OCC sues to block electric bill relief
Consumer counsel says PURA wrong to limit it to delinquent customers
The state’s Public Utilities Regulatory Authority decided in mid-October to distribute $3.6 million in excess United Illuminating Co. earnings to consumers who’ve fallen behind on their electric bills during the coronavirus pandemic.
But its effort to help the neediest consumers has stalled, and may be doomed, because of a lawsuit seeking to block it by the state’s Office of the Consumer Counsel.
Why would the consumer counsel’s office, whose statutory job is to represent customers of regulated utilities, sue PURA over an attempt to help hard-hit consumers?
The Oct. 19 lawsuit by OCC raises numerous legal objections, including that PURA is exceeding its authority by favoring a relatively small number of delinquent ratepayers with UI’s “over-earnings” — which are financial returns on a utility company’s investments that exceed amounts forecast in calculating PURA-approved rates for them to charge their customers.
The OCC says that PURA should have to adhere to its longstanding, legally adopted mechanism for returning such excess earnings — which is to split them among UI’s entire population of ratepayers, not just the subgroup behind on their payments, in the form of credits on their accounts. UI has more than 300,000 residential customers in 17 municipalities along Long Island
Sound including New Haven and Bridgeport.
Marissa Gillett, PURA’s chair since 2019, insists that her agency does have the authority to carry out the plan, and the office of state Attorney General William Tong is defending PURA in court.
Gillett said the $3.6 million is a small part of the hundreds of millions of dollars UI receives annually from residential customers, and spreading it out among all 300,000 of them would amount to a one-time credit of $10 or $15 each — which wouldn’t mean much to someone who pays a typical monthly electric bill of $140 to $175.
But she said it would make a big difference to a few thousand delinquent ratepayers whose “arrearages” could be reduced or erased by grants of up to $1,500 each under the PURA plan.
“I thought it was innovative [and] certainly more meaningful, on a dollar-and-cents basis,” Gillett said.
Using the money to pay down delinquent ratepayers’ balances benefits all ratepayers, because utility companies are allowed to make up for today’s delinquent “uncollectibles” by later imposing
those charges on the entire base of ratepayers, Gillett said.
The Hartford-based nonprofit Operation Fuel Inc. — which assists low- and moderate-income residents statewide with utility expenses — was recruited to administer the grant program.
It would handle customers’ requests for grants, and submit payment authorizations to UI for eligible recipients. UI would then credit over-earnings funds to individual customers’ accounts, but never more than their delinquent amount. Operation Fuel would be allowed up to $264,502 in administrative costs from the $3.6 million UI over-earnings total.
The program has yet to start up, even though it was supposed to be well underway by now, and Brenda Watson, Operation Fuel’s executive director, said she’s worried that if the lawsuit delays the launch until early 2021, it may be too late. A legal deadline, written into the Oct. 14 PURA decision, says the grants of excess earnings must be distributed among the delinquent ratepayers by March 15.
The OCC’s lawsuit says it’s improper for PURA to have Operation Fuel run the grant program or receive $264,502 of the over-earnings, adding that it “is a private nonprofit entity and not one of the public service companies ... over which PURA possesses regulatory jurisdiction.”
“The whole legal [approval] process wasn’t followed correctly,” acting Consumer Counsel Richard Sobolewski said in a Friday interview. In departing from the long-established “Earnings Share Mechanism” that distributes the funds among all ratepayers, Sobolewski said that PURA rewrote a “decision that’s been in place and been adopted for all our [regulated utility] companies.”
There’s a “huge legal precedent for my office in what they did,” Sobolewski said. “What’s next? There could be funds for something else [and] they could transfer them to some party outside their control.”
The next scheduled event in the case is a Dec. 23 remote hearing before Judge Daniel Klau in New Britain Superior Court.
Lamont called on
The court battle is drawing attention to the fact that Gov. Ned Lamont hasn’t appointed a permanent replacement for ex-Consumer Counsel Elin Swanson Katz in the 17 months since she resigned in July 2019. Sobolewski, a longtime utilities financial analysis supervisor at the OCC, has been serving as acting consumer counsel since she left.
But a permanent replacement is needed, says Tom Swan, executive director of the Connecticut Citizens Action Group. He and Chris Phelps, state director for the group Environment Connecticut, wrote to Lamont in late September asking him to “appoint a Consumer Counsel immediately.”
“The recent exorbitant electric transmission rate increase and the current crisis resulting from Tropical Storm Isaias, makes it even clearer that ratepayers need for a strong independent office to protect consumers and the public interest,” they wrote. “We and our members look forward to your response to this urgent matter.”
“I don’t know who is advising the governor that leaving this position open is a good idea,” Swan told Government Watch. “Whatever rate increases are approved, and whatever failures there are for past or future storm responses and how those costs are passed on to consumers, will politically will lay at his doorstep.”
Swan said that it’s important to have a permanent appointee, not just an acting consumer counsel, because “an appointed person ... has gone through a process that is more publicly accountable” and “there are greater expectations for them to really protect consumers.”
He also said he considered it “weird” that the OCC is devoting such time and expense to a lawsuit against a PURA effort involving a relatively small amount of money, compared to vast sums paid by electric consumers annually — particularly when he said the OCC didn’t make such a fuss over the big July 1 Eversource rate increase that caused a public outcry.
Max Reiss, Lamont’s communications director, was asked Friday about the delay in appointing a new, permanent consumer counsel, and he said: “The Office of the Consumer Counsel has remained active with numerous filings on behalf of ratepayers over the past year and a half. Richard Sobolewski, who has 34 years of experience in that office serving the people of Connecticut, is an expert in utility regulation, and has been managing the role professionally with an eye toward how to best represent Connecticut residents. The Lamont administration will continue its search for a permanent appointment to lead the Office of the Consumer Counsel.”
Asked if Lamont supports the OCC lawsuit against PURA, Reiss said, “The administration won’t comment on pending legal action.”
The legal arguments surrounding the PURA decision emerged over several months, and are numerous and complicated. One measure of that is that lawyers from Tong’s office have taken two different positions about PURA’s plan — one in an Oct. 6 letter submitted to PURA before it made its final Oct. 14 decision, and the other after the OCC filed its lawsuit.
“The Attorney General is concerned ... that the record in this case does not support a conclusion that PURA’s plan is the fairest and most efficient way to achieve its goal or that its goal will be accomplished consistent with applicable law,” two assistant attorneys general, Lauren H. Bidra and John S. Wright, wrote Oct. 6, essentially aligning Tong’s office with OCC’s position.
Since the OCC filed the lawsuit, a different assistant attorney general, Robert L. Marconi, has been assigned to defend PURA, and he wrote in a Nov. 5 legal memo, filed in court: “PURA had the statutory authority to render its decision. PURA’s decision to reopen the UI docket was motivated by changed conditions surrounding the COVID19 pandemic.” He added that “PURA’s decision is supported by substantial evidence.”