Dive Brief:

• Four investor-owned utilities in New York will face a combined $7 million hit to their allowable revenue after failing to meet certain reliability and customer service metrics in 2018, the state's Public Service Commission said Thursday.
• These "negative revenue adjustments" are a change from last year, when regulators concluded all utilities met targets. The PSC noted that "extreme weather" in 2018 caused a spike in outages, ultimately leading to a decline in interruption frequency and duration performance for electric service for the year.
• The largest revenue adjustments are related to electric reliability failures. Shareholders of New York State Electric & Gas ​will see a negative revenue adjustment of $3.5 million; Central Hudson shareholders will face $2 million.

Dive Insight:

Utilities constantly face a wide range of challenges, but last year was particularly difficult for several in New York as storms took a toll on performance.

In terms of electric reliability, last year major storms accounted for more than 80% of the total customer-hours of interruptions and 36% of the overall number of customers affected, the PSC said. The state experienced three dozen separate major storm events in 2018.

"While most utilities are doing a good job providing safe and reliable service, four utilities have fallen short of our expectations in certain areas and we will continue to act aggressively to ensure utilities improve performance," PSC Chairman John Rhodes said in a statement.

Excluding major storms, the PSC said the statewide interruption frequency and duration performance for 2018 declined compared to 2017 and the statewide five-year average. "The decline was primarily due to fewer outages from equipment failures and tree contacts," the PSC concluded.

"It is clear that utilities must be ready to address more frequent and powerful storms," Rhodes said.

NYSEG and Central Hudson's revenue adjustments are related to missed targets on two metrics: the System Average Interruption Frequency Index and the Customer Average Interruption Duration Index.

"All electric utilities met their frequency and duration targets, except NYSEG and Central Hudson both failed to meet certain reliability metrics," the PSC said.

But the revenue adjustment "should be taken into context," because Central Hudson also earned positive revenue adjustments, including in the area of gas odor response time, a utility spokesperson said.

"An evaluation of the cause of electric service interruptions has shown trees to be the greatest contributor," Central Hudson's John Maserjian told Utility Dive in an emailed statement.

Maserjian said the utility has been working to address the issue and will increase tree trimming spending 40%.

"The benefits of this enhanced tree management program will take time to show results, and we expect tree-related outages to once again decline and our reliability to show improvement," Maserjian said.

Orange & Rockland shareholders will see a $450,000 negative revenue adjustment because it failed to meet its target for calls answered by a representative within 30 seconds.

The PSC noted, however, that "aside from the deficit at O&R, customer service performance has steadily improved over the last several years, and this trend continued in 2018."

O&R faced a number of challenges last year, "including storms, scammers, heat waves and a frigid winter, which all significantly increased customer call volume and duration," the company said in a statement to Utility Dive.

In response to the increased customer calls, O&R said it has implemented new programs and resources, temporarily extended customer service hours, and has hired additional customer service representatives.

In the area of gas safety, National Grid’s Long Island gas utility faces a negative revenue adjustment of approximately $1.1 million, for missing 30-minute emergency response targets. 

Again, however the commission stressed that "overall, the data indicates that performance has substantially improved" since metrics have been in place for issues like damage prevention, leak management and others.

Utilities across the nation have been preparing for a range of threats this summer. "There are regional specific differences between all areas of the country, across all manner of threats," Scott Aaronson, vice president of security and preparedness for the Edison Electric Institute, told Utility Dive.

"The common theme is, it's better to prepare for the worst than to be caught flat footed," he said.