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N.Y. PSC Issues Order Involving Six Companies

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ALBANY, New York, April 18 -- The New York State Public Service Commission issued the following order (Case Nos. 19-E-0105, 19-E-0106, 19-E-0107, 19-E-0108, 19-E-0109, 19-E-0110) instituting proceeding and to show cause involving New York State Electric and Gas, Rochester Gas and Electric, Consolidated Edison of New York, Orange and Rockland Utilities, Central Hudson Gas and Electric and Niagara Mohawk Power dba National Grid, Albany, New York:

CASE 19-E-0105 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for New York State Electric & Gas Corporation.

CASE 19-E-0106 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for Rochester Gas and Electric Corporation.

CASE 19-E-0107 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for Consolidated Edison of New York, Inc.

CASE 19-E-0108 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for Orange and Rockland Utilities Inc.

CASE 19-E-0109 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for Central Hudson Gas & Electric Corporation.

CASE 19-E-0110 - Proceeding On Motion of the Commission Investigating Utility Preparation and Response to Power Outages During the 2018 Winter and Spring Storms for Niagara Mohawk Power Corporation d/b/a National Grid.

ORDER INSTITUTING PROCEEDING AND TO SHOW CAUSE

(Issued and Effective April 18, 2019)

BY THE COMMISSION:

INTRODUCTION

On March 6, 2018, Governor Andrew M. Cuomo directed the Department of Public Service (DPS or Department) to conduct a comprehensive investigation of New York State's major electric utilities following the storm response and service restoration of certain electric utilities to Winter Storm Riley.1 Winter Storm Riley occurred on March 3, 2018, significantly impacting Westchester, Putnam, and Sullivan counties in the lower Hudson Valley, resulting in peak outages of nearly 500,000 customers. Shortly thereafter, on March 7, 2018 another significant event, Winter Storm Quinn, hit many of the same areas causing further peak outages of 162,000 customers. New York State subsequently experienced further weather events that led to significant outages - there were two windstorms, one on April 4, 2018, which caused substantial damage in Western New York resulting in peak outages of over 120,000 customers, and one on May 4, 2018, which heavily impacted the Plattsburg area in the North Country resulting in peak outages of 160,000 customers. The final event was a severe thunderstorm system on May 15, 2018 that affected Dutchess, Putnam, and Orange counties causing peak outages of 188,000 customers. 2 The response to and service restoration of these events also became part of the comprehensive investigation of the Department.

The DPS investigation considers whether each utility properly prepared for, and responded appropriately to, the effects of the 2018 Winter and Spring Storms in compliance with their annually filed Emergency Response Plans (ERPs), Commission regulations and orders,3 the Public Service Law (PSL),4 the and Public Authorities Law (PAL).5 The Department's investigation examined the communications used to inform customers, emergency management personnel, governmental officials, and the media of the utility's response and restoration efforts, as well as, each utility's operational performance. Additionally, the Department determines whether there are any lessons learned and best practices that should be implemented in future ERPs.

The Department has completed its investigation and analysis concerning the Utilities' performance during and following the 2018 Winter and Spring Storms.6 While certain areas where the Utilities performed appropriately were noted, DPS's analysis found several areas where the Companies did not follow their ERPs and identified areas where the Companies fell short of customer and municipal expectations. The Department's overarching conclusion is that the Utilities' emergency response and electric service restoration protocols and practices need improvement during outage events. In some instances, the ability of a utility to provide "safe and adequate service" under PSL * 65(1) can be called into question.

The DPS Report provides the Department's assessment of the Utilities' performance during the 2018 Winter and Spring Storms, including their respective restoration efforts, as well as recommendations believed to improve the Utilities' performance. As part of the 2018 Winter and Spring Storm investigation, the Department sought input from all customer sectors, including governmental and civic entities. Department Staff (Staff) conducted twenty public statement hearings across the State where numerous customers and public officials provided both written and oral comments; conducted interviews with numerous State, County, City, and Town officials; held meetings with and received comments from customers and other stakeholders; and facilitated substantial public outreach to better understand issues and problems experienced during the 2018 Winter and Spring Storms. Additionally, the Department issued over 700 document requests; evaluated complaint data filed with the DPS Office of Consumer Services; and, reviewed other salient information, such as the United Westchester March 2018 Storm Response Report.

The DPS Report identifies 94 recommendations for corrective actions to be implemented in the Companies' ERPs.7 The DPS Report also identified potential regulatory violations by several of the Utilities.8 The DPS Report presents credible information to warrant Commission action requiring Central Hudson, National Grid, NYSEG, RGE, Con Edison, and Orange & Rockland to formally respond to the conclusions drawn in the DPS Report and this Order. By this Order, therefore, National Grid, NYSEG, RGE, Con Edison, Orange & Rockland, and Central Hudson are directed to show cause why the Commission should not pursue civil penalties, pursuant to PSL *25, and/or administrative penalties, pursuant to PSL *25-a, for the apparent failure to follow their ERPs as approved and mandated by the ERP Order and Commission regulations. All Utilities are also directed to show cause why they should not implement and incorporate the DPS Report recommendations into their ERPs.9

LEGAL AUTHORITY

Public Service Law * 65(1) requires utilities to provide "service, as shall be safe and adequate and in all respects just and reasonable." Public Service Law * 66(2) authorizes the Commission to investigate utilities. PSL *66(21) requires each electric utility to file its ERP on or before December 15 of each year for Commission review and approval. PAL *1020-f(cc)(2) requires PSEG LI, on behalf of LIPA, to file an ERP consistent with both PSL *66(21) and 16 NYCRR Part 105, which specify the content and information to be in the Utilities' ERPs.

