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Uproar forces regulator to overhaul rules for electricity rate increases

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Uproar forces regulator to overhaul rules for electricity rate increases

Monday, December 07, 2020

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CONNECTICUT, United States (AP) — Connecticut regulators last week imposed what they called sweeping changes to how electricity rate increases are proposed and approved, responding to an uproar by customers over substantially higher bills during the summer.

The state Public Utilities Regulatory Authority (PURA) unanimously approved new rules for electricity distributors Eversource and United Illuminating. The changes will help prevent dramatic increases in bills, ensure rates more accurately reflect costs and decrease the likelihood that the companies overcharge consumers, the agency said.

“PURA concluded that the current approach to administrative rate adjustments is not in the public interest, is inconsistent with the intent of the authorising statutes and renders PURA’s role in the review and approval process objectively inconsequential,” the agency said in a statement.

Officials at Eversource, which serves nearly 1.3 million homes and businesses in the state, and United Illuminating, which serves nearly 340,000, said they were reviewing the new regulations and did not offer detailed comments about them. They said they looked forward to working with PURA to make required changes.

The agency also approved redesigning customer bills to make them easier to understand and provide more transparency. The changes to the bills are expected to be in place by next summer.

Eversource rates that were approved by PURA and took effect July 1 took many customers by surprise because their monthly bills increased by hundreds of dollars in some cases. In response to a flood of complaints, the agency suspended the new rates July 31 and investigated.

Eversource said the higher bills were due to several factors, including increased use of air conditioners and other appliances because of hot weather during the summer, more customers staying home during the coronavirus pandemic, and higher prices charged by electricity suppliers.

PURA chair Marissa Gillett said the electricity distribution rates in effect before the July 1 will remain in place until May 1. The rulings will not affect the other component of bills — electricity supply charges related to power plants.

“During our investigation … the authority uncovered a number of concerning aspects with respect to the implementation of the rate adjustments,” Gillett said.

One of the findings was that the utilities were being compensated for certain expenses at an “unjustifiably” high rate. They were charging seven per cent to nine per cent interest on some costs the companies had to pay up front before being reimbursed by rate revenues.

PURA, meanwhile, lowered the allowed interest rate to the prime rate, which is around two per cent to three per cent, saying customers should see “meaningful” savings.

Agency officials also said the cost projections the utilities use to request rate increases historically have been incorrect, leading to “wild” swings in customer bills and overcharging for services in some cases. So PURA is now requiring them to base the requests on actual data from the previous year. If costs increase for the companies compared with the previous year, they can request rate increases based on the actual costs.

PURA also changed the two dates per year that new delivery rates take effect from January 1 and July 1 to May 1 and September 1, allowing the agency more time to review rate increase proposals. Gillett said the utilities had been submitting their rate increase requests as late as a week before they had been scheduled to take effect under the old January and July dates, leaving little time for review.

“In this decision, PURA has begun demystifying and unwinding decades of ratemaking policies that have evolved into a less customer-friendly, less transparent framework,” Gillett said.

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