UI, state reach deal on electric rates
State officials have struck a deal with The United Illuminating Co. for a $46.5 million COVID-19 relief bill credit from the Orange-based company, a move that Gov. Ned Lamont and Connecticut Attorney General William Tong said Wednesday will decrease and stabilize electric rates into 2023.
The deal between the utility and the state will only result in about a $1 average decrease on a typical residential customer’s monthly bill, depending upon how much electricity they use.
But UI has also told state officials they will not seek an increase in distribution rates until sometime after May 2023.
The last time the electric distribution company changed its distribution rates was in July 2019. The agreement is subject to review and approval by the state’s Public Utilities Regulatory Authority.
United Illuminating serves 341,000 customers in 17 municipalities in the Bridgeport and New Haven areas.
“For families and businesses who have been struggling with high energy costs during the pandemic, this agreement promises more affordable, predictable rates,” Lamont said in a written statement. “When I signed legislation to reform utility accountability, I called on the utilities to put ratepayers above profits. Today’s settlement, achieved through ratepayer-focused negotiations by our state agencies, represents a positive step by UI in that direction.”
Tong said the Connecticut residents “pay far too much for our energy.”
“Families need and deserve stability as we emerge from this economic and public health crisis,” he said. “United Illuminating came to the table prepared to make real concessions, including contributing millions of their own dollars to ease the burden on local ratepayers. It makes such a difference to have corporate leadership firmly committed to Connecticut.”
Frank Reynolds, president and chief executive officer of UI, said the settlement “allows us to provide meaningful benefits to our customers, many of whom continue to be impacted by the economic effects of the COVID-19 pandemic.”
“If approved, it will not only avert a bill increase in the near term but will also help keep rates stable in the foreseeable future,” Reynolds said in a statement.
The monthly savings will come in the form of a bill credit based on the number of kilowatt hours used each month, according to Ed Crowder, a UI spokesman. If PURA approves the agreement, credits will begin appearing on bills starting May 1 and will last through Dec. 22, 2022, state officials said
Crowder said officials at the utility had initially anticipated an
increase of between 6 and 8 percent in federally mandated charges that UI is required to collect, which would cover the costs associated with using the electric transmission grid as well as a power purchase agreement that the utility has with the owner of the Millstone nuclear plant. But that was before the negotiations began in earnest.
UI contributed $5 million to support customers, in addition to an accelerated return of $41.55 million of accumulated savings from federal tax cuts to offset that would have resulted in the increase, according to state officials. The increase would have begun in bills on May 1.
Katie Dykes, commissioner of the state Dept. of Energy & Environmental Protection (DEEP), said the relief to UI ratepayers comes “not a moment too soon.”
“This bill credit will help to offset pressure on other parts of the energy bill, while better enabling PURA to implement performance-based regulation of UI,” Dykes said in a statement.
Richard Sobolewski, the state’s acting Consumer Counsel, said the plan “allows for the costs that were deferred last summer to be recovered without a bill increase.” Sobolewski’s office represent the state’s consumers in utility rate cases.
Further rate relief is on the way for UI’s residential customers, according to state officials. On Tuesday, PURA ordered UI to provide an updated filing on how it plans to distribute $3.6 million in overearnings that is due to residential ratepayers.