PURA Chairman Marissa Gillett discusses the importance of rate cases like the one Aquarion just went through and why PURA won’t be able to get a look inside Eversource’s books until 2025.
Mike Hydeck: Nothing gets your attention like a rate hike and when our electric companies were able to get their supply charges on our bills to double, lawmakers and regulators say this was a pass through because of the price of natural gas on the world market and the war in Ukraine, as well and the restriction of supply because of that. Then, just weeks later, executives from Eversource touted huge gains in their profits to shareholders. So can both be true? The Chairman of the Public Utilities Regulatory Authority, or PURA, joins me now to shed some light on this, as well as where water rates could be going. Chairman Marissa Gillett, welcome back to Face the Facts. Nice to see you.
Marissa Gillett: Nice to see you. Thanks for having me.
Mike Hydeck: So how does Eversource report surging profits and then tell us times are tight and we need more money from ratepayers?
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Marissa Gillett: Now, I think that's the question of the hour. And it's certainly something both myself and the legislature have been focused on this session. You know, they are regulated entities and in exchange for their monopoly, they are entitled to receive an opportunity to earn a fair return. But I don't think anyone looking around thinks that what they are reporting constitutes a fair return. So that's definitely something that I've been anxious to address, and, frankly, really eager to have the opportunity to review their rates. Unfortunately, I've not had that chance in the four years that I've been in this position.
Mike Hydeck: So speaking of which, to that point, when a utility company wants a rate hike, usually something called a rate case happens. Basically, they make their case to you, PURA. You see their financials. UI and Eversource give you their paperwork, public hearings happen, it gets discussed, but Eversource hasn't had one of these in years, correct? And why is that?
Marissa Gillett: Correct. So by law, all the entities that we regulate are supposed to come in every four years, if they're an electric or gas utility. The last time that Eversource came in for a rate case was in 2016. Now in 2020 and 2021, there was a proceeding where PURA tried to do an interim rate decrease using some of the authority we got in the Take Back Our Grid Act that actually ended in a settlement that did see some monies returned to customers through that. Unfortunately, though, there was also a provision in there that excused Eversource from coming in for a rate case until 2025. And at the time, that sounded really great. I know a lot of people were thrilled that that mean distribution rates would be held. I actually dissented at the time saying, you know, I think it's a mistake to let Eversource go that long, without really getting under the hood and seeing what makes up these rates. And right now, I think that's what we're seeing. I need them to come in for a rate case in order to exercise all these tools. And you know, you mentioned water rates just a moment ago, I think what you saw coming out of PURA just this last week, where we exercised a lot of those tools in the context of a water rate proceeding. That was really my attempt to show as the chief regulator in the state, what I could do if I was given the opportunity to go through a rate case with a lot of these utilities.
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Mike Hydeck: So why were you able to do it with this, doesn't Eversource own Aquarion right, so why did they consent? Or how did a rate case come about in the water rates particular situation and it can't come about in the electric rates? How are you able to manifest it with Aquarion?
Marissa Gillett: It's a great question. So, you know, it's really up to the utilities when they come in for rate cases. There is some state laws I mentioned just a moment ago for electric and gas utilities, trying to get them to come in every four years. And that's one of the things that the legislature is looking at this session through SB 7 is trying to get these utilities to come in on a more regular cycle. So right now, the reason I was able to exercise that authority Aquarion was that they themselves actually came in last August asking for a significant increase in their rates. And at the same time United Illuminating, which is, you know, another one of our big electric utilities in the state made the same ask. So UI is also pending before me right now. So right now, we're really beholden to Eversource in terms of when they're going to come in for a rate case. And they just reported to investors that they're not looking to come in until 2025. And if they're listening right now, and they hope they are, I would really encourage them to come in sooner, because I think we all would benefit from looking under the hood and really understanding the drivers of the rates that they're offering in Connecticut.
Mike Hydeck: Can legislation change that? The SB 7 you mentioned, will that be in there and say look, you need to come in every four years, no matter what the market says. Is that possible?
Marissa Gillett: It is. What we can't do is disturb a settlement. So in this case, you know, the 2021 settlement, which allows Eversource to stay out through 2025, we can't go back and unwind that. But we can correct this issue moving forward. And for anyone out there interested in the legislative process, I'd really encourage you to reach out to your legislator and express confidence and urge them to adopt SB 7 because SB 7 has some provisions in it that would prevent us from being in the situation that we're in now moving forward.
Mike Hydeck: SB 7stands for Senate Bill 7. Okay, one last question I have about a minute. We had Representative Jonathan Steinberg in from Westport. He's on the Energy Committee, as you probably know. He wants to help make utility bills more transparent. When I look and I see supply charges, I want to know what that money is going for when there's extra fees. Where are we with that? Is that going to become a reality, do you say?
Marissa Gillett: It is. Actually last July, July of 2022, PURA completed our docket, which is a word for how we categorize our work at PURA. We completed that docket last summer and issued a final decision. That decision directs both Eversource and UI to redesign their electric bills, so that you can understand what the cost drivers are of each line item on the bill. And more importantly, you can understand who has direct control over them, so you can go interact with those folks and express your opinions on them. So the utilities told us it would take them about a year to implement those changes. So we should see some changes coming this summer.
Mike Hydeck: We'd love to see that. PURA Chairman, Marissa Gillett. thanks so much for joining us and the explanations today on Face the Facts. We appreciate your time.