UI Settlement on Overcharges Gets Nod, Performance-based Rates to Move Forward

A settlement agreement for United Illuminating to return money it has overbilled customers is moving forward, say state regulators, after the agreement was amended to address concerns that it could stall the introduction of performance-based rates for Connecticut’s energy providers.

Under the settlement, United Illuminating would return the $44.7 million it has overbilled customers since a federal corporate tax cut in 2017. The company also agreed to contribute an additional $5 million which will slightly lower customer rates. Residential customers will see their bills drop by about 5.2 percent starting July 1, in part as a result of the settlement, but largely due to a seasonal adjustment in electric supply rates.

The Public Utilities Regulatory Authority, or PURA, initially rejected the settlement agreement, citing concerns that prior settlements have prevented Chair Marissa Gillett from taking actions she thinks could benefit ratepayers. Gillett had expressed concern that the new agreement could slow the implementation of performance-based ratemaking – a change the legislature ordered in the wake of Tropical Storm Isaias last summer.

United Illuminating and the regulated water and gas utilities continue to charge Connecticut customers based on a 35-percent tax rate that was lowered in 2017 to  21 percent. All have been ordered to return that money.

Eversource has already adjusted its charges to reflect the tax cut, and returned the money it owes to customers. 

Under the modified agreement, PURA still can’t change United Illuminating’s guaranteed return on equity prior to May 1, 2023, but the authority can go ahead with planning a new system for performance-based rates.

Gillett told CT Examiner in a statement that the transition to performance-based ratemaking is the clear intent of the legislature and a priority for her. 

“What is important to me in the near-term is to ensure that PURA is not hamstrung in our investigation and implementation of [performance-based ratemaking] by some prescribed date in the future,” Gillett said. “We must be able to begin adopting metrics and regulations as soon as they are ready to go so that a regulatory baseline and expectations are established.  The amended settlement would allow for that to happen.”

Gillett said that only a handful of states have seriously explored performance-based ratemaking.

State Sen. Norm Needleman, D-Essex, co-chair of the Energy and Technology Committee, said he and Gillett worked hard to get performance-based ratemaking into the utility reform bill and don’t want to see any impediments. He said he has faith in Gillette, and “if she’s satisfied, I’m satisfied,” with the amended agreement.

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