Eversource Energy said Monday that shareholders would shoulder the cost of $30 million in penalties the Connecticut Public Utilities Regulatory Authority (PURA) laid down last week for the utility’s inadequate response to Tropical Storm Isaias in August 2020.

That statement accompanied Eversource’s first-quarter report, in which the company announced earnings of $366.1 million ($1.06/share), 9% higher than the same period last year.

The results reflect the $0.07/share charge tied to a PURA penalty for Eversource’s performance during Isaias, which about 50% of the company’s 1.3 million Connecticut customer lost power for as many as nine days.

There were damaged power lines, utility poles and transformers, and debris that blocked roads that hindered power restoration. PURA fined Eversource about $28 million, the maximum for nonperformance under state law. It also hit the utility with an additional $1.62 million for violations of accident reporting requirements. (See Conn. PURA Hits Eversource, UI with Civil Penalties for Isaias Response.)

Recently appointed CEO Joe Nolan said it was “painful” to read some aspects of PURA’s April report that harshly criticized the utility over Isaias. (See Conn. Utilities Found Deficient in Tropical Storm Isaias Response.)

Nolan said it “did not reflect the hard work of our dedicated employees,” such as line workers who worked up to 16 hours a day on power restoration efforts amid the COVID-19 pandemic. He said he recognized “clearly identified areas for improvement” from the PURA audit and penalties, including the utility’s storm response plan and its relations with the regulator.

“I can assure you that we hear this loud and clear and are already doing all we can to improve on both counts,” Nolan said.

Eversource has until May 26 to file a written response for a hearing with PURA to contest the penalties. The subsequent hearings would be held on June 10-11 with a final decision scheduled for July 14.

Eversource’s electric distribution segment absorbed the PURA penalties, dropping first-quarter profits to $93.2 million, compared with $130.1 million a year earlier. Nolan added there were approximately $20 million of storm-related expenses January through March this year, with 31 separate storm events across the company’s footprint that further drove down electric distribution earnings.

The electric transmission and natural gas segments reported significant gains compared with the first quarter in 2020. Electric transmission earned $135.4 million, up nearly $9 million, primarily because of additional investments in the system. Natural gas distribution earned $147.6 million, a 71% increase, mainly because of the acquisition of Columbia Gas and its distribution assets in Massachusetts.

Winds of Change

Nolan said the climate legislation signed by Massachusetts Gov. Charlie Baker earlier this spring allows each of the state’s utilities to build up to 280 MW of additional solar generation. About $500 million is budgeted for this action between 2022 and 2025.

Additionally, the expansion of Massachusetts’ offshore wind authorization from 3,200 MW to 5,600 MW will help keep the state at the forefront of OSW development in the United States, Nolan said OSW is “near and dear to his heart,” having overseen Eversource’s partnership with Ørsted before being named CEO.

Nolan said the Biden administration’s goal of 30 GW of OSW by 2030 has also provided a boost.

“We expect to be a significant contributor to that output through our partnership with Ørsted,” Nolan said. “Already, more than 1,750 MW are under contract to serve load in Connecticut, New York and Rhode Island.”

Nolan said it is a “breath of fresh air” working with the administration on OSW development. He cited a recent meeting that included four cabinet secretaries and climate czars Gina McCarthy and John Kerry.

“The focus down there is what can we do to help move this agenda,” Nolan said. “We’re already seeing decisions that are coming out of there at a much faster pace than we’d seen in previous administrations, and it’s really been a sea change for this business.”

Transcript courtesy of Seeking Alpha.