HARTFORD, CT - At a time when Connecticut Democrats are considering imposing a mandate to prohibit the sale of gas-powered cars within the next decade, Eversource, the largest electrical utility in the state, is seeking a 19% rate hike effective May 1, according to the CT Mirror.
The company filed for a $784 million rate “adjustment” to the current rate, which expires June 30. The company says the rate adjustment is due to state-mandated costs and would cost the average consumer an extra $38 monthly.
The Mirror reported that electric utilities seek rate adjustments twice annually to recover costs imposed by government bureaucrats. In Connecticut, there is a directive that the companies purchase electricity from Millstone, the last nuclear power plant in the state, which also happens to be the latest source of carbon-free electricity.
The company said that the Connecticut General Assembly in 2017 authorized a credit to Millstone that cost the utility $605 million in unrecovered costs. An additional $160 million is due to government-mandated benefits for the poor and medical hardship cases.
Eversource is also trying to raise funds by selling a water utility, Aquarion, to offset an additional $1.9 billion loss suffered on offshore wind investments and, a day after the company told stock analysts that Connecticut regulators were to blame for the company’s cash crunch.
According to the company, part of the blame is a change the Public Utilities Regulatory Authority (PURA) adopted in December 2020, which changed the way PURA assesses biannual rate adjustments. Eversource complains that change has slowed cost recovery.
Eversource’s chief financial officer explained the change's effect on the company’s bottom line.
“We’ve been significantly under-recovered at the CL&P franchise in 2023 by a sizable amount, close to $1 billion,” said John M. Moreira. PURA’s methodology changed from forecasts of recoverable costs to actual costs in the previous year as a benchmark.
Eversource explained that in a statement:
“Without aligning current costs to collection from customers, rates for customers will consistently tend to be higher and more volatile for customers than market trends. Collaboration is needed to revisit policies that layer past and future costs to avoid constant rate shock now and in the future.”
The company suggests phasing in any potential rate increases later this year and returning to the previous method of forecasting future costs and factoring them into rates.
A PURA spokesperson said the authority would review the proposed rates, noting that the process would be like an audit.
“These filings and anticipated impacts represent the requests of each electric utility, but importantly signify just the first step in a rigorous public process during which PURA and its stakeholders will thoroughly vet the requests, including through the issuance of discovery questions and evidentiary hearings,” said the spokesperson, Taren O’Connor.
The other privately held Connecticut electric utility, United Illuminating, is also asking for a significant rate adjustment, CT News Junkie reported.
“The primary drivers of the increase are the contracts for the Millstone and Seabrook [New Hampshire] nuclear power plants, which were anomalously low in 2023 due to global energy market conditions, and the increase in costs for low-income assistance programs,” said Sarah Wall Fliotsos, UI’s spokesperson, noting those costs are attributed to 87% of the increase.
Eversource also blamed the requested increase on the number of unpaid customer balances, which date back to the COVID-19 pandemic.
“Overdue customer balances are paid for by all customers,” Everrsource said in a statement.
Democrats did not accept responsibility for the proposed increases and instead tried to blame the companies.
For example, State Sen. Norm Needleman, a Democrat who chairs the Energy and Technology Committee, claimed the companies resist accountability after years of operating under a “weak” regulatory climate.
“According to earnings reports issued just days ago, Eversource saw a 6% increase in earnings per share from 2022 to 2023 while announcing a nearly $2 billion loss on their wind energy gamble,” Needleman said in a statement. “They’re doing fine–at the very least, much better than many Connecticut households. And yet they claim they’re broke, and those households need to pick up the slack. Connecticut deserves better.
Some Republicans, including State Sen. Ryan Fazio, who serves as the ranking member on the Energy and Technology Committee, also criticized the proposed rate adjustment. He acknowledges that Connecticut families are already paying too much.
“It also underscores the vital need for strong oversight from PURA to protect the interests of Connecticut residents in dealings with a regulated monopoly like Eversource, Fazio said.
The office of Gov. Ned Lamont (D) weighed in on the proposed increase.
“We need to review the filing. We agree that we ought to work together to lower electric costs,” said Julia Bergman, Lamont’s spokesperson. “We’ll continue to collaborate with all the parties to do that.”
Some Republicans, however, laid the blame on Democrat policies.
“This proposed rate comes at a time when residents simply cannot afford to pay more out of pocket to cover the financial ramifications of policy decisions that have been made by the Democrat-controlled legislature, the governor’s office, and his regulators,” said Rep. Bill Buckbee, a New Milford Republican.
The bill to prop up Millstone came in 2017 when Democrat Dannel Malloy was governor. Millstone’s profits had been diminished at the time due to cheap natural gas supplies, and Millstone’s owner said the plant’s future was threatened without some assistance from the state.
That bill allowed the Department of Energy and Environmental Protection and PURA to enable Millstone to compete in a more favorable market against other renewable sources, such as solar, wind, and hydropower, which garnered higher prices.
At that time, Eversource and UI could get the power produced by the nuclear plant at fixed costs, allowing the two utilities to purchase it and immediately resell it on the market.
When prices were low, the utilities took a loss, and PURA allowed them to recoup those losses from consumers. When prices rose, such as in the first year of the Russia-Ukraine war, the utilities were able to profit.
Now, Millstone’s electricity is above market rates, which means the two utilities need to recover their costs again.
“Now we’ve got to pay the piper,” said Democrat Rep. Jonathan Steinberg, co-chair of the Energy subcommittee. “There’s not much way around it, and they stand on very firm ground with that one aspect.
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