By Barbara Heimlich
Editor
Sources include Edmund H. Mahony, Hartford Courant, and Luther Turmelle, Hearst Connecticut Media Group
If you are a United Illuminating (UI) residential customer, you can expect to pay slightly more for your electricity supply in the first six months of 2025 than you are paying now.
In a filing made with state utility regulators this week, winter electric rates for Eversource customers will increase about $15 a month beginning January1st, largely because of seasonal market conditions that push up the cost of natural gas, according to the utility.
UI officials said the increase in their winter electric supply rates is primarily due to constrained fuel supply for the majority of the power plants that generate the electricity for New England. Those plants are currently fueled by natural gas, supplemented by fuel oil during the coldest winter periods. Many customers across the region also use natural gas for residential heating. The high demand for the fuel requires supplemental fuel supplies of imported liquefied natural gas and fuel oil in the colder months, which drives up the cost of electricity generation.
The increase, which will run from January to June, will appear in the supply portion of customer electric bills. Utilities such as Eversource do not profit from the supply price, which is the price the utility pays suppliers and passes along to customers for the electricity it distributes.
Eversource said the winter increase in supply costs this year is 24% lower than last year, and is proposing to have its standard service offer residential customers pay 13.57 cents per kilowatt hour, according to the filing with the Connecticut Public Utilities Regulatory Authority. That is a 1.66 cents per kilowatt hour increase over what they pay now, but it represents a 20% decrease over the first six months of this year, when UI standard service customers paid 17.06 cents per kilowatt hour.
In a news release, Frank Reynolds, President and Chief Executive officer of UI, said seeing the proposed supply rates for the first six months of 2025 decrease compared to the same period this year “is welcome news.” “While we are glad to announce a more than 20% drop compared to winter rates last year, the energy supply market, which we do not control or profit from, remains in need of deep reform,” Reynolds said. “The over-reliance on natural gas for electricity generation will cause price increases every winter until policymakers take action.”
If the proposed increase is approved, the average residential standard service electric customer, who uses 700 kilowatt hours per month, will see their overall electric bill increase by about 5% or $13.69 per month, according to UI.
UI has 273,000 customers on standard service, which represents 79% of the utility’s customer base. Standard service allows the two electric utilities to purchase power on their behalf. The companies pass along the purchase cost without any mark-ups.
Customers of UI and Eversource Energy, also have the option of contracting with third-party electricity providers to get the power they use in their homes. Those customers see the electric bills rise or fall based on the terms of the contract with their third-party electricity provider.
Connecticut Attorney General William Tong said in a statement on Monday that the supply rate filings by both Eversource and UI are “the same bad news — another unaffordable increase on top of already unaffordable bills. Again, these winter rates are the result of a competitive bidding process,” Tong said. “We see these fluctuations every year. But that doesn’t make it OK — far from it.” Tong said everything about the electricity procurement process needs to be reviewed and reconsidered.
This rise in billing follows the one during a heat wave last summer that created a customer backlash. The summer raise was due to an increase in the public benefit portion of the bill, which reflects costs the state requires electric utilities to incur on state mandated clean energy and social welfare programs. As is the case with supply, the utilities do not profit on public benefit billing.
Attorney General Tong, a regular Democratic critic of utilities, called for a re-examination of a state energy policy that, among other things, locks the utilities into buying electricity from the Millstone nuclear power station in Waterford, even when less expensive sources of supply are available.
“This is yet another increase on top of the exorbitant bills that already hit this summer,” Tong said. “I don’t pretend to have all the answers to Connecticut’s energy affordability crisis, but we’ve got to do better than this. These rates are the result of a competitive bidding process. This is pretty much set in stone at this point. But that doesn’t mean we just need to take it and move on.
“Everything has to be on the table,” he said, “and that includes reckoning with why New England has the highest electric transmission costs per mile of anywhere else in the country. That includes reckoning with the consequences, both positive and negative, of the Millstone deal. That includes how we pay for the cost of necessary programs that have kept the lights on for families facing unprecedented challenges. That must include a real commitment from our public utilities to stop their onslaught of padded revenue demands.”
The state and the electric utilities have no control over the prices charged by power generators – a price that typically increases in winter when natural gas must be shipped into New England to meet increased demand. Natural gas generation produces about half of New England’s electricity.
“The supply portion of the bill is typically the largest and most volatile because it’s vulnerable to market forces, and we’ve certainly experienced those dramatic swings in energy prices over the last few years,” Eversource President of Connecticut Electric Operations Steve Sullivan said. “While energy prices have come down significantly from a couple years ago, we continue to encourage customers to shop for a third-party supplier and potentially lock in a lower rate.”
On Monday a divided state utility authority slashed revenues for two state gas companies, Connecticut Natural Gas (CNG) and Southern Connecticut Gas (SCGC), giving customers a slight break on bills but drawing a warning that the decisions will lead to more credit downgrades for the industry and an eventual decline in service.
The 2-1 decision by commissioners of the Public Utility Regulatory Authority (PURA) revenues for Connecticut Natural Gas and Southern Connecticut Gas were lowered to levels below what they were authorized to collect through rates six and seven years ago, respectively.
It is unclear exactly how much customers of Avangrid subsidiaries Connecticut Natural Gas and Southern Connecticut Gas can expect to save beginning in December.
Avangrid said its preliminary analysis was that average CNG customers should save $6.97, or 5.3% a month, while SCGC customers could save $5.25, or about 4.7%.
