Connecticut Attorney General Richard Blumenthal Thursday called on the state’s regulators to impose significant penalties on Connecticut Natural Gas (CNG) for a rash of customer overbillings in January and February.

“I think that the overbilling…is astonishing and alarming,” and the East Hartford, CT-based local distribution company (LDC) broke state law when it sent out excessive bills in January and February to make up for apparent undercharges in November and December, he told the Connecticut Department of Public Utility Control (DPUC) during an emergency technical meeting called to explore the overbilling issue.

The violation “very clearly implies the need for a penalty,” Blumenthal said. This “[would] send a message and establish a deterrent for this type of incident in the future.” The DPUC needs to investigate “who knew what when within the company,” and why the state agency wasn’t alerted earlier about the problem.

“I think what we have basically is a callous, cavalier disregard” for utility consumers, he noted. “We would submit to the DPUC that consumers should be forgiven for amounts above the previous year’s January bill.”

It was estimated that as many as 2,600-2,700 CNG gas customer were sent inflated bills in January and February to make up for billing errors in November and December. Some customers estimated the bills were $300-$500 above what they normally paid during those months. Most of the affected customers were residential users, but a few commercial and industrial users (71) received abnormal bills as well.

The DPUC Wednesday threatened to fine CNG up to $26 million — $10,000 for each of the 2,600-2,700 overbillings.

CNG officials blamed the billing errors on a few renegade meter readers who submitted falsified and/or inaccurate reads. The LDC started to see a trend involving inaccurate reads by these meter readers in January, which triggered an internal investigation, said CNG President Robert Allessio. CNG, however, was sternly criticized for not notifying the DPUC about the problem until late January or early February. A CNG official said “we had no idea of the nature or magnitude” of the problem at the time.

When confronted by CNG, the three meter readers who submitted the false reads “denied what they were doing and appeared to be in cahoots,” said a CNG official. She noted that the company has since terminated them. In addition, CNG said it is considering bringing further action against them.

Even though CNG had concerns with the accuracy of its billing, it still required its gas customers to pay their January bills, explaining that the weather during the period was especially cold, Blumenthal said.

“We want a letter to go out as quickly as possible” that apologizes to the customers and informs them that payment will be deferred until the DPUC’s investigation is resolved, noted DPUC Commissioner Anne C. George.

CNG is proposing to send a letter that would apologize to the affected customers and would offer credits equal to the difference between the amount owed for the January-February 2008 billing period and the amount paid for the corresponding period in 2007. The company said it also plans to waive any late charges, suspend normal collection activities and recalculate the purchased gas adjustment.

“We will review it [CNG’s letter] as quickly as possible,” said George.

“I am very disappointed with the company,” said Mary J. Healey of the Office of Consumer Counsel, adding that she wished CNG had come forward sooner about its billing concerns. “Our office will ask tough questions of the company,” she said.

“If the company has failed [its] customers, then sanctions should be levied,” Healey said. She further hopes the DPUC investigation will explore the “long-standing concerns over estimated billings…I would like to see a culture change [with] all utilities.”

CNG’s letter apologizing to its customers is a “good first step,” but she believes the utility needs to go even further.

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