Connecticut Attorney General's Office

Press Release

Attorney General Asks For DPUC Investigation Of UI Maintenance, Capital, Operation Cuts

May 19, 2009

Attorney General Richard Blumenthal today announced he has asked the Department of Utility Control (DPUC) to investigate whether United Illuminating (UI) defied department orders by slashing capital, maintenance and operations budgets and to order those cuts rescinded or a rate reduction and other penalties if it did.

Blumenthal asked for the investigation and sanctions as the company withdrew its request for a rate increase proceeding.

"The company's capitulation -- conceding its request for higher profits is unnecessary -- completely shreds its credibility and trust," Blumenthal said. "The company has totally reversed itself -- now admitting that it can raise capital without rate or profit hikes, after condescendingly dismissing our opposition. UI's unfathomable about-face and its abandonment of critical operations and maintenance show the need for comprehensive, complete investigation.

"Withdrawal of this irresponsible rate increase request in no way excuses UI's irresponsible decision to cut spending on maintenance and ongoing operations, endangering reliability and public safety. I will fight for disciplinary measures -- an investigation followed by fines and penalties, if appropriate."

In February, DPUC rejected UI's request for an $81.5 million rate increase, instead ordering a $1 million decrease. UI reacted by slashing capital, maintenance and operations spending, doubling its profits, and at the same time effectively asked DPUC for rate increase.

Blumenthal said, "My petition asks DPUC to investigate whether UI defied orders requiring specific levels of spending on maintenance, capital projects and ongoing operations, endangering public safety and reliability. If the company did so, I urge DPUC impose a hefty fine and either rescind the cuts or reduce the company's rates.

"UI reacted to rejection of its rate hike request like a spoiled child, slashing maintenance, capital and operations budgets, threatening public safety and reliability. The state authorized an 8.75 percent profit, an enviable rate of return for most businesses, especially during the current recession, but apparently not enough for UI. Instead of welcoming its generous profit, UI slashed vital spending on maintenance and capital projects, jeopardizing reliability and safety to squeeze more money out of struggling ratepayers.

"Since crying poverty to the DPUC, UI has gloated to Wall Street that its profits doubled, its stock price soared and that it secured financing for a large project. Its plan to sell 4 million shares of stock further demolishes its claim only weeks ago that it could not raise capital.

"DPUC should investigate whether UI provided accurate and truthful information -- and consider sanctions if evidence of bad faith emerges."

Blumenthal also asked DPUC to deny UI's plan to move its headquarters from New Haven to Orange. Blumenthal said DPUC should reject the headquarters relocation regardless of whether it improperly slashed its budget.

Blumenthal said, "I strongly oppose UI's plan to relocate its headquarters to Orange. Defiance of orders for maintenance, capital improvements and operations spending would provide DPUC with another powerful reason to refuse UI's request for ratepayer funds to move its headquarters."

UI, which operates distribution and power lines that deliver electricity in the New Haven and Bridgeport areas, is a regulated utility, meaning that the state grants the company a monopoly and authorizes a certain profit level in exchange for it providing reliable, affordable delivery of power.