Rate agreement rejected
Proposal would curb costs with tax savings, shareholder money
PURA rejects settlement between state and United Illuminating.
State officials and United Illuminating hailed an agreement last month as a novel approach to hold down electricity rates by using accumulated savings from tax cuts and shareholder money.
State regulators, however, disagreed. The Public Utilities Regulatory Authority rejected the settlement between UI and the state, saying the “proposed scenarios presented by the company do not provide sufficient protection to relevant public interests, both existing and foreseeable.”
In a decision issued Wednesday, PURA cited “uncharacteristic market prices and overall net expenses” during the pandemic last year and the “complexity in comparing 2020 actual costs in an anomalous year with expected 2021 expenses.”
Regulators said more analysis is needed to examine the factors contributing to UI’s proposed rate adjustments.
The agency directed UI to pay off, or amortize, over five years $58.1 million from money it failed to sufficiently recover in three programs related to avoiding congestion on the transmission system, a transmission adjustment charge and a mechanism separating UI’s revenue and sales related to energy efficiency.
And in its interim decision,
PURA directed UI to maintain current rates, effective as of June 29, for two rate components until regulators complete a review before the next rate adjustment period on Sept. 1.
A final decision is scheduled for Aug. 25.
UI said it is “surprised and disappointed” that PURA rejected its settlement offer with the state. It was supported by Gov. Ned Lamont, Attorney General William Tong, the Office of the Consumer Counsel, Department of Energy and Environmental Protection and PURA’s office of education, outreach and enforcement.
“As this decision is finalized in the weeks ahead, we expect to file comments on the draft decision, highlighting elements we believe would negatively impact UI customers,” the utility said,
Tong said PURA’s decision adds $2.4 million in costs for ratepayers, while rejecting a $5 million voluntary contribution from UI. PURA’s move also enables UI to immediately apply for an increase in rates, the attorney general said.
“PURA got this wrong and I strongly urge them to reconsider,” Tong said.
The utility, which serves about 340,000 customers in the Bridgeport and NewHavenareas, considered legislation enacted last year authorizing PURA to investigate an interim rate cut and a 2017 change in federal tax law reducing the corporate tax rate that was to be passed on to ratepayers in lower prices.
The tax law changes amounted to $41.5 million and UI added $5 million of shareholder money. The result would have been a line-item credit on customers’ bills based on electricity use from May 1 to Dec. 22, 2022, avoiding a rate increase of between 5% and 8%.
Every six months PURAreviews requests by Eversource Energy and United Illuminating for new rates to account for costs and revenue that do not meet estimated targets. Regulators in June OK’d a rate increase, but ordered a rollback after significant price increases provoked outrage among consumers and elected officials.
Prices spiked due to heat waves last summer, a power contract the utilities were required by law to buy from the Millstone Power Station, at-home workers and a required federal charge.