State residents were given good news Wednesday as the Connecticut Public Utilities Regulatory Authority (PURA) voted against the Aquarion Water Company’s request for a multi-year distribution rate increase. Instead, current customer rates will be reduced effective immediately.
PURA commissioners on Wednesday voted 2-1 to approve the decision. Chairman Marissa P. Gillett and Commissioner Michael A. Caron voted to approve the decision, and Vice Chairman John “Jack” Betkoski III dissented, according to a press release.
AARP Connecticut has been fighting the increase since Aquarion’s proposal was made public and on Wednesday John Erlingheuser, AARP Connecticut’s Senior Associate State Director, said he was gratified.
“This is a two-fold win for our seniors, who on a daily basis have to decide whether they are going to pay money for medicine, food, housing or utilities,” Erlingheuser said. “First there will be no increase as they did not prove that they needed the increase but also we will see a net reduction in costs. It is about $67 a year but that is a lot of money when every penny counts.”
Nearly 2,400 AARP members signed a petition opposing the proposal. Nearly 1,800 AARP members urged PURA to make the February draft opinion final through a second petition. In October AARP Connecticut submitted public testimony urging PURA to deny the proposed rate increase, and has took similar actions in the United Illuminating rate increase case.
“We are hoping this decision bodes well for the decision on the rate increase request with United Illuminated,” Erlingheuser said. “This is very much like a court battle. They needed to show proof that they needed the increase and they clearly didn’t do that. At the same time, it was shown that they could afford to reduce their rates. Coming off the pandemic and with the Eversource price increase that began on January 1, it was just a bad look and bad timing for them to make this request.”
Republican lawmakers also applauded the decision.
“As the state Senator who represents the people of the towns that would bear the largest brunt of this excessive and unaffordable hike, I asked PURA to consider whether this request is at all warranted. Today is a victory for ratepayers, and it shows what can happen when people speak out and our regulators listen,” Sen. Tony Hwang, R-Fairfield, said.
Today’s action will decrease the average residential customer’s total bill by approximately $67 per year. Under the decision, the Authority approved an annual revenue requirement for Aquarion of $195,561,690 in base rates for the rate year that started today (March 15, 2023), and a return on equity (ROE) of 8.70%.
This authorized annual revenue requirement represents a decrease of almost $2 million, or 1%, compared to current levels.
PURA also authorized a new three-tier pricing structure for Aquarion residential single-family customers designed to encourage conservation by sending appropriate pricing signals to higher-volume users.
“We have worked very hard to give the regulators more tools in making their decisions and I’m happy with their work on this proposal,” said Norm Needleman, co-chairman of the legislature’s Energy and Technology Committee. “I haven’t read the whole decision but it seems they thought they were making more than enough return and did not need the increase. There was some concern about how it would affect business but I believe that holding the line on lower rates helps the ratepayers, seniors, middle-income families, and other businesses as well, as they can save money.”
The initial consumption rate tier, which applies to the first 9 hundred cubic feet (CCF) of usage per month, will capture 76% of customer bills based on an analysis of historic usage. Another approved rate design includes a Low-Income Rate Assistance Program (LIRAP) that will provide a 15% credit to qualifying residential customers on their total monthly bill.
“I have to give Governor Lamont credit for hiring Chairman [Marissa] Gillett,” Needleman added. “She is holding the line and I think any time we can do that it is a good thing. We need the ratepayers of water, electric, and gas to be confident that the regulators will do their best to keep the rates low. We have a regulatory body now that is doing deep digging and it will no longer be the case of automatic increases for providers. For us to be at our best, the ratepayers have to have trust in the regulators and I hope this will show it is no longer an instant approval.”
Aquarion said that the rejection of their requested increase, coupled with a net rate decrease, would affect the company’s ability to do “good works” in the communities it serves, including investment in capital projects and delivery clean water.
Erlingheuser called the company’s statement disingenuous.
“They said they will not be able to go out and do good but they certainly can,” Erlingheuser said. “What they are saying is that the ratepayers funded their community service when it should really come from their stakeholders.”
In total, PURA’s ruling reduced the company’s requested revenue requirement by over $10.7 million for expenses that Aquarion failed to adequately demonstrate would benefit ratepayers. These include costs such as those associated with Aquarion’s share of costs linked to its 2017 merger with Eversource ($4.9 million); outside legal costs related to this rate case ($390,000); industry and non-industry membership dues ($300,712); charitable donations ($81,491); and entertainment expenses ($37,812), among others.