Public Service Law ** 25-a (3) and (5) authorize the Commission to commence an administrative penalty proceeding against combination gas and electric corporations to determine, by a preponderance of the evidence, whether the corporation violated the Public Service Law or an order or regulation adopted pursuant to the Public Service Law. Such violations, pursuant to pursuant to PSL *25-a(5), may warrant a Commission-assessed penalty against,

...a combination gas and electric corporation determined by the commission to have failed to reasonably comply by a preponderance of the evidence with a provision of this chapter, or an order or regulation adopted under authority of this chapter, designed to protect the overall reliability and continuity of electric service, including but not limited to the restoration of electric service following a major outage event or emergency, shall forfeit a sum not to exceed the greater of:

(a) five hundred thousand dollars or four one-hundredths of one percent of the annual intrastate gross operating revenue of the corporation, not including taxes paid to and revenues collected on behalf of government entities, whichever is greater, constituting a civil penalty for each separate and distinct offense; provided, however, that for purposes of this paragraph each day of a continuing violation shall not be deemed a separate and distinct offense. The total period of a continuing violation, as well as every distinct violation shall be similarly treated as a separate and distinct offense for purposes of this paragraph; or

(b) the maximum forfeiture determined in accordance with subdivision three of this section.

Violations of PSL *25(4) may warrant a civil penalty as follows:

4. Notwithstanding the provisions of subdivision one or two of this section, a public utility company, corporation or person and the officers, agents and employees thereof that knowingly fails or neglects to obey or comply with a provision of this chapter, or an order or regulation adopted under authority of this chapter, designed to protect the overall reliability and continuity of electric service, shall forfeit to the state of New York a sum not to exceed the greater of:

(a) five hundred thousand dollars constituting a civil penalty for each separate and distinct offense; provided, however, that for purposes of this paragraph each day of a continuing violation shall not be deemed

a separate and distinct offense. The total period of a continuing violation, as well as every distinct violation, shall be similarly treated as a separate and distinct offense for purposes of this paragraph; or

(b) the maximum forfeiture determined in accordance with subdivision two of this section.

5. Penalties provided for pursuant to this section shall be recovered in an action as provided in section twenty-four of this article.

Such civil penalties under PSL *25 are recovered pursuant to PSL *24, which states:

Action to recover penalties or forfeitures

An action to recover a penalty or a forfeiture under this chapter or to enforce the powers of the commission may be brought in any court of competent jurisdiction in this state in the name of the people of the state of New York, and shall be commenced and prosecuted to final judgment by the commission. In any such action all penalties and forfeitures incurred up to the time of commencing the same may be sued for and recovered therein, and the commencement of an action to recover a penalty or forfeiture shall not be, or be held to be, a waiver of the right to recover any other penalty or forfeiture; .... All moneys recovered in any such action, together with the costs thereof, shall be paid into the state treasury to the credit of the general fund. Any such action may be compromised or discontinued on application of the commission upon such terms as the court shall approve and order. An action may be maintained by the commission for the whole or any part of the penalties or forfeitures prescribed in this chapter, and judgment may be rendered for the amount demanded in the complaint, or for any less amount, as justice may require.

BACKGROUND

The Commission and DPS have the regulatory authority to ensure utilities meet their regulatory obligation to provide electric, natural gas, and/or telecommunications services in a safe, adequate and reliable manner.10 The Department's oversight responsibility for utilities' emergency response actions occurs in three phases: storm preparation, active monitoring of utility impacts and system restoration, and post-storm analysis. To ensure that electric utility companies are fully prepared, PSL *66(21)(a), 16 NYCRR Part 105 (Part 105), and the LIPA Reform Act (LRA),11 require each major electric utility to submit a comprehensive ERP to the Commission, or, in the case of LIPA, the Department. The ERPs detail procedures and define roles, responsibilities, and required training to reduce confusion and promote a common understanding of the restoration process. The ERPs are annually reviewed by the Department and approved by the Commission, or, in PSEG LI's case, by the LIPA Board of Trustees. Under Part 105, each utility is also required to perform restoration efforts in compliance with its ERP and is expected to update its plan after a major event to capture all lessons learned and incorporate all best practices. The Utilities are further required to file self-assessment reports of their restoration efforts if they experience an outage with a restoration period exceeding three days.12

Winter Storm Riley occurred on March 3, 2018, resulting in more than 500,000 customer outages at its peak. The storm significantly impacted Westchester, Putnam, and Sullivan counties (NYSEG, Orange & Rockland, Con Edison, and Central Hudson service territories). On March 7, 2018, Winter Storm Quinn affected the same service territories, causing 162,000 peak customer outages.

Certain portions of these service territories were without power for several days as a result of these March storms, with customers in NYSEG's Brewster division experiencing outages for as long as eight days.13 Con Edison and Orange and Rockland had outages lasting ten days.14

Subsequently, the April and May 2018 Windstorms caused substantial damage and outages in Western New York and the North Country, including Plattsburg, New York (NYSEG, RG&E, and National Grid service territories). At their peak approximately, 125,000 and 160,000 customers were without power, respectively, with customers losing power up to three days in each event.15

Finally, portions of NYSEG's, Central Hudson's, and Orange & Rockland's service territories were without power resulting from the May Thunderstorm for as long as five days in portions of NYSEG's service territory, and for four days for Orange & Rockland and Central Hudson. The May Thunderstorm caused approximately 69,000 outages for NYSEG, 73,000 peak outages for Central Hudson, and 46,000 outages for Orange & Rockland customers. This event impacted many of the same communities previously affected by Winter Storms Riley and Quinn.

The complete text of the order is available at (http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={EFB4C0AD-AD34-473A-8BEF-AA6646FA982D}).

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