State DPU says it can't fine Unitil

BOSTON, Nov 03, 2009 (Sentinel and Enterprise - McClatchy-Tribune Information Services via COMTEX) -- UTL | Quote | Chart | News | PowerRating -- The Department of Public Utilities on Monday ordered Unitil Corp. to undergo a comprehensive management audit for failing its customers during and after the Dec. 11 ice storm, but stopped short of fining the company for its poor performance.

"We have no fining authority," DPU Executive Director Timothy Shevlin said. "The attorney general encouraged us to issue a fine but we disagreed that we have that authority."

Monday's ruling comes after nearly a yearlong investigation by the DPU into Unitil's handling of the storm, which left residents in Fitchburg, Lunenburg, Townsend and Ashby without power for up to two weeks.

Attorney General Martha Coakley, who earlier this year recommended the DPU fine Unitil $4.6 million, expressed disappointment with its decision.

"While the department's factual findings are consistent with the evidence presented to the department by the Attorney General's Office, we disagree with the department's constrictive interpretation of its own authority," Coakley said in a statement.

In the finding, members of the DPU wrote that Unitil's performance before, during and after the ice storm represented a "clear and unambiguous failure to satisfy its obligation to provide safe and reliable service to its customers."

While the DPU has no authority to issue a fine, it does have the authority to set Unitil's allowed return on its investment and to determine whether Unitil may recover storm-related costs from rate

payers, Shevlin said.

"This is not over," Shevlin said. "This order paves the way for further financial consequences." The company could also face additional penalties for its handling of the ice storm when it files a rate case with the DPU.

"Unitil's gross failures in service quality will be factors in upcoming cost-recovery and rate-setting cases Unitil is expected to file within a year," the DPU's report states.

Unitil spokesman Wesley Eberle said Monday that the company is reviewing the order and assessing its options.

"Unitil has taken significant steps to strengthen its ability to prepare and respond to future events, including undertaking a comprehensive self-assessment led by former Massachusetts DPU Chairman Bob Yardley that identified 28 specific recommendations for improvement to Unitil's storm response," Eberle said in a prepared statement.

"The company has undertaken each recommendation and recently conducted a system-wide storm drill in conjunction with state and local emergency and public officials."

State Sen. Jennifer Flanagan, D-Leominster, reacted sharply Monday to the DPU's refusal to fine Unitil.

"The fact that it took 10 months to be told by the DPU that they do not have the authority to issue a fine is unacceptable," Flanagan said. "I'm just absolutely disgusted by this decision."

Lunenburg resident Cathy Clark, who has been the most vocal critic of Unitil since the storm, said the DPU ruling makes no sense and provides no resolution.

"I just don't get it," Clark said. "People are still being impacted by Unitil, as we continue to get blue-sky outages on a regular basis. Consumers deserve reliable service at a fair price and we're not getting it. I hope our politicians are listening."

State Rep. Stephen DiNatale, D-Fitchburg, said legislators are in the process of changing state law so that the DPU can hand out serious fines in the future.

"We have a lot of laws on the books that have not kept up with the 21st century and this is one example," DiNatale said. "We, as a delegation, are going to change them. In the meantime, it looks like people are going to get some gas-rate relief."

In another case unrelated to the ice storm, the DPU ordered Unitil Monday to rebate $4.6 million the company has overcharged its natural-gas customers during the past few years.

"We determined that they overpaid for gas and therefore overcharged their customers by that amount," Shevlin said. "So they must return that money to the customers, plus interest."

DiNatale said that he has received assurances from the DPU that the agency will be putting every request Unitil makes in the future under the microscope.

"It's going to be very difficult for them to get what they want moving forward," DiNatale said.

It's the first time in nearly 20 years that the DPU has exercised its authority to order a comprehensive management audit, Shevlin said.

The agency found that Unitil fell short of its obligations in several critical areas, including its communication with the public and local officials, its planning and training, its failure to act on behalf of life-support customers, its underfunded vegetative management and its poor judgment in issuing estimated bills.

"The DPU's top priority in the wake of this investigation is to ensure the company acts swiftly to repair its failures, operate its system in a manner expected of a franchised public utility, and make certain that what happened last winter never happens again," DPU Chairman Paul Hibbard said.

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