After ‘rate shock,’ Eversource says it backs plan to review how CT sets electric rates

The state’s biggest utility says it supports a comprehensive review of the way electric rates are set in Connecticut, but questioned whether regulators have the legal authority to roll back the already approved rate increases generating widespread protests among consumers .

Eversource also said in a filing with utility regulators that, in combination with the rate increase, “record-setting heat and resulting high energy consumption” was “a principal driver” behind the sharp rise in customer bills beginning last month. Without the heat and accompanying consumption, Eversource said the rate increases would have added about $7.58 cents to the average bill.

The Eversource response was filed with the Public Utility Regulatory Authority, which approved the rate hikes. It was one of several demands for rate relief filed with regulators late this week  by dozens of politicians and customers who sounded unlikely to accept the utility’s explanations.

Most of the filings demand some form or rollback of the increases, something that is possible under state law only in limited circumstances and that would likely draw a challenge from the utilities.

Top Republicans in the state Senate and House called on Gov. Ned Lamont to use the budget surplus to cover the increase in utility rates.

“As you know, according to the Comptroller, the General Fund will end Fiscal Year 2024 with a surplus of $329 million—which could cover the government mandated arrearage costs imposed on the utilities and paid for by all ratepayers,” Vincent J. Candelora and Steven Harding, Republican leaders of the House and Senate, respectively, wrote to Lamont. “This one time surplus could also absorb the expenses of the new electric vehicle charging program.”

Driving the anger and political reaction was an increase of 400 percent or more that appeared under what is known as the public benefit category of Connecticut electric bills, the portion of bills that sets apart what the state requires utilities to spend on social welfare, environmental and other programs.

PURA approved the rate increases, beginning with July bills, to reimburse Eversource and United Illuminating for their costs related primarily to compliance with state requirements that they buy electricity from Dominion Energy’s Millstone nuclear station in Waterford and underwrite a program that incentivizes conversions from gas-powered to electric vehicles.

The Eversource filing was in response to one by the state Office of Consumer Counsel on Thursday, which said it was reacting to “the extraordinary rate shock being experienced by Connecticut electric customers” as a result of rate increases and “the extreme heat patterns this summer.” United Illuminating is expected to file a similar response next week.

Consumer Counsel Claire E. Coleman’s letter to PURA said something needs to be done to relieve hard-pressed electric customers, while acknowledging that rate increases were justified.

Coleman outlined two proposals, the first of which is to reopen the rate cases and extend the period over which the Millstone and EV charges are billed to customers. In the case of the Millstone costs, the repayment period would be extended from 10 to 22 months.

Extending the repayment period, known as amortization, would decrease the amounts that appear on monthly bills. But it would also result in customers paying more over a longer period of time when the tens of millions of dollars in interest payments the utilities are required to borrow to pay for the state mandates are factored in.

Eversource has said its interest charges on what it borrowed to buy electricity from Millstone would increase by about $25 if the payback period is extended from 10 to 22 months.

More than 25 Legislative Democrats, including Senate and House Leaders have decided paying more over a longer period is preferable to the “rate shock” customers  are now experiencing and have written to PURA, asking the regulators to reopen rate cases and extend the repayment period to 22 months.

In order for PURA to reopen the rate cases, which involved  comprehensive analysis of utility finances beginning in December 2023, there must be, under state law, “a showing of changed conditions.”

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The letters to PURA that address “changed conditions” suggest that the rate increase by itself amounts to significant change.

“After several weeks of consumers receiving bills with historically high summer usage, it seems accurate to categorize ratepayer impact as ‘rate shock,’” two groups of Legislative Democrats wrote in identical letters. “Communication by the utilities and others regarding anticipated bill increases have significantly underestimated impact, and public harm is significant.”

If PURA reopens the rate cases and extends the repayment period, it will be resurrecting a proposal by Chairman Marissa Gillett that was made during the rate hearings but not adopted in a final decision approving the increases. Eversource opposed extending the repayment period, arguing that the state law requiring utilities to buy power from Millstone also entitles the utilities to recover their costs in a “timely” fashion.

Eversource does not explicitly oppose reopening the rate cases in its filing with regulators, but notes that the Office of Consumer Counsel, in its analysis of the controversy, does not claim that the “changed conditions” necessary to reopen settled rate cases exist.

If there is no means of rolling back the rate increases, the Office of Consumer Counsel recommended in the alternative a review and possible restructuring of utility law to make rate shocks less likely in the future.

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Eversource said it “fully supports” a review and restructuring and has repeatedly called for it in regulatory filings. The utility said it hopes the procedure can be completed before May 2025, when the next rate adjustment proceeding is schooled,

“Eversource has advocated for such a process throughout the preceding — as it is the appropriate step for customers as, OCC understands,” the company wrote.