Eversource Rate Increase Docket No. 20-01-01

ADMINISTRATIVE PROCEEDING TO REVIEW THE CONNECTICUT LIGHT AND POWER COMPANY'S STANDARD SERVICE AND SUPPLIER OF LAST RESORT SERVICE 2020 PROCUREMENT RESULTS AND RATES

This matter is under urgent review by the Public Utilities Regulatory Authority (PURA).  The rate change that went into effect on July 1 was an administrative adjustment that was scheduled for a full regulatory review in the coming months, but the review has been expedited.  If you wish to comment on how this rate change affected you, please file your comment in Docket No. 20-01-01.  You may do so by going to https://portal.ct.gov/PURA/About/Filing-and-Forms/Electronic-Filing or by emailing your comment to PURA’s Executive Secretary at PURA.ExecutiveSecretary@ct.gov.

While PURA’s review is ongoing, the new rates have been suspended.  The suspension of the rates applies going forward, only to future bills while PURA reexamines the rates.  Customers must pay the charges incurred on their current bills.  If PURA determines the recent higher electric bills were the result of improper overbilling or over-collection, PURA may address the issue of the over-collection in its review. 

Below you will find more information about the drivers of the rate increase.

The Public Utilities Regulatory Authority (PURA) is statutorily charged with regulating the rates and services of Connecticut’s investor owned utilities, including Eversource.  While distribution rates are determined through an evidentiary proceeding known as a rate case hearing (the last rate case for Eversource culminated in a 2018 settlement with other state agencies and the consumer advocate), the generation rates and certain line items within the delivery portion of a customer’s bill are adjusted on average twice a year – on January 1 and July 1.

On July 1, 2020, the generation rates decreased an average of 20%, and are locked in at the current standard service rate through December 31, 2020.  Because of this substantial decrease in the generation rates, customers may notice that even with increased energy usage in July, the “supply side” of their bill comprises a smaller percentage of the overall bill.  Nonetheless, because the state is deregulated, customers may elect to shop for a third-party electric supplier and have their electricity sourced from another provider if they no longer wish to receive their supply through the “standard service rate” that their electric utility provides.  PURA encourages customers who are interested in “shopping” for an electric supplier to take advantage of the resources on the EnergizeCT.com website, specifically through the electric supplier rates board.  Importantly, customers should note that the standard service rate – or the rate to compare – is locked in at $0.07375 per kWh in the Eversource service territory, and at $0.086672 per kWh in the UI service territory, for residential customers through the end of 2020.

Importantly, however, customers should note that electing a third-party electric supplier does not impact the portion of a customer’s bill denoted as the “delivery charges.”  While many charges that comprise the delivery portion of a customer’s bill do indeed stem from the cost of physically transmitting the electricity and maintaining the aging electric grid, the costs associated with the state’s energy-related public policy goals, as well as costs that are regulated by the federal government, are also reflected in the delivery charge section of a customer’s bill.  On July 1, several of these bill components underwent an administrative adjustment, and coupled with the higher usage due to the extreme weather in July, customers are experiencing higher-than-expected bills.  This is because the majority of rates and line items on a customer’s bill are volumetric in nature – meaning that the ultimate charge to the customer is dependent on the customer’s usage that month (because the rate is multiplied by the number of kWh a customer consumes).

While PURA is still reviewing these administrative adjustments that went into effect on July 1 and may ultimately take other actions, the initial review indicates that the primary drivers of the July 1 rate increases are a 1.18 cent/kWh increase in the federally-regulated transmission rates, which are a strict pass-through, and a 1.46 cent/kWh increase in the non-bypassable, federally mandated congestion charge (NBFMCC).  The NMFMCC is comprised of a number of components, including costs related to the 10-year power purchase agreements recently entered into between the Millstone power plant and the state’s electric utilities.

Public Act 17-3, signed by then-Governor Malloy in June 2017, required state regulators from DEEP and PURA to study the economic viability of the Millstone plant, which Dominion asserted would shut down without state financial assistance.  After a multi-year review conducted by DEEP and PURA, the agencies found that Millstone was at risk of retirement, and importantly, that it would cost the state’s ratepayers an estimated $1.8 billion (2017 dollars) to replace the generation and that regional emissions would still increase by 20 percent.  Pursuant to Public Act 17-3, PURA approved the ten-year power purchase agreements between Millstone and Eversource and UI through an order last September.  The rate is $49.99 per MWh, or $0.04999 per kWh, for up to 50% of Millstone’s output over a ten-year period.  Those costs began to be reflected in customer rates effective January 1, 2020, where the majority of the NBFMCC line item increase is attributable to cost recovery of the Millstone contract terms.

Finally, PURA notes that our colleagues in the General Assembly are interested in discussing this further with the ratepayers, utilities, and state regulators in the near future.  PURA stands ready to participate in this important conversation, and will come prepared to discuss ideas that will increase the transparency of the ratemaking process in the state.  Until then, PURA continues to urge all ratepayers to contact their utilities if they need assistance with their electric bills.  Earlier this year, PURA mandated that the utilities begin offering a COVID-19 Payment Program for both residential and non-residential customers impacted by the public health emergency. PURA-regulated electric, gas and water utilities must offer these payment programs that: 

• Are available to any customer requesting financial assistance – utilities are prohibited from requiring a demonstration of financial need prior to enrolling a customer in the COVID-19 Payment Program;
• Require no initial or down payment;
• Have durations of up to twenty-four (24) months;
• Waive any fees or interest in the calculation of the monthly payment amount; and
• Facilitate the repayment of the past due balances in addition to the customer’s current monthly bill.