The Office of Consumer Counsel is intervening in the lawsuit United Illuminating filed last month claiming the rate request regulators rejected will force it to operate at a loss.
The Public Utility Regulatory Authority rejected UI’s proposed distribution rate increase of $131 million over three years so the utility appealed the unanimous decision to court.
“United Illuminating’s appeals have commenced another lengthy process where they will attempt to distort the impact of PURA’s decision and weaken the integrity of Connecticut’s regulatory framework for the benefit of their bottom line,” said Consumer Counsel Coleman. “That’s why my office filed motions to intervene in the Superior Court proceedings on behalf of the customers in their service territory. During the rate case over the course of the last year, my team succeeded in demonstrating major shortcomings in UI’s original rate application, and we are prepared to do it again. Utility customers benefit from a proactive regulatory body that is willing to hold our utilities to applicable legal standards, and OCC will seek to ensure consumer interests are elevated in these appeals.”
UI said that PURA’s decision is out of step with the state’s needs, adding that it’s a financial hit on UI and the state’s economy.
The OCC is intervening to preserve the final decision’s substantial rate benefits to customers, including reductions due to the company’s well-documented performance and management deficiencies, as well as to defend important regulatory principles that are designed to protect consumers. At the same time, OCC, according to Coleman, will continue to have constructive dialogue with UI on Connecticut’s transition to a performance based regulatory framework, which we expect to provide additional guidance on required justifications for capital expenditures and other areas that will improve the regulatory framework for both customers and utilities.
Among the issues raised in UI’s appeal, PURA’s final decision established the company’s return on equity (ROE) at 8.63% with an opportunity to earn up to 9.10% if it meets certain conditions and timelines to address performance and management issues. UI requested a 10.20% ROE.
UI is arguing that the actual ROE is much lower because the final decision extinguishes $32.3 million in deferred assets – producing an actual ROE of 2.5%.
“This unprecedented ROE will drive needed investments to other states and is insufficient to allow us to support the critical investment in reliability and modernization that Connecticut needs,” the statement reads. “Well established Supreme Court precedent holds that utility companies can recover reasonably incurred costs and can earn a fair and reasonable return on assets used to serve customers. PURA’s decision denies UI recovery of investments made in 98 projects critical to the strength and reliability of the electric grid and impacting many of our most vulnerable communities.”
UI also claims that PURA is not allowing for a transition to clean energy because it rejected UI’s proposal to install 900 electric vehicle charging stations.
PURA said there have been 840 ports at EV charge stations deployed in UI’s service territory as of June 30, 2023. PURA was unable to rule on the EV charging stations in its rate application as there are other ongoing investigations more appropriate for the review of those proposals.
UI also argues that PURA – through its decision – is deferring investments in infrastructure that needs replacement, substations that serve thousands of customers, and capacity investments that will help protect customers from long-duration outages.
The utility estimates it will lose $31.9 million annually, adding that PURA denied recovery of $118 million in incremental net plant-in-service additions.
UI also took issue with PURA’s stance on the remediation of English Station in New Haven, calling it an “abuse of discretion.”
The company claims it has invested more than $18 million to complete interim asbestos abatement, cleanup and demolition of the former Station B building.
“These are clear actions, not failures, and we will continue to meet and exceed our regulatory and legal agreements with the state of Connecticut and work with all parties to ensure English Station is cleaned up,” the statement reads. PURA circumvented the proper jurisdictional channels, and is using ROE penalties as a tool to coerce policy outcomes, according to UI.
