The Middletown Press (Middletown, CT)
Eversource confirms $124M gap
Utility says Connecticut customers are paying more than projected
Eversource managers confirmed Monday during a daylong hearing that Connecticut electricity customers are paying $124 million more than what the utility projected they would for electricity generated this year by the Millstone nuclear power plant.
In short, the grid saw a drop in electric load this summer, but customers did not see a corresponding drop in their energy bills.
The admission came after a call by U.S. Sen. Richard Blumenthal, DConn., that Eversource be broken up, arguing it has failed in its responsibilities as a public service company in holding down prices while ensuring a reliable flow of electricity to Connecticut customers.
On Monday afternoon, Gov. Ned Lamont emphasized other approaches the Connecticut Public Utilities Regulatory Authority can consider, including incentive programs in Maryland he suggested have been effective in aligning utility interests with the customers they serve as well as penalties for failing to perform on key metrics.
The COVID-19 pandemic led to a spike in home electricity use this summer as workers kept air conditioners going during successive heat waves. But the overall New England grid saw a drop due to offices and other commercial facilities ratcheting down power consumption.
A formula Eversource uses to forecast the cost of electricity led the utility to estimate erroneously what customers ended up paying under a new power purchase agreement mediated last year by the Lamont administration, Eversource managers said Monday after being pressed by PU
RA Commissioner Marissa Gillett for clarification.
PURA held the hearing to query Eversource managers on high bills customers have received this summer, including through an increase in the price paid for power generated by the Millstone nuclear power plant in Waterford. Some Eversource customers called PURA out during the hearing for approving the Millstone increase without foreseeing the impact on summer bills.
Gillett expressed concern that Eversource has not reconciled changed pandemic electricity consumption patterns with the billing rates allocated between households and businesses. Eversource has not updated its sales forecast since last December, a manager confirmed.
“There’s been concern that residential customers ... are footing the bill for commercial customers,” Gillett said during the hearing. “If we are not adjusting the sales forecast, I think they may be right.”
Attorney General William Tong called Monday for Eversource to forgo a planned rate hike next year.
Doug Horton, director of revenue requirements for Eversource, said the utility is not over-collecting revenue beyond what PURA authorized it. He added the utility is open to reevaluating the frequency with which it reconciles forecasts with actual electricity use, and to move the timing of rate changes from July when bills tend to spike with hot weather.
“There’s no way we could have anticipated what is happening in 2020 when we were devising the forecasts,” Horton said. “We are not able to change our rates without some process.”
Dan Ludwig, sales and revenue forecasting manager for Eversource, said the company still lacks clarity on what the coming months will bring with regard to electricity use.
“The big challenge ... is we have never experienced what COVID will do for sales in the winter period,” Ludwig said. “We will make our best judgment on what to include, but at the end of the day it’s going to be a high-level estimate.”
Penni Conner, chief customer officer for Eversource, acknowledged what she called “lax” communication to warn customers of the likelihood of higher bills.
“We did recognize they were going to be higher than usual,” Conner said. “More needs to be done — I concur.”
State Sen. Matt Lesser, D-9th, argued Monday that PURA can set aside the Millstone contract on what he described as a “force majeure” power under its authority, saying the COVID-19 pandemic represents a triggering event due to the higher electricity costs homeowners are absorbing as they turn up air conditioning while working from home, or waiting for job opportunities after getting laid off.
“We’re now paying the cost of keeping that nuclear plant in business — and that is not fair,” Lesser said. “You can set aside that contract that raised everyone’s electric rates.”
Eversource’s general counsel did not commit immediately to any renegotiation of the Millstone power purchase agreement with Dominion, including spreading out the payment period, but promised to submit a legal brief outlining its position. A Dominion attorney on hand for the hearing declined the opportunity to ask questions of Eversource during time reserved for crossexamination of managers.
Many public officials and customers used the opportunity to vent about Eversource’s response to Tropical Storm Isaias, which knocked down lines throughout the state to leave hundreds of thousands of customers without power, some for a week. PURA is planning another set of hearings to address Isaias response by Eversource and the United Illuminating subsidiary of Avangrid.
Blumenthal suggested PURA consider the model of the Connecticut Municipal Electric Energy Cooperative or another form of public ownership of the state’s grid, arguing CMEEC has proven more responsive through affiliates like South Norwalk Electric & Water and the Third Taxing District in East Norwalk and others in eastern Connecticut.
“I think the time for tinkering is over — we need to think big about becoming smaller, more responsive and smarter,” Blumenthal said Monday. “I think we ought to eliminate the system of guaranteed profits for Eversource and link rates to performance.”
PURA has left the docket open for public comments through Wednesday which can be filed via email to pura.executivesecretary@ct.gov under the subject header “Docket No. 20-01-01 Comments.”