Connecticut regulator targets rate relief with new rules on electricity

Eversource crews at work in August 2020 in Norwalk, Conn.

Eversource crews at work in August 2020 in Norwalk, Conn.

Erik Trautmann / Hearst Connecticut Media

Connecticut regulators acted Wednesday to corral what they called a “yo-yo effect” that can result in far higher costs for electricity than customers expect, such as during last summer’s pandemic heat wave.

The Connecticut Public Utilities Regulatory Authority has been analyzing how it approves rates, one of multiple major inquiries underway. PURA did not provide any immediate estimate as to how much in savings Connecticut customers can expect as a result of the new rules it is implementing.

The Connecticut General Assembly passed legislation in October that is the most sweeping since deregulation of the industry two decades ago. The law switches the state to a system that allows PURA to weigh the performance of utilities in meeting their public obligations in delivering electricity in approving what they can charge to fund operations and return profits to investors.

PURA also has an ongoing probe of Eversource’s and Avangrid’s response to Tropical Storm Isaias in early August, with another set of hearings planned for mid-December after the new law that among other changes allows PURA to force utilities to pay customers for spoiled food and medicine.

And PURA is studying ways to modernize the Connecticut grid, to include the possibility of utility-scale batteries to store electricity produced by offshore wind farms, and “smart” meters installed at residences to better pinpoint outages and opportunities for ratepayers to save by reducing electric use during peak pricing periods.

“PURA’s action is a breath of fresh air, bringing more accountability to bear on Eversource [and] UI,” U.S. Sen. Richard Blumenthal, D-Conn., wrote in a Wednesday post on Twitter. “However, more must be done, including setting more affordable rates [and] creating a [Connecticut-based], truly ‘public’ utility.”

On Wednesday, PURA criticized Connecticut’s existing rules as rendering it “objectively inconsequential” in approving rates that predict actual electric prices and consumption. Bills rocketed upward this summer as temperatures soared and people stayed home as a result of workplaces and camps closing to limit any spread of COVID-19.

“PURA has begun demystifying and unwinding decades of ratemaking policies that have evolved into a less customer-friendly, less transparent framework,” said Marissa Gillett, PURA chairwoman, as quoted in a Wednesday news release. “Moving forward, we are focused on making sure the risk borne almost exclusively right now by our ratepayers is shifted and shared equitably with utilities and their shareholders.”

PURA stated Connecticut’s existing rules rely too heavily on forecasts that can prove wrong, resulting in wild swings in a customer’s bill from one month to the next. It added the process compensates utilities at “an unjustifiably high rate” in its words.

“We cannot promise that this new process will deliver direct savings as we have no oversight over the underlying costs,” said PURA spokesperson Taren O’Connor, in an email response to a query on Wednesday. “This new process [does], however, simplify the current rate adjustment process to give stakeholders greater insight into the rate setting process. It also increases consumer protections by protecting against inaccurate forecasts.”

Rate adjustments will move to the “shoulder” months of May and September, when milder temperatures limit air conditioning that can lead to bigger bills, with Eversource and Avangrid having voiced support for the change.

The utilities have supported changes in bills PURA is ordering to better describe specific charges, some of which are lumped together in single line items on bills.

“We’ll review the decision once we receive it and look forward to working cooperatively with PURA to institute changes to the rate adjustment process that further enhance transparency and understanding by our customers,” said Eversource spokesman Mitch Gross on Wednesday, in an email response to a query.

An Avangrid spokesperson indicated the Orange-based company is still reviewing the decision.

“We look forward to working with policy makers to ensure that these ‘pass-through’ adjustments to customer rates are implemented equitably, and in support of our commitment to provide highly reliable electric service at a reasonable cost,” said Avangrid’s Ed Crowder in a Wednesday email.

PURA regulates the price of electricity delivery, and not the price set by power plants which is overseen by ISO New England which is under the jurisdiction of the Federal Energy Regulatory Commission. Entering office last year, Gov. Ned Lamont approved a new agreement with Dominion Energy’s Millstone nuclear power plant in Waterford hammered out by his predecessor Gov.Dannel P. Malloy. With Millstone struggling to compete with rival plants powered by low-cost natural gas, the state committed to purchasing half of Millstone’s power output in the decade to come at higher prices.

PURA noted the Millstone rate was among those lumped into the Federally Mandated Congestion Charge element on customer bills.

Alex.Soule@scni.com; 203-842-2545; @casoulman