CHANGES COMING FOR POWER RATES
Connecticut regulators will alter how they decide how much utilities can charge for electricity; confusing customer bills must also be simplified
Connecticut regulators said Wednesday they will change how they periodically adjust electricity rates, using utilities’ recent expenses and revenue as a guide to set rates rather than forecasts that fell short in the pandemic that no one saw coming.
Rate increases that applied to the delivery of electricity, rather than its supply, were approved last summer by the Public Utilities Regulatory Authority for Eversource Energy. The decision led to dramatic price spikes that drew an immediate backlash from customers and elected officials.
PURA ordered the rates rolled back and took another look at the utilities’ requests. The scaledback rates will remain in effect until May 1 when regulators again take up requests by utilities to recoup costs such as those associated with less customer demand or lower wholesale prices.
Regulators investigated what they called “unexpectedly high electric bills” and said they will rely on utilities’ recent revenue and expenses rather than forecasts that have been “dramatically off-base.”
Electricity use patterns changed as employees worked from home and commercial and retail spaces emptied to avoid gatherings that spread COVID-19.
PURA’s new policy will bring more stability to customer bills and, the agency said, allow for an “extended and more meaningful” opportunity to review rate requests.
Spokeswoman Caroline Pretyman said Eversource will review the decision and looks forward to “working cooperatively with PURA to institute changes to the rate adjustment process that enhance transparency and understanding by our customers.”
United Illuminating commended PURA for seeking “greater transparency and clarity” in rate adjustments. It said it will work with policymakers to make sure adjustments for utility costs are “implemented equitably.”
PURA also ordered a redesign of customer bills that have drawn complaints for their confusing and complicated array of rates and explanations.
“In this decision, PURA has begun demystifying and unwinding decades of ratemaking policies that have evolved into a less customer-friendly, less transparent framework,” said Marissa Gillett, chair of PURA.
A redesigned bill, which could be available to utility customers later next year, might detail where customers have a choice among electric services and links to what drives rates, such as public policy or taxes, Gillett said.
Rather than listing line items that “are somewhat nonsense to an average consumer,” electric bills could explain details about what goes into a particular cost, when it will next be reviewed and how a customer benefit from a policy, such as clean energy goals, that drive the cost, Gillett said.
PURA’s rate decision focuses on its review every six months of requests by Eversource and United Illuminating to approve new rates to account for costs and revenue that do not meet estimated targets.
PURA also ordered the utilities to scale back what it called an “unjustifiably high rate” earned on money advanced for energy purchases and other costs.
Gillett said Eversource earns 7% to 9% interest on many delivery charges that state law authorizes to be recouped from ratepayers.
“We took a hard look at that and said, ‘There’s just no risk there,’ “she said. “We agree that you’re fronting money and that way acting like a bank and you should recoup interest, but certainly not at the level that they were getting for the past decade.”
PURA ordered a reduction of the interest collected to the prime interest rate that currently is 3.25%.
In June, regulators approved increases sought by Eversource for several charges that took effect July 1. Rates were higher than expected with energy use up dramatically due to heat waves that prompted greater use of air conditioning and more employees at home, Eversource said. The Berlin-based utility also said it fell short in recovering certain local transmission charges.
In addition, the utilities cited state-approved payments in power purchase agreements with the Millstone Power Station in Waterford.
Gillette defended PURA’s decision to raise delivery rates charged by Eversource.
“As a quasi-judicial agency we can only make a decision based on the evidence in front of us,’ she said. “So we’re at a perpetual disadvantage if we don’t hear from ratepayers on a regular basis about how decisions affect them.”