The decision cuts revenue for CNG by $24 million, or more than 5%, and $11 million, or approximately 2.5%, for SCGC. CNG had sought a $19.7 million increase and SCG wanted an additional $43 million.
Michael Caron, the dissenting commissioner who voted against the revenue cuts, predicted the decision will accelerate a succession of credit downgrades issued on state utilities by ratings agencies after several regulatory decisions adverse to electric, water and gas companies.
“The companies are dealing with inflation rates that the nation has not seen in 40 years, and to then deduce that current or lower rates can somehow sustain the operations and investment necessary for a safe and reliable system is hopeful at best,” Caron said.
Caron also pointed to the utility business model that relies to a large degree on borrowing to finance operations. He said reports by agencies such as S&P Global Ratings and Moody’s Ratings that warn of increasing credit risk among Connecticut utilities based on a “negative regulatory climate” will result in investments in utility infrastructure being directed elsewhere.
His comment was in reference to Commissioner John Betkoski’s prediction a year ago in a water rate case that slashed revenues to a level below what they were a decade ago. Caron said: “I mention your remarks in the recent Aquarion decision that multi-jurisdictional companies would invest less in Connecticut and more elsewhere, and that prediction has come to pass. The message has gone out loud and clear that there are better regulatory jurisdictions in which to invest and I feel that this decision will continue that trend.”
Betkoski voted with PURA Chair Marissa Gillett to approve the reductions, saying, “I know it is not everything the companies were looking for. But I believe it does provide adequate revenue to run the local gas distribution system safely and reliably in the future.” Gillett, the commissioner who oversaw the decision, voted for it without making remarks.
State Attorney General Tong applauded the decision to cut revenues, complaining that over the six years since its last rate case, for brief periods CNG earned above the return on equity it was authorized to collect by PURA. On those occasions, under state law, the company returned half the over-earning to customers.
“This is finally a bit of good news for Connecticut families desperately in need of relief from unaffordable energy costs,” Tong said. “Let’s remember how we got here — CNG over-collected millions of dollars from ratepayers. Then they turned around and asked for millions more. Their rate demands were packed with inflated profits and unnecessary expenses. PURA was absolutely right to slash their revenue.”
Consumer Counsel Claire Coleman said she would have cut the gas company revenue farther, but said the decision “appears to protect customers from excessive rates while approving the necessary resources for CNG and SCGC to continue to deliver safe, reliable and quality gas service.
“Though PURA’s decision does not implement all the reductions my team proposed,” she said, “it certainly reflects a healthy and transparent regulatory process here in Connecticut.”
A week ago, Yankee Gas, an Eversource subsidiary, asked PURA to approve a rate increase beginning a year from now that could raise home heating costs for its residential customers by as much as 43%, or more than $46 a month for an average home. Yankee said it needs to collect an additional $209 million, a 29% increase in revenue, to cover losses created by distribution costs.
State Attorney General Tong immediately attacked the proposed rate hike.
“Read the room, Eversource,” Tong said. “Connecticut families are fed up with sky high energy costs and can’t afford this massive increase. This is yet another tone-deaf slap in the face from our out-of-touch public utilities. You don’t have to be a lawyer to see some basic obvious overreach in this filing.”
Yankee’s request for a rate hike comes at a time of growing hostility between regulators and the state’s electric, gas and water utilities, which are owned mostly by Eversource and Avangrid. Over the last year, PURA has not only denied rate increases, but cut rates to levels below what the companies were charging more than five and even 10 years ago.
disputed.
Critics such as Tong and the state Office of Consumer Counsel complain the utilities have been allowed through lax regulatory control to overcharge.
The utilities respond that their inability to raise rates will hurt their reliability. And they complain that what Wall Street utility analysts are referring to as Connecticut’s “negative regulatory environment” is preventing them from recovering what they invest in their distribution systems through rates, resulting in credit downgrades that make borrowing money to finance operations more difficult and costly.
In its request to raise rates, Yankee took the unusual step of including what it calls a “Regulatory Risk Premium” in a list of “facts” that it says support its rate increase application. The company said it has an expert who can testify that a risk premium “is now necessary for Connecticut utilities and the risks that Yankee faces as a result of the Connecticut Regulatory Environment.”
Tong criticized the risk premium. “They’re asking for profits that are completely out of whack with other public utilities, including tacking on a non-starter ‘regulatory risk premium’ to account for the fact that our public utilities don’t like oversight and accountability,” Tong said. “I’m going to comb through every page of this application and will be there at every single step of these proceedings to fight for Connecticut families.”
If the rate increase were approved as proposed, something that appears highly unlikely in the current regulatory climate, Yankee said the added costs to customers could shrink by as much as 5% monthly through the application of certain credits.
“The increase is driven by the substantial investments we’ve made — and must continue to make — in the natural gas distribution system to ensure customers have safe, reliable service year-round, and especially during the winter heating months,” an Eversource spokesman said. “Recent PURA precedent has led to regulatory outcomes that result in higher costs for customers over shorter periods of time. To avoid that, we’re presenting a proactive approach that directly addresses the costs needed to ensure the safety and reliability of the natural gas system while proposing a new performance based regulatory plan that sets rates over multiple years.”
Yankee said in its regulatory filing that its distribution system is operating at a deficit for several factors, including millions of dollars of investment in distribution since its last rate case, increased operating and maintenance costs, increased depreciation rates, and its inability to recover costs previously authorized by regulators.
