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Attorney General William Tong

05/20/2021

Attorney General Tong Urges Rate Stability for United Illuminating Customers

Joint Letter to PURA Answers Questions, Urges Support for $46.5 Million COVID Relief Bill Credit

(Hartford, CT) – In a joint letter filed Wednesday with the Public Utilities Regulatory Authority, Attorney General William Tong, United Illuminating, and other settling parties clarified questions and reaffirmed their commitment to a proposed $46.5 million COVID relief bill credit to decrease and stabilize electric rates into 2023.

The joint letter was filed by Attorney General Tong, United Illuminating, the Department of Energy and Environmental Protection, and the Office of Consumer Counsel in response to questions raised by PURA. The letter seeks to answer those questions and clarify misunderstandings regarding the agreement.

Click here to read the full letter.

See below for an explainer on the settlement and Q and A regarding some of the questions raised by PURA.

What does the agreement do?

In March, Attorney General Tong and Governor Lamont brokered an agreement with UI to establish a $46.5 million COVID relief bill credit to decrease and stabilize electric rates into 2023. The agreement fully offsets what would have been a five to eight percent increase in bills on May 1 due to federally-mandated transmission charges and the costs of the Millstone power purchase agreement. The settlement includes a $5 million voluntary contribution from UI’s own coffers, and also accelerates the return of $41.55 million of accumulated savings from federal tax cuts ahead of what would have otherwise been required. In addition, UI agreed to not change base distribution rates until at least May 2023—an agreement that would save ratepayers a projected $20 million above and beyond the $46.5 million COVID credit.

What has PURA proposed?

PURA issued a draft decision rejecting the settlement, and instead proposed an alternative plan to amortize the accumulated charges over a 68-month period, with interest. This plan would provide marginal immediate relief to ratepayers, while adding $2.4 million in new interest costs to ratepayers. It would also allow UI to immediately apply for an increase in rates.


Question: PURA has suggested spreading the costs over a 68-month period with added interest. Is that the best way to deliver rate stability for Connecticut consumers?
Answer: No, PURA’s suggested path adds $2.4 million in new interest costs to ratepayers, while also rejecting a $5 million voluntary contribution from UI’s shareholders. UI had further agreed through the settlement not to change base distribution rates until at least May 2023—an agreement that could save ratepayers a projected $20 million, and would be lost in PURA’s suggested path.

Question: The Take Back the Grid Act ordered PURA to examine the possibility of an interim rate decrease, as well as the adoption of low income or economic development rates. Does the settlement block that?
Answer: The settlement takes no position on implementation of low income or economic development rates and does not hinder PURA’s ability to adopt these changes. The settlement itself includes $5 million in rate relief funded by a voluntary contribution from UI’s shareholders. Instead of a 5-8 percent increase that would have hit bills this month, families will now experience a minor decrease as a result of the settlement.

Question: Does the settlement hinder PURA’s ability to implement Performance Based Regulation?
Answer: No, it does not. The settlement takes no position on performance-based regulation and does not hinder PURA’s ability to investigate, develop, or adopt performance-based regulations.

Question: The settlement proposes an accelerated return of $41.55 million in accumulated savings from federal tax cuts. Did PURA already order this returned? Will UI keep over-collecting from ratepayers?
Answer: No, PURA did not order the return of those funds prior to the settlement. PURA cannot order UI to return the tax liability outside of a rate proceeding. As for future overcollections of the corporate income tax, the settlement agreement does not allow UI to retain over-collected funds. UI has stated that it is open to working with PURA to readjust its rates to reflect federal tax changes.
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Media Contact:

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