Top utility regulator criticizes Connecticut’s $103 million settlement with Eversource over poor response to Tropical Storm Isaias. The average customer will get a $35 credit on bill.

With a sharp dissent by Connecticut’s top utility regulator, the state on Wednesday approved a $103 million settlement with Eversource Energy over its handling of Tropical Storm Isaias in August 2020, requiring the utility to provide refunds to customers and establish local control over state operations.

Marissa Gillett, chairwoman of the state Public Utilities Regulatory Authority, cast the sole vote against the deal negotiated by the administration of Gov. Ned Lamont, Attorney General William Tong and the state consumer counsel.

In her detailed disagreement — rare for a PURA chair — she broadly criticized the agency’s past practices. Gillett, who has headed PURA since 2019, said an average refund of $35 approved in the settlement could leave consumers “underwhelmed,” while removing a penalty of nearly $30 million a year aimed at Eversource’s profit that PURA had sought robs regulators of a tool to force the utility to change how it plans for, and responds to, major storms.

PURA Vice Chairman John Betkoski and Commissioner Michael Caron backed the settlement that requires Eversource to return $65 million to customers as two credits on their December and January bills. The average customer will see a $35 credit.

In the agreement, Eversource will not appeal a $28.4 million penalty levied by PURA due to its response to Isaias that left as many as 800,000 customers without power for days. And the utility has agreed to not seek a rate increase until at least January 2023 for rates that could not take place until at least January 2024.

Eversource also will set aside $10 million to help customers who are unable to pay their utility bills.

And the utility will establish a Connecticut-based president of Connecticut Light & Power. It has offices in Boston and Hartford, but its strong Massachusetts presence dates to 2012 when Connecticut Light & Power’s parent company, Northeast Utilities, purchased Boston-based NStar.

Tong said the agreement “forces significant governance changes at Eversource,” but Gillett said it “lacks the necessary specificity.” Costs related to the compensation of board members and executives will be paid by Connecticut ratepayers, but the benefits “remain nebulous at this stage,” she said.

“The new Connecticut president will remain accountable to an Eversource-controlled board of directors, in which even the new ‘independent’ seats are outnumbered by the seats held by Eversource executives,” she said.

And during storms the “status quo will persist” because the Connecticut incident commander will continue to report to the regional president, Gillett said.

In addition, she said responses were “underwhelming, nonspecific and noncommittal” to questions about when the regional president will hand off responsibilities to the incoming Connecticut president and when Connecticut ratepayers would pay what she called duplicative executive salaries.

Lamont said the settlement “clears the way for PURA to make real progress on performance-based rate-making” and “provides certainty to Eversource customers about the remedies they will receive as a result of Eversource’s poor performance in response to Tropical Storm Isaias by disposing of legal claims related to the storm penalty decisions.”

Eversource said in an emailed statement the settlement “provides immediate, tangible relief for our customers as we continue to deal with COVID-19 and prepare for winter, as well as long term benefits for Connecticut.”

Gillett conceded that the settlement reflects the “collective will of the parties who represent a variety of vested interests in the outcome” and she will “work diligently to see” that it’s enforced. But she broadly criticized previous PURA policies.

She said criticized the rate freeze through Jan. 1, 2024, in which Eversource will not seek an increase in the distribution charge. It’s one of many costs on monthly bills that bewilder customers, and she said the “nuances of electric rate-making simply do not matter when you are a ratepayer faced with a monthly electric bill that has increased.”

Gillett cited intense public criticism in July 2020 when regulators reconciled the utility’s costs to account for fluctuating federal charges related to the transmission of electricity and state costs that PURA must by law approve.

And she warned of yet more cost increases this winter due to a global rise in the cost of natural gas.

“At best, the public will be confused as to why (PURA) has ‘allowed’ these rate increases when the settlement has negotiated a rate freeze, and at worst, this confluence of events may undermine the public’s confidence in the public bodies entrusted with ensuring affordable rates, which is ultimately to no one’s benefit,” she said.

Anecdotal evidence shows that ratepayers are “underwhelmed by the monthly bill credits” ordered by PURA for what she said was Eversource management’s failures during Isaias.

One of the most effective tools, Gillett said, is a reduction in the company’s return on equity, a measure of its profitability.

Gillett said allowing Eversource to “dispose of its obligations” imposed by PURA in a one-time, lump sum cash infusion brings “finality and closure and also removes the litigation risk from the equation.”

“But I worry that this will not be the last time that we are in this situation — more devastating storms will come to pass — and a tool such as a return on equity reduction would more acutely encourage Eversource’s executives to properly prepare for and respond to such storms,” she said.

Stephen Singer can be reached at ssinger@courant.com.