Eversource pushing for rate hike
19% increase would help offset cash issues ‘primarily driven’ by PURA, utility claims
Eversource filed a request Thursday for a $784 million rate adjustment that would bump its Connecticut Light & Power electric rates by nearly 19%, costing an average residential customer an additional $38 a month on May 1.
The United Illuminating Company, an Avangrid subsidiary and the smaller of Connecticut’s two regulated electric monopolies, intends to make a similar filing next week, though most likely at a far less jarring level.
Twice a year, the utilities seek rate adjustments to recover costs imposed by public policies, notably a directive that they purchase electricity at a favorable rate from Millstone, the state’s last nuclear plant and its biggest source of carbon-free power.
Eversource said the Millstone credit authorized by the General Assembly in 2017 caused $605 million of the $784 million in unrecovered costs; another $160 million is blamed on mandated benefits for the poor and medical hardship cases.
The filing comes as Eversource is looking to raise cash by selling Aquarion Water to offset a one-time $1.9 billion loss on off-shore wind investments and a day after it told stock analysts that Connecticut regulators were making its cash crunch worse.
Eversource complains that a change that the Public Utilities Regulatory Authority unanimously adopted in December 2020 in its methodology for assessing biannual rate adjustments have slowed cost recovery.
The company’s cash issues were “primarily driven” by PURA’S shift in methodology away from forecasts of recoverable costs to using actual costs in the previous year as a benchmark, said John M. Moreira, the Eversource chief financial officer.
“We’ve been significantly under-recovered at the CL&P franchise in 2023 by a sizable amount, close to $1 billion,” Moreira told stock analysts on an earnings call Wednesday.
Eversource offered no estimate, however, of how using the older methodology would have mitigated the proposed increase by allowing some cost recovery earlier. Eversource proposed Thursday that the increase be phased in.
Claire E. Coleman, the state’s consumer counsel, said her office would try to assess which method was best for stability and the interests of consumers.
“These are very complicated calculations, and the impacts of using forecasts versus actual costs are probably different for each of the cost components of the [rate adjustment]
application,” Coleman said.
The criticism of PURA has a broader subtext: Eversource and Avangrid, the owner of United Illuminating, have been urging Gov. Ned Lamont not to reappoint Marissa P. Gillett, the authority’s chair, to another term.
Gillett declined comment on the filing.
Two lawmakers on the Energy and Technology Committee said they saw new messaging around the filing as part of the broader campaign against Gillett.
“It’s pretty clear that the utilities are not a great fan of Marissa Gillett,” said Sen. Ryan Fazio, R-greenwich. “I think she has the interest of consumers at heart, and whether every decision she and the other commissioners make is right or wrong is a complicated question. Each of those decisions should be examined and judged on their merits.”
He called the campaign against her “untoward.”
Sen. Norm Needleman, D-essex, co-chair of the committee, was blunter.
“In my opinion, they are just trying to get her fired. And that’s as simple as it is,” Needleman said.
Lamont has both praised Gillett for her close oversight of utilities’ expenses and rates, but he has urged her to work more collaboratively with her two colleagues on the PURA commission, as well as the companies.
The governor’s office reacted with caution Thursday night.
“We need to review the filing. We agree that we ought to work together to lower electric costs,” said Julia Bergman, the governor’s spokeswoman. “We’ll continue to collaborate with all the parties to do that.”
“In my opinion, they are just trying to get (Gillett) fired. And that’s as simple as it is.”
— Sen. Norm Needleman, D-essex
Whether the numbers are correct, the types of expenses claimed by Eversource clearly are recoverable, lawmakers said.
Fazio said the methodology challenged by Eversource did not change that.
“It’s a question of when they’re going to pay costs, not if they’re going to pay costs,” said Fazio, the ranking Senate Republican on the energy panel.
The ranking House Republican, Rep. Bill Buckbee of New Milford, blamed Democratic policies.
“This proposed rate increase comes at a time when residents simply cannot afford to pay more out of pocket to cover the financial ramifications of policy decisions that have been made by the Democrat-controlled legislature, the governor’s office, and his regulators,” Buckbee said.
Actually, the Millstone bill had more Republican support in the House than Democrats — Buckbee among them. In 2017, Republicans held half the seats in the Senate and were five short of a majority in the House. The governor was a Democrat, Dannel P. Malloy.
At the time, Millstone’s profits were eroded by competition from electricity generated by what then was plentiful and cheap natural gas, and its owner said its future was threatened without help.
The bill allowed the Department of Energy and Environmental Protection and PURA to permit Millstone to compete in a more favorable market against solar, wind and hydro power that commands higher prices.
What resulted was a fixed price for much of the electricity generated by Millstone. Eversource and Avangrid would buy it and immediately resell it on the competitive market.
When the market prices were low, the utilities took a loss that PURA would let them recover from ratepayers. When the prices rose, as occurred during the first year of the war in Ukraine, the utilities turned a profit on the Millstone power that flowed back to ratepayers.
Millstone’s electricity is once again above market rates, meaning UI and Eversource are owed a recovery of their costs.
“Now we’ve got to pay the piper,” said Rep. Jonathan Steinberg, D-westport, co-chair of energy. “There’s not much way around it, and they stand on very firm ground with that one aspect.”