PURA Concludes Utility Bill Investigation

pura
December 2, 2020

Connecticut’s Public Utilities Regulatory Authority (PURA) issued a ruling today after concluding its parallel investigations into the unexpectedly high electric bills received in July and August by utility customers.

PURA Concluded:

  • The current approach to administrative rate adjustments is not in the public interest.
  • The current approach to administrative rate adjustments is inconsistent with the intent of the authorizing statutes.
  • The current approach to administrative rate adjustments renders PURA’s role in the review and approval process objectively inconsequential.
Following today’s decision, there must be a comprehensive overhaul to the rate adjustment process moving forward, along with a mandatory redesign of customer’s electric bills to bring some much needed transparency to the policies, programs and investments paid for through customer rates.

What does this mean for your bill?

The rate adjustment components of customer bills in consideration, pertains to the “delivery” portion of the bill.

These costs are recovered on a per kilowatt-hour basis, which is why there was a great impact on the July rate adjustments as more people found themselves at home due to the COVID-19 pandemic. This exposed the deficiencies of the existing administrative rate adjustment framework, and PURA labeled the framework inadequate concerning public interest.

PURA’s Investigation Determined:

  • The current framework is problematic because it relies heavily on forecasts, which are inherently incorrect, and depending on the degree to which the forecasts are wrong – like in 2020 – can result in wild swings in a customer’s bill.
  • The current process also compensates the utilities at an unjustifiably high rate (the weighted average cost of capital) for carrying charges associated with these expenditures.

Changes and Updates:

  • The new process will rely on actual revenues and approved expenses from the previous calendar year as a proxy for expected costs when determining the going-forward rates to prevent the yo-yo effect witnessed in July.
  • PURA will consider semi-annual adjustments to the reconciling components of a customer’s bill, changing the effective dates to May 1 and September 1.
  • PURA is mandating a reduction in the carrying charges recouped by the utilities, directing Eversource and UI to instead use the prime interest rate.

PURA believes the framework announced today will create more stability for customer bills.

PURA is also re-committing staffing resources to enhance educational resources available to the public regarding utility bills, programs and practices, starting with this narrated explanation of electric bill components.