Thursday, May 30, 2024

Electric Rate Increases Are PURA Hell!

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By Barbara Heimlich
Editor

Sources:  Hearst Media; CTNewsJunkie; Hartford Courant; The CT Mirror; Connecticut Inside Investigator; Stratford Daily Voice

Public Utility Regulatory Authority (PURA) on April 27th gave final approval to a plan that will lead to an increase in the bills for customers of Eversource and United Illuminating.

The PURA commissioners voted 2-1 – with Chairman Marissa Gillett being the dissenting vote – to agree to proposed rate increases for the state’s utility providers. Those increases will reportedly be an additional $30 on the bills of United Illuminating customers. Gillett issued a written dissent after the decision, in which she said she was disappointed.

“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,” her dissent read.

“This decision could have struck a fair balance by allowing the recovery of this substantial liability over a period of 2-to-3 years, rather than just 10 months,” Gillett’s statement said in part. “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.”

UI was seeking a 12% increase, which would have increased the revenue adjustment portion on the average residential customers’ bills by $26 a month. Although the final decision removed some items both UI and Eversource were seeking to have customers pay for, the impact on UI customers’ bills will be $30, spokeswoman Sarah Fliotsos, Communications Manager at Avangrid said.

Editor’s Note:  Avangrid, headquartered in Orange, is a leading sustainable energy company transitioning America toward a clean and connected future, and has a footprint in 24 states with $41 billion in assets. Its primary businesses are Networks, which serves 3.3 million electric and natural gas customers in the Northeast, and Renewables, the third-largest renewable energy company in the U.S., with a diverse onshore and offshore renewable energy portfolio. Avangrid has been named one of the Worlds Most Ethical Companies for five consecutive years by the Ethisphere Institute.

Eversource asked for an 18.7% hike for the typical residential customer, which would have added about $38 per month to residential customers if implemented in a phased-in manner starting May 1st.

Sen. Norm Needleman, a Democrat from Essex who chairs the Energy and Technology Committee, said in a statement that the recent comments by utility providers in the state – in the wake of PURA’s decision to agree to rate increases for payers – shows a lack of commitment to the future of energy in Connecticut.

“If Eversource does not want to make green energy investments in our grid, for which it receives full reimbursement and an additional profit on top of out-of-pocket costs, maybe we should consider a review of their franchise agreement, which allows them to operate as a monopoly with no competition.”

Eversource has not indicated how much residential customers’ bills will increase. The rate increases will take effect on July 1st, and will be in effect for 10 months. Eversource has referenced costs like the pass-through entity tax, as well as other policies, in saying it has no choice but to increase rates. July 1st is the same date when standard service electric customers will see the generation rates for the electricity they use change, according to Joe Cooper, a PURA spokesman.

“Continued participation in these programs could place critically needed capital resources at risk and hinder our ability to support electric operations that our customers rely on every day,” Doug Horton, Eversource President of Distribution Rates and Regulatory Requirements said in a statement Friday.

Gillett said that instead of giving time for proper recovery of possible losses, the company made a “thinly veiled threat,” instead of advancing a legal argument. John Betkoski III, vice chair of the PURA board, and Michael Caron both voted in favor of the request.

A PURA spokesperson said that the organization will review and approve Standard Service Rate adjustments for the second half of 2024 in the coming weeks. Cooper said the standard service rates for the second half of this year are still being calculated.

“As a result of the public policy programs and policymaker decisions, UI customers can anticipate cost increases beginning in July,” Fliotsos said. “As described in our recent Understand Your Bill video, these costs are pass-through costs for UI, as is 70% of customers’ overall electric bill, and PURA’s months-long process that concluded in today’s Final Decision on the Revenue Adjustment Mechanism (RAM) has ensured customers are only paying for the costs of the programs. UI’s new electric bill redesign, which began in the February billing cycle, will delineate these charges under the ‘Public Benefits’ section.”

While the rate adjustment consists mostly of pass-through costs required by state policies that are reasonably designed to benefit customers, Ratliff said 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,” she said. “The Public Benefits portion of the bill, combined with volatile Energy Supply costs that are at this point declining, now makes up nearly 60% of a customer’s bill. We do not control nor do we profit from these portions of the bill.”

The Revenue Adjustment Mechanism is an annual filing the electric distribution companies are required to submit to show the costs they expect to outlay over the upcoming year to pay for the public policy programs they are required to implement, according to Fliotsos. She said the revenue adjustment mechanism represents a pass-through of the costs to pay for these programs, with no mark-up and no profit.

But Connecticut has among the highest electricity bills in the country, so any increase, even a pass through, will have an impact on customers.

Standard service customers let the utilities purchase their electricity for them instead of going through a third party provider. Rates that go into effect on July 1st will last through the end of the year and are typically lower than the generation rates that residential customers pay during the first six months of the year.

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