Reopened Connecticut Water Case Draws Warning From Top State Regulator

PURA Chair Marissa Gillett warned that the authority’s decision to allow Connecticut Water to raise rates again because of a mistake the company made in a rate case earlier this year would continue to push the burden of proof onto the regulator, making it more difficult to protect customers from unnecessary rate increases.

After having their rate increase approved in July, Connecticut Water went back to the Public Utilities Regulatory Authority