No One Backing Down–Consumers Suffer In Long Run
By Barbara Heimlich
Editor
There is no sign of de-escalating contention and mistrust between PURA and the major Connecticut state utilities.
Iberdrola, a multinational energy company based in Spain, recently completed its purchase of Connecticut-based Avangrid, Inc., taking the company fully private in a move that state officials say limits transparency into the operations of the parent company of several state utilities. The sale, which was announced last May, was completed Dec. 23. Iberdrola, which already owned a majority of Avangrid, purchased the last 18.4% of shares it did not control. According to Iberdrola the company’s headquarters will remain in Orange.
Iberdrola is one of the largest energy utility companies in the world, with subsidiaries and projects on six continents serving over 30 million customers.
According to Iberdrola, “Avangrid will be able to participate more economically in new energy infrastructure projects in its grid and renewable businesses, representing a significant investment in local communities and generating hundreds of direct and indirect jobs. These projects will create a more robust, resilient, and reliable power grid, and will help meet the growing demand from utilities and data centers.”
Avangrid distributes electricity to seven million people in New York, Connecticut, Maine, and Massachusetts. It has 8,000 employees.
The sale of Avangrid to Iberdrola without Connecticut stakeholder input or regulatory review, which Attorney General Tong requested, places increased risk on the backs of UI customers who are already burdened with some of the highest energy costs in the nation.
Avangrid is now no longer being subject to federal financial reporting requirements, which creates less transparency around the vital utility services that families and businesses across the state rely on every day.
Attorney General William Tong said that it’s unfortunate that Iberdrola chose to consummate its transaction without giving Connecticut’s Public Utilities Regulatory Authority (PURA) the opportunity to act on its petition for review, and that the company should have provided the same deference to Connecticut’s regulator as it did in New York and Maine.
“I continue to have concerns about Iberdrola acquiring the remaining independent shares of Avangrid, which operates United Illuminating, Southern Gas, and Connecticut Natural Gas here in Connecticut,” he said. “Days before the deal closed, we filed a joint brief with the Office of Consumer Counsel with PURA in the proceeding on our petition for review of the transaction. We will continue arguing on behalf of ratepayers in that proceeding because Iberdrola’s taking the company private removes its obligation to make public filings, and removes a safeguard against risky corporate behavior that may impact public safety and household utility bills. “
The completion of the sale caps off a tumultuous month for Avangrid. Earlier in the month, Standard and Poor’s and Moody’s downgraded Connecticut Natural Gas and Southern Connecticut Gas. Both companies then appealed a rate decrease that PURA ordered, arguing that the regulators improperly came to their final decision.
United Illuminating has raised the stakes in a long-running dispute between state utilities and regulators by bringing new accusations of bias against the Public Utility Regulatory Authority chair, and arguing that she and much of her staff should be disqualified from participating in a hearing on its rates.
In addition, UI claims PURA has failed to comply with a court order requiring the authority to produce a variety of records, notably all email and related documents pertaining to the authorship of a news opinion column that suggested an implausible conspiracy by local utilities and major credit agencies to undermine the authority.
PURA has scheduled an evidentiary hearing on UI’s accusations and said it plans to issue a “summons” to UI President and CEO Frank Reynolds to appear at the hearing and submit to questioning under oath. A PURA spokeswoman referred questions about the matter to the office of Gov. Ned Lamont, which did not immediately respond.
A UI spokeswoman said the company opposes requiring Reynold’s presence at a hearing. She said whatever evidence UI has of bias is contained in its filing. Any additional evidence will be found at PURA, not at UI, she said.
Earlier this week, Reynolds said UI’s return on equity, a measure of utility profitability, had fallen to 3.49 — below the 4.72 percent lenders are charging the utility for the hundreds of millions of dollars it borrows to finance operations.
Return on equity or ROE is an upper limit PURA sets on what utilities can earn. PURA authorized an ROE of up to 8.63 percent for UI, which Reynolds said is unachievable, given limits on how much of what the company invests in its distribution system it is permitted to recover through rates.
Various Sources including: Hartford Courant; CT News Break; Patch.
