House Lawmakers Overwhelmingly Approve Performance-Based Energy Bill

The Connecticut House of Representatives voted to approve a bill that would direct the state’s utility regulator to establish a rate-making system for energy providers, including Eversource and UI, that would consider the quality of their service to consumers.

The House voted 136-4 to approve the bill, which will give the Public Utilities Regulatory Authority, called PURA, more power to penalize utilities for poor performance in storm recovery and which will force the companies to reimburse customers who lost food or medicine after lengthy power outages.

Lawmakers overwhelmingly supported the legislation, but also called for more action and in-depth reviews of the underlying issues causing high electric rates for Connecticut customers.

“It’s time to give our regulators the power and direction to take on these monopolies and ensure that positive customer outcomes are driving their performance, and not the utilities’ bottom line,” said State Rep. David Arconti, D-Danbury, co-chair of the Energy and Technology Committee. “There’s one thing that’s become clear to me since we began working on this legislation a couple months ago, utilities put their shareholders as their number one priority.”

State Rep. Anne Dauphinais, R-Killingly, State Rep. William Petit, Jr., R-Plainville, State Rep. John Piscopo, R-Thomaston, and State Rep. Bill Simanski, R-Granby, were the four votes against the bill, which still needs approval of the Senate.

A reported lack of communication from Eversource following Tropical Storm Isaias in August was a common concern expressed by lawmakers from across the state. House members recounted how Eversource liaisons failed to give local leaders basic information about where crews were and how long their communities would be without power.

State Rep. Maria Horn, D-Salisbury, said that communities expected they would be provided with “make-safe” crews in the wake of the storm and that there would be basic communication with local elected officials — neither of which happened according to Horn.

“I have the First Selectman of Sharon, who shared his multi-day string of texts with Eversource. Sharon is the home to our regional hospital. They have important critical infrastructure to the entire district,” Horn said. “His texts were begging for basic levels of information, saying, ‘We don’t have to have power restored immediately, just tell me what’s happening.’ They got nothing.”

The lack of communication meant people couldn’t make informed decisions about whether to stay in their homes, leaving vulnerable people at risk, Horn said.

The centerpiece of the bill is a directive to PURA to investigate and develop a system of “performance-based ratemaking” that would measure electric companies’ ability to meet customer needs, like reliability, cost and emergency response. PURA would use that system to evaluate requests for rate increases and determine reasonable rates of return for utility companies. 

Communication during storm response would be one factor that regulators would consider when setting rates, Arconti said. The goal, he said, is for service to catch up to what customers are paying for. Arconti said that there is nothing “inherently” in the performance-based rate system that would raise rates. 

Other marquee provisions raise the penalty PURA can levy — from 2.5 to 4 percent of the company’s annual distribution revenue — if it finds that a utility company failed to meet performance metrics in a storm with widespread outages.

Another provision would require electric companies to give customers a credit of $25 for every day past four days that they’re without power, and compensate customers $250 for spoiled food or medication due to an outage that lasts at least four days, if PURA determines it’s warranted.

Language in the final bill was changed from an earlier draft to say that PURA may investigate an interim rate decrease and reduction in “low-income” and “economic development” rates, from earlier language that would have required it.

The original provision drew opposition from lawmakers who questioned whether a reduction in low-income and business rates would leave middle-class customers with higher bills, something Arconti said he didn’t expect would happen. The change was made to let PURA determine the economic impact of the changes, without giving them a mandate to do it, Arconti said.

“I will say I thought it was important to include this section in the bill, and this authorization, if you may, to show our constituents that we’re thinking of them, and that it’s something we would like to be considered,” Arconti said.

Eversource and United Illuminating were publicly supportive of the performance-based ratemaking provision, but opposed the customer credits, which the companies called “punitive.”

The energy providers also noted that in several places the bill authorizes actions by PURA that are already allowed under existing law.

In testimony to the committee Eversource told lawmakers that PURA already has the authority to evaluate low-income and economic development rates. The company testified that the regulatory authority has already been reviewing low-income rates.

Eversource and United Illuminating also earlier called a provision linking executive compensation and employee incentive pay to the company’s performance unnecessary, because PURA already has the authority to determine how much the companies can pay executives with income from customers.

The bill also tasks PURA with studying what minimum staffing and equipment the companies need to respond to storms — a step that the regulatory authority already completed in February, although in written testimony the authority agreed that a closer look would be the “logical next step.” 

The energy bill also asks the Department of Energy and Environmental Protection to evaluate whether the state’s participation in ISO-New England wholesale energy markets is in the best interest of Connecticut consumers, a study the department said was already underway as part of its Integrated Resource Plan review.

Some members of the House, including Piscopo, urged the legislature to wait until the regular session to hold a fuller discussion of energy issues, with an evaluation of whether provisions in the bill would cause rates to rise. 

Others called the bill a good first step toward making electric companies more responsive to consumers, but also pushed for further action in the legislature’s regular session, something Arconti and House Majority Leader Matt Ritter, D-Hartford, promised they would do.

State Rep. Harry Arora, R-Greenwich, said the bill doesn’t address the key issue of PURA not having enough staff, or staff with the right skill sets, to effectively control rates.

“I believe that this bill is half-baked, because some of the key elements which will help in reducing costs, which will help in improving reliability, which are in front of us, have not been addressed,” Arora said. “We are going after a little nebulous idea of performance-based regulation, which actually has some risks that it may increase costs.”

State Rep. Laura Devlin, R-Fairfield, said she hoped the bill would make utility bills clearer, so that customers can understand which costs are being passed on to them, and through what part of their bill.

Arconti said that bill transparency would be a part of the criteria for performance-based ratemaking, but said he’d be happy to work on the issue more in the regular session.

State Rep. Doug Dubitsky, R-Chaplin, called for a task force to study how the electric distribution market operates in Connecticut, and how it could be changed. Ritter said that would be discussed in the regular session. Ritter said it was a good idea to have a task force study the complex issue, but said that the legislature was constrained by the special session.

“I’d be glad to have us have a debate about forming a task force to study that,” Ritter said.

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