Public officials are praising the Public Utilities Regulatory Authority for rejecting United Illuminating’s application to enact a three-year rate plan that included an additional $131 million from ratepayers. PURA also came down on the company for various performance issues.

In a draft decision issued Friday, the Public Utilities Regulatory Authority (PURA) approved an annual revenue requirement for UI in the amount of $370.4 million for the rate year beginning Sept. 1 – an amount representing an increase of less than $2 million from the current approved revenue requirement, for which UI had sought a $131 million increase over three years.

PURA also rejected the company’s request for a 10.2% “return on equity” – or profit – instead determining that 8.8% is more appropriate. Yet, the PURA reduced that to 8.28%, depending on whether UI meets certain conditions and timelines to address what it called performance and management issues.

PURA, through its brief, found that UI’s proposal for a rate increase couldn’t be justified based on errors in a cost-of-service study it provided, and also because PURA recently released its regulatory goals, which include revisiting the concept of multi-year rate plans to ensure their effectiveness in providing efficiency and affordable service.

Representatives from UI said they are reviewing the draft decision and will file a response by the Aug. 3 deadline.

Connecticut Consumer Counsel Claire Coleman and Attorney General William Tong were among the public officials praising PURA’s decision.

Coleman said that in light of the performance-based regulatory model that is currently under development in Connecticut, she is pleased to see that her office’s recommendation of a single year was adopted, rather than a multi-year rate plan.

“This will avoid locking in rates under an outdated regime and allow regulators a chance to evaluate the next rate plan in accordance with the performance-based regulatory model,” Coleman said. “PURA’s draft decision agreed with OCC’s argument that a single-year rate plan will make it possible to implement performance-based ratemaking with UI on the fastest possible schedule. OCC will continue to push further regulatory reform to provide more avenues for keeping utility costs in check.”

Coleman said she is also happy to see the reduction in UI’s requested return on equity. 

“PURA appropriately reduced UI’s profits (called ‘return on equity’ in utility regulation) given UI’s performance deficiencies. Reducing UI’s profits decreases the rates customers pay for electric service. These profits have historically been inflated across the utility sector, so this appropriate reduction is an important victory for UI customers,” she said. 

PURA found UI fell short in customer service. For example, it found UI employees were not asking hardship pre-qualification questions for those needing assistance programs, resulting in customers being placed in the wrong programs.

Tong said he is pleased that PURA took UI to task for its handling of the former English Station power plant on Grand Avenue in New Haven.

“This strong decision sends a clear message to Connecticut’s regulated utilities – failure to meet basic obligations to ratepayers will not be rewarded. United Illuminating has utterly refused to meet its commitments to remediate English Station, which remains a contaminated blight on the residents of New Haven who were promised better,” Tong said. “This failure will now come at a significant cost to United Illuminating’s shareholders.”

PURA found that UI did not complete the remediation of English Station, and also “has taken a lackadaisical approach to ensuring site security as shown by its failure to act to prevent (or to timely address) vandalism around the remediation site,” according to the decision.

Opposition to the application was unanimous, according to PURA’s decision, with the American Association of Retired Persons of Connecticut (AARP CT) filing comments on behalf of their 600,000 Connecticut members. 

The 289-page draft decision issues 43 orders to UI. 

United Illuminating will have until Aug. 3 to file a response. If a request is filed, oral arguments may be heard on Friday, Aug. 11 at 2 p.m. Oral arguments, if requested, will be conducted via remote access through the Zoom platform. People can register by accessing the link.

The authority expects to render a final decision on this matter on Friday, Aug. 25.