NEW BRITAIN – The Public Utilities Control Authority dealt a major blow to Connecticut Light and Power’s request to charge consumers for damages due to major storms in 2011 and 2012 by cutting their recovery request by $90 million, a move that will limit the increase for consumers to $3.25 per month.
PURA announced the draft decision in a press release Monday afternoon. In June, CL&P asked for a proposed rate increase to raise $231,582,000 in revenue. In September, the request was revised to $221,098,000. PURA’s draft ruling would allow recovery of $130,172,000, which includes previously approved costs associated with 2011 and 2012 storms.
The bottom line for customers will be that fixed costs–what every customer pays regardless of how much electricity he or she uses–will increase from $16 per month to $19.25 per month. Had CL&P’s original request been approved, the fixed cost would have gone up to $25.50 per month.
PURA also penalized CL&P by lowering the “return on equity” for a one-year period in light of CL&P’s performance before and after Tropical Storm Irene and the major snowstorm that occurred in 2011. The return on equity measures how profitable a business is based on how much profit it makes with the money shareholders invest. The reduction in CL&P’s requested return on equity would equate to the average residential customer who uses 700 kWh of electricity seeing an increase of approximately $7.12 per month.
The increase will go before the full commission on Dec. 17.
CL&P commented on the decision and the changes made to the companies requests:
While we are still reviewing PURA’s draft decision on our rate case filing, we appreciate their careful and comprehensive review of the costs associated with providing safe, reliable power to our customers. It’s important to note that there are significant expenses associated with running a large and complex electric system. Over time, it’s crucial that we continue making targeted investments in Connecticut’s electric infrastructure. To that end, we are doing everything we can to secure the resources necessary to build and maintain an electric system that is stronger, more reliable and more efficient for our customers. This decision is a critical element of that effort.
Many high-profile figures in Connecticut have commented on PURA’s decision. Sen. Richard Blumenthal was dismayed by the release, saying:
This draft decision is unconscionable and unacceptable, granting CL&P a more than 20 percent increase in its fixed rate charge in defiance of the sustained, broad public outcry from consumers. A fixed charge of $19.25—with signals for future increases—would make CL&P’s residential charge the highest in New England. This fee would hit consumers before they even turn on a single light, discouraging and devaluing conservation and efficiency efforts. Connecticut residents—most notably low-income and elderly residents—cannot afford and should not be asked to finance a nine percent-plus guaranteed rate of return for CL&P.
Echoing Blumenthal’s comments about the strain this increase will put on the elderly, AARP released a similar statement decrying the rate increases:
CL&P’s customer service rate is already the highest in the region, and one of the highest in the nation. Allowing any increase, no matter how small, is simply unwarranted and will have a detrimental impact on people already struggling to pay their bills this winter. The increase is also a disincentive to conserve energy, since customer’s bills will go up before they turn on a single light.
Connecticut Attorney General George Jepsen was less forceful in his condemnation of PURA’s decision:
While my office is still reviewing PURA’s draft decision, I commend PURA for its extensive review in this rate case. I am pleased that the authority’s draft decision reduces the company’s request to increase its return on equity to a more reasonable level that is in line with other utilities operating in Connecticut.
While I’m also pleased that regulators saw fit to enact a penalty on CL&P’s return on equity for its poor performance in the two major storms of 2011, I continue to believe a larger, more meaningful penalty is warranted in this rate case.
Additionally, I remain concerned that the increase to the residential customer service charge included in this draft decision – though less than the 60 percent increase CL&P requested – will disproportionately impact low-income customers and I believe it should be held flat.
All CL&P customers will still experience a significant increase in their rates as a result of this decision, and I anticipate filling additional comments with PURA prior to its final decision later this month, as I believe these further reductions, and possibly additional reductions, are appropriate.
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