The state's Public Utilities and Regulatory Authority must reverse a recent draft decision rejecting an agreement between the state and United Illuminating that holds down electricity rates for the utility's customers.
PURA's curious rejection of the agreement is an unfortunate example of a state regulatory body adding unnecessary cost to ratepayers, resulting in significant and avoidable costs.
State Attorney General William Tong said PURA's decision, which rejects a $5 million voluntary contribution from UI, will cost ratepayers $2.4 million.
Tong was one of the architects of the March 10 agreement between his office, UI, the Governor’s Office, the Department of Energy and Environmental Protection, the Office of Consumer Counsel, and PURA's Office of Education, Outreach, and Enforcement.
'Got This Wrong'
"PURA got this wrong and I strongly urge them to reconsider," Tong said in a statement. "I do not understand why they rejected a settlement that does so much to help Connecticut families squeezed by the cost of electricity.
"Their plan will provide a marginal immediate savings to ratepayers, but at the expense of millions of dollars in new charges to Connecticut families who simply cannot afford to pay more down the road.
"This just doesn’t make good sense to me, especially when United Illuminating was willing to contribute their own money to avoid this problem."
The PURA decision:
- Passes up $5 million in funds UI volunteered to contribute toward rate relief
- Rejects UI’s rate stability proposal, where UI pledged not to change its core distribution rates before May 2023
- Adds an estimated $2.4 million in new interest costs that will be borne by UI customers
- Leaves unaddressed the under-collection of mandatory transmission and public policy costs, potentially setting up future rate shock for customers.
- Violates prohibitions against single-issue ratemaking
'Affordable, Predictable Rates'
The agreement, which Gov. Ned Lamont had said "promises more affordable, predictable rates," meant that UI customers would see no changes in the base distribution rate for more than four years.
DEEP Commissioner Katie Dykes had also welcomed the agreement, saying it "will provide much-needed relief to UI ratepayers, supported by UI contributions."
UI officials said they were “surprised and disappointed” by PURA's rejection of the agreement, which offered a $46.5 million COVID relief bill credit to fully offset a potential rate increase.
“As this decision is finalized in the weeks ahead, we expect to file comments on the draft decision, highlighting elements we believe would negatively impact UI customers,” the company said in a statement.
CBIA's John Blair said it was "unprecedented" for an agreement ratified by so many state agencies and top administration officials to be rejected.
"This agreement would have resulted in significant cost savings and predictability that has long been sought by all," he said.
"We urge PURA to reconsider its ill-constructed and unprecedented draft decision."
PURA cited “uncharacteristic market prices and overall net expenses” during the pandemic last year in its 18-page draft decision. A final decision is scheduled for April 28.
United Illuminating serves 341,000 customers in 17 municipalities in Fairfield and New Haven counties.
For more information, contact CBIA's John Blair (860.244.1921).