Unitil to take $4.9m hit for Mass. overcharges
Unitil Corp. won’t have to pay a nearly $5 million fine for taking too long to restore power for its Massachusetts electric customers during the 2008 ice storm, but it will have to take a loss for about the same amount for overcharging its Massachusetts gas customers,
The Hampton-based utility will take a $4.9 million charge this quarter, because its Massachusetts subsidiary Fitchburg Gas and Electric engaged in certain gas price stabilization practices in 2007-2008 and 2008-2009 — when prices fluctuated drastically — without prior approval from the Massachusetts Department of Public Utilities, the company disclosed in a filing Monday to the U.S. Securities and Exchange Commission.
The agency said that the subsidiary is required to refund $4.6 million of previous collected natural gas costs plus about $300,000 interest.
Unitil plans to appeal the order, arguing that it did disclose those policies, that pre-approval was not required and it was similar to other practices by Massachusetts gas companies. In any case, FG&E won’t have to pay back the refund for five years.
Nonetheless, the utility will take the whole charge as an operating cost this quarter because it was “consistent with its accounting policies for regulatory matters of this nature.”
On the other hand, Unitil won’t have to pay a $4.65 million penalty recommended in June to the commonwealth by the attorney general for inadequate tree-trimming, a faulty damage assessment, billing customers for the times they didn’t have power and not contacting critical care customers during the outage.
The company contended that it responded “in a dedicated and prudent manner” and was “proud of the heroic efforts of employees, contractors and crews.” Besides, the company said, regulators couldn’t legally fine them in any case. The regulators agreed with the latter argument, although last week Gov. Deval Patrick signed into a law a bill that would allow the utilities regulators to impose such fines, as well as require that utilities file annual emergency response plans with the state.
The Massachusetts utility commission did order FG&E to conduct a comprehensive management audit of its management practices to ensure safe and reliable future operations.
It also promised to look at how FG&E can collect $12 million in “extraordinary expense” relating to the storm from its customers over a reasonable time period.
Unitil also was criticized for its response to the ice storm in New Hampshire, where the Public Utilities Commission will determine how the company can collect $2 million in “extraordinary expense” from its customers in its upcoming rate case.
The PUC referred to that ruling as a $2 million “regulatory asset.” – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW