UK Edition
National Grid faces $20m fine over US storm blackouts
National Grid is facing another showdown with its US regulator after thousands were left without power for days in the wake of major storms across Massachusetts late last year.
The US department launched an investigation into the FTSE 100 grid operator's response to blackouts affecting more than 300,000 homes, which could lead to a fine of up to $20m.
It is the second major run-in with the Massachusetts Department of Public Utilities in recent years, as the operator of Britain’s pipes and wires funnels a larger stake of its investment towards the US business.
National Grid was forced to pay a fine of $19m to the Massachusetts department in 2012 for failing to meet its standards in the wake of Tropical Storm Irene and the October snowstorm of 2011.
The latest probe will examine how National Grid responded to the storm, including its preparations before the windstorm, and its efforts in the storm’s wake to restore power and communicate with the communities which were left without power.
A National Grid spokesman in the US said the business is reviewing its planning and response processes following the storm, as it does following every major storm.
“In a report filed last month with the department, we detailed the impact of this storm, which interrupted service to more than 330,000 customers, and caused damage that surpassed that of other historic Massachusetts weather events, including Hurricanes Sandy and Irene, and Winter Storm Nemo,” he said.
The spokesman added that National Grid will continue to provide information to the department as part of the investigation.
The probe was announced late last week, amid the group’s revenue negotiations to determine its income from its Massachusetts activities for the next three years. The new regulated revenue will take effect from September.
Meanwhile, National Grid has returned to the New York regulator to negotiate the revenues for its Niagara Mohawk Power Corporation, which will be finalised this spring.
National Grid told UK investors on Monday it had initially requested a revenue increase of $317m for the 2018/19 financial year, but after talks with the commission over the next three year regulation period it has cut its increase request to $206m.
For the 2019/20 and 2020/21 financial years incremental year-on-year revenue increases would be $36m and $60m respectively, National Grid said.
National Grid is pouring more than half of its spending into projects in the North East of the US where regulators are encouraging billions of dollars in low carbon investments.
The transmission expert’s trading update late last year revealed it has invested £2bn in the last six months, of which 55pc was ploughed into the US market.
The growing business delivered profit growth of almost a fifth to £526m, helped by the stronger US dollar, while the UK business fell short of expectations to drag the overall operating profits to £1.26bn from £1.47bn last year.