By Lisa van der Pool, Boston Business Journal

BOSTON (CBS) – NStar officials have insisted in press reports that the utility isn’t liable for losses resulting from the big Back Bay power outage earlier this month, but some local attorneys say that may be wishful thinking on the part of the power company’s leadership.

Firms that experienced business interruptions and revenue loss may have a strong case to make if negligence eventually is found to be a factor in the transformer fire that caused the widespread, two-day long outage, the attorneys said.

“(NStar is) liable like anyone else for damages that flow from negligence,” said Tony Doniger, a business litigation partner at Boston-based Sugarman, Rogers, Barshak & Cohen, who also lost power at his Back Bay home.

“They’re not immune,” Doniger told the Boston Business Journal.

NStar spokesman Michael Durand said the fire was caused “by the catastrophic failure of a connector between an electrical cable and a transformer in our Scotia Street substation. The failure caused cable cooling fluid to ignite, leading to the fire that ultimately caused the outage.”

The first step for businesses that want to try to recoup cash is to contact their insurance companies to see what type of plan they have, said Mary-Pat Cormier, a civil litigation partner at Edwards Wildman Palmer LLP in Boston.

Restaurateur Steve DiFillippo, who owns Davio’s and Avila in the Back Bay, said he lost upwards of $20,000 during the blackout, because the lights abruptly went out during dinner service on Tuesday night.

But DiFillippo said his insurance kicks in after 24 hours and his power was only out for seven.

Cormier said that once the insurance route is exhausted, the next step would be to potentially file a claim against NStar for lost revenue.

Cormier herself was affected by the blackout, as her law firm, Edwards Wildman, is located at 111 Huntington in the Back Bay.

Power came back on during the second day but it was spotty.

Cormier worked from home the first day, and forwarded articles about the blackout to clients so they would know why she was sluggish to respond.

“It was impossible to access documents and we had to get an extension to answer a complaint,” said Cormier of the inconvenience.

Businesses that file claims against NStar for damages during the blackout will have a struggle getting money out of the utility — unless it’s eventually found that there was negligence.

“Unless (the fire) was due to something they didn’t check, or they cut corners… barring that, it’s going to be an uphill battle,” said Leonard Kopelman, a municipal law expert, with Boston-based Kopelman and Paige PC.

Howard Goldman of Goldman & Pease LLC agrees with Kopelman, and cited a 1993 case, “FMR Corp. v. Boston Edison.”

In that case, businesses in the financial district sued Boston Edison for several different power outages in 1983 and 1987.

Boston Edison was eventually found not liable for lost business during the power outages because there was no physical damage, according to a decision in the case, which was decided in the Supreme Judicial Court of Massachusetts.

“The courts will not award damages to such businesses under a tort or strict liability theory where personal injury or physical property damages have not resulted,” said Goldman in an email.

“And damages are not recoverable under a breach of contract theory due to the regulatory agreements between the state and NStar as such contracts and agreements do not expressly provide for such economic damages, for to do so would most likely bankrupt the utility companies.”

Lisa van der Pool of the Boston Business Journal can be seen weekdays at 6 a.m. on WBZ-TV.

You can follow Lisa on Twitter at @lvanderpool.

Comments (11)
  1. Billy says:

    I don’t think the NStar should pay. For what I read and heard, the transformer exploded. NStar didn’t shut off the power for the Back Bay area until half an hour after the accident. They didn’t install the backup transformer until day later. Was it necessary to shut off power for the whole area or partially?

  2. tsal-kv says:

    I think if they find that NSTAR was negligent, the company should be responsible. Connectors fail all of the time. The transformer will have documented testing records so it should not be difficult to find out how well maintained it and the components were. I may be mistaken but believe it’s been there for several decades. As far as businesses, there should always be a plan b and if you can’t sustain one day of lost power, I’m thinking you were in a lot of trouble to begin with.

  3. emom says:

    Lets see,,, Nstar should start thinking of upping their maintenance on their items,, If they put as much care into being sure things like this would not happen then maybe it would not happen and the things that need to get done , LIKE THE POLES ON STILTS. Can get replaced, If the put as much effort into repairing things correctly and in the first place instead of putting a band aid on them then ,m they would solve the issue of cost over runs., Wasteful spending in repeat repairs are extremely costly to the consumers, have you looked at your bills over the last five years,,,, And they are asking for a rate hike once again… I WONDER WHY. Fix things right the first time around, it will not cost the consumner 10 x in the end.
    So in a way its their fault, lack of regular maintenance creates these problems, ANd yes they can do maintenace they just claim they dont have the staff ,,,

  4. Ken says:

    The US electrical grid is deteriorating to third world levels since deregulation of the industry. Utilities throughout the country have cut back on maintenance and upgrades to maximize profits. This has been allowed to happen by the corrupt politicians at the local, state and federal level who are bought and paid for pawns of corporate interets.

  5. make everybodypay says:

    Uhh, and will Menino pay for losses caused by 100 year old water main breaks? I don’t think so. Why can’t the city maintain its infrastructure? I think that is gross negligence.

  6. emom says:

    I agree,, the lack of maintenance over the last decade has resulted in failures that have cost the people of the state far to much. Also the lack of staff to be able to handle these issues is simply… CORPORATE GREED, We pay the salaries of the ceo’s and those that sit in an office crunching numbers, wearing expensive suits , driving around is gas wasting SUVs, eating out at expensive restaurants and all thanks to those that pay their electric bills, I will never forget the answer to why something was not getting fixed correctly,… they don’t have the man power, they don’t have THE TIME, and its not cost effective to replace at this time… REALLY NOW,,, so the next time one of these behemoths explode then what…. what if we have injuries,,, what will they say then.,. OH WELL.

  7. tsal-kv says:

    emom – it wasn’t the transformer that failed – it was the conductor.

    There are records on the testing of the transformer (which I believe has been there for decades) that will document its testing history. For anyone to say there needs to be more frequent testing on these transformers, is simply a guess unless that person has access to the tests. The only thing that can be said for certain is that it had to have had a recent enough test to have determined very quickly that there were not askarels in the oil.

    If anyone thinks that these have a high failure rate, he/she needs to go back and check what the failure rates used to be. Ken, your comments are interesting. Do you have information to support them or are you guessing? I haven’t looked into what problems, if any, deregulation caused. I sure believe your comments with regard to politicians.

    With regard to less maintenance, you are right emom The greed at the top of companies is excessive. It is however being supported by the political mindset that CEO’s etc SHOULD earn more because they are the “chosen ones” Well, folks, if you support that mindset – do not complain when the average Joe isn’t there to pull the samples needed for the tests to be performed

  8. Sheila Barrett says:

    No matter what has failed it is their cost of delivering the electricity and they need to pay when their job is not done. If a failure has occured in their equipment they need to resolve it with their vendors. They cannot add to the cost of our insurance if someone there did not do their jobs. What better plan to make sure they do their job. This comes from a customer that still has a tree growing through the wires and they tell us the town should be responsible. I lost power 3 times last year and no one was respomsible for food loss.

    1. tsal-kv says:

      Sheila most if not all homeowners ins pays for food lost without a deductible. Also ice helps – we lost power for days in two houses during Irene and in one during the October storm and didn’t lose a thing. Of course we had so much warning that it was easy to prepare.

      If it’s their job to delivery the electricity then they should not charge for the days that a customer doesn’t have any. Any more than that, I’m not seeing it – UNLESS it was due to negligence. What happens in disaster areas? The utilities can’t be expected to pay for damage when their lines are all down, substations are flattened, etc.

      I’d hate to see what would happen in this country if we ever faced a real disaster and pray we never find out.

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