this state allow the utility company to operate, the people of the state can revoke their right to operate."

However, penalties and revocations are "very hard to affect right now by the current law," Cuomo said, "and we need to change the law."

The proposed legislation follows a similar move in Connecticut, where Gov. Lamont has signed a new law authorizing that state's Public Utilities Regulatory Authority (PURA) to establish a system of utility review focused on safety, reliability, storm response, affordability, communication with municipalities, and other factors.

The new law also expands a program to protect critical infrastructure from the threat of severe weather and other climate impacts.

“Utility companies provide a critical service that can quite literally mean life or death in certain situations, and ratepayers deserve a level of respect that puts them above profits,” Lamont said in a statement.

In New York, on Thursday, Consolidated Edison said it was preparing to respond to any service disruptions related to the remnants of Hurricane Zeta. The utility said it had secured 318 mutual aid workers to assist its own crews in restoring service and was prepared to hold its own crews over for extra shifts.

"Line crews, damage assessment, site safety, customer service operations and the Con Edison teams that support those functions will respond," the company said.