PURA Chair: Eversource Rate Vote 'Does Not Strike Required Balance'

HARTFORD, CT — A decision this week by the Connecticut Public Utilities Regulatory Authority to approve a rate increase for Eversource Energy may have caused more angst than given answers.

In other words, just how much it will be is still being calculated and reaction was both pointed and outright harsh.

PURA on Wednesday, voted 2-1 to pass its annual Rate Adjustment Mechanisms, also known as RAM, for electric utilities, including Eversource. The utility was seeking an increase of about 19 percent ($38 a month on average) for the July to April period to mostly recoup delayed bill payments that state government required it to implement because of hardships incurred by the COVID-19 pandemic.

Eversource customers will also see increased rates in the public benefits portion for that 10-month period beginning in July.

Eversource officials said the utility expects the jump in public benefit costs to coincide with a decrease in supply costs this summer, but PURA's decision calls for the utility to recoup the pandemic "losses" over 10 months and not the period of two-to-three years initially proposed.

Reactions poured in.

Eversource spokeswoman Jamie Ratliff said, "We are evaluating the final decision released by the Public Utilities Regulatory Authority.

"PURA authorized a rate adjustment to the Public Benefits portion of the bill beginning July 1. By a 2 to 1 margin, PURA voted to take advantage of a projected dip in supply prices, which was part of our proposal to reduce rate shock for customers. This means the majority of residential customers will see a significantly smaller increase on their bill, depending on usage.

"While the rate adjustment consists mostly of pass-through costs required by state policies that are reasonably designed to benefit customers, the size of this increase was driven by PURA pushing costs off to the future and was avoidable. Last year, we actively advocated on behalf of customers to prevent this rate shock. The Public Benefits portion of the bill, combined with volatile Energy Supply costs that are at this point declining, now makes up nearly 60 percent of a customer’s bill. We do not control nor do we profit from these portions of the bill.

"We will continue to advocate for thoughtful long-term solutions to provide Connecticut electric customers with rate stability, predictability, and transparency and hope PURA will consider our proposals in the next phase of the process.

"We understand how difficult this increase will be for customers, and while we do not control these pass-through costs, we encourage any customer who is having trouble paying their bill to contact us so we can connect them with the programs or assistance that's best suited for them by calling 800-286-2828 or visiting Eversource.com/billhelp."

PURA Chairwoman Marissa P. Gillett, who cast a dissenting vote, submitted a long response and said, "The residents and businesses of Connecticut are no strangers to the high cost of electricity in this state. Under the Governor's and the General Assembly's leadership, PURA has begun shifting its regulatory focus to performance-based regulation, grounded in principles of affordability and compensation based on the quality of service. Unfortunately, though, today’s decision by PURA is likely to place further financial strain on those that can least afford it, and it will also hit the pocketbooks of our business community in a particularly challenging way.

"While I appreciate that the majority’s decision leaves intact one of my recommendations (to delay the effective date of the pending rate increases to coincide with the expected generation rate decreases for residential customers in July), the remainder of the majority’s decision leaves our business community entirely unshielded from the impact of the forthcoming increases.

"To be clear — I believe that regulated utilities are entitled to recover prudently incurred costs,
particularly when such costs are incurred at the bipartisan direction of a public policy endeavor
codified by the legislature to ensure reliability of our electric grid. As a regulator, I also understand
that it is my duty to monitor and consider the financial condition of the utilities that I regulate.
However, these principles must be observed alongside two important qualifications: (1) PURA is
charged with monitoring the financial condition of the regulated public service company (not its
unregulated parent company); and (2) this charge must be constantly weighed and considered in
light of the statutory mandate that PURA provide appropriate protection to the public interest.

"In carrying out this duty, it is incumbent on PURA, particularly in instances such as this one where our oversight role is more narrowly tailored, that we leverage all of the tools at our disposal to mitigate and smooth rate shock for all of our ratepayers.

"Today’s decision fails to do so.

"While the COVID-19 pandemic may feel distant, and the war in Ukraine commenced several years
ago, the effects of both continue to be felt by people across the world – and in the energy policy
world, the impact of both continue to affect global supply chains and contribute to unprecedented
regional energy market dynamics. Indeed, a representative of Eversource conceded during oral
argument in this proceeding that last year witnessed "anomalous conditions."

"Given this concession, and in light of utility arguments across other proceedings that amortization is an appropriate tool to mitigate rate shock (albeit apparently only when discussing an extended return period for an overcollection of federal taxes back to customers), I am perplexed as to why we would not avail ourselves of such a tool here. This decision could have struck a fair balance by allowing the recovery of this substantial liability over a period of 2-3 years, rather than just 10 months. This would provide timely recovery for the utilities and reduce the rate shock for ratepayers. Instead, customers will bear the brunt of this extraordinary volatility and anomalous conditions over the course of an unreasonably short period of time given the magnitude of costs at stake.

"Eversource, for its part, argued that the use of such a tool here would violate its right to a 'timely'
recovery. However, rather than advancing any persuasive legal argument or precedent in support of its position, the Company instead makes a thinly veiled threat —that a combination of its cashflow issues (largely resulting from substantial losses from its unregulated wind energy business) and purported regulatory uncertainty would prevent it from supporting similar state policy initiatives in the future if the Company did not recover its money immediately.

"Today’s decision does not strike the required reasonable balance, leaving ratepayers with a substantial rate increase that could have been smoothed out over a longer period.

"Ultimately, while I am disappointed by today’s decision, I am eager to continue the complex and
necessary conversations with my colleagues and all stakeholders to ensure that prudently incurred costs are recovered while balancing the overarching statutory obligation to ensure appropriate protection of the public interest — both existing and foreseeable."

Vernon Town Administrator Michel Purcaro was as loud as anyone who cautioned against a sizable increase in electric bills. Vernon spearheaded a petition drive that, along with an AARP version, garnered more than 15,000 signatures.

Eversource officials denounced the move as "rhetoric."

Said Purcaro to Patch Friday, "PURA's Rubber-stamping of Eversource's request represents an epic failure of our state regulators to do their jobs and represent best interests of the people. With the exception of Marissa Gillette, the chairperson of PURA who voted against this crushing rate increase, it is clear to me that PURA is more concerned about the utility companies than they are about ratepayers or taxpayers.

He continued, "We were already paying some of the highest electric rates in the country and this makes it worse. How does an increase in our rates make bills more affordable?"

Vernon Mayor Dan Champagne has repeatedly said in protest, "The rates keep going up and up and up."

Added state Sen. Jeff Gordon (R-35th District), "People need to know that this situation was preventable and is borne from policy decisions before I joined the legislature — existing nuclear power purchase agreements and the Governor's moratorium on service terminations during the pandemic. Although these policies might have merits, they must be paid for. They account for the $784 million in costs that Eversource will recover. These polices do not reflect today’s realities.

"I joined my Republican colleagues a year ago to change our course. We proposed meaningful ways to make energy costs less expensive in the state, work toward a sustainable and cost-effective energy procurement process, and allow for better oversight of utilities. I supported major legislation that passed to address these concerns and to protect energy consumers.

"This year, my Republican colleagues and I proposed to use remaining ARPA money to help defray the costs of big electricity rate hikes.

"I agree with Chairwoman Gillett that it was a missed opportunity to not phase-in the rate increase over several years. Now, ratepayers face a big hit starting July 1. This is unfair. I will continue to advocate for commonsense ways to make energy and other necessities in Connecticut more affordable."

The towns served by Eversource stretch from Granby to Greenwich and Woodstock to Watertown. See the complete list of towns served by the utility here.