State Regulators Find Electric Rate Hikes Not ‘Customer-Friendly,' Announce Changes

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State utility regulators announced Wednesday that they will change the process of authorizing electricity rate hikes requested by Eversource and United Illuminating.

Connecticut's Public Utilities Regulatory Authority (PURA) released its findings from two investigations after complaints were raised by customers who received electric bills over the summer that included large increases for many.

In its announcement, PURA admittted the current approach to the rate hike approval process is not in the public interest.

“In this decision, PURA has begun demystifying and unwinding decades of ratemaking policies that have evolved into a less customer-friendly, less transparent framework,” stated PURA Chairman Marissa Gillett. “Moving forward, we are focused on making sure the risk borne almost exclusively right now by our ratepayers is shifted and shared equitably with utilities and their shareholders. PURA looks forward to working with stakeholders and our colleagues in the General Assembly on appropriately realigning risks across the regulated utility landscape.”

The decision focuses on the rate adjustment portion of customer bills that are reflected on those bills as the "delivery" costs, according to a news release from PURA.

Those costs currently are recovered on a per kilowatt-hour basis and the rate adjustments that took effect in July were very large for some customers who may have used more electricity than the month before, according to PURA.

The COVID-19 pandemic led to a shift in energy consumption patterns which resulted in fluctuations in regional wholesale energy market prices.

PURA said its investigation found the current model used for rate increases relied heavily on energy usage forecasts, which it said are "inherently incorrect," and can lead to "wild swings" in a customer's bill from one month to the next.

After Wednesday's ruling, PURA will now consider semi-annual rate adjustments, changing the effective dates to May 1 and September 1. The new process will rely on actual revenues and approved expenses from the prior year as a model for expected costs when determining new rate adjustments.

PURA also said it will mandate a reduction in carrying charges recoupled by the utilities, instead, it will require Eversource and United Illuminating to use the prime interest rate.

Eversource said it had not yet seen the decision.

"We’ll review the decision once we receive it and look forward to working cooperatively with PURA to institute changes to the rate adjustment process that further enhance transparency and understanding by our customers," said Tricia Taskey Modifica, an Eversouce spokesperson.

United Illuminating released a statement as well:

"We have not yet fully reviewed the final decision and therefore cannot respond in detail. However, we commend PURA for its pursuit of greater transparency and clarity in the mechanisms for adjusting rate components. We look forward to working with policy makers to ensure that these 'pass-through' adjustments to customer rates are implemented equitably, and in support of our commitment to provide highly reliable electric service at a reasonable cost."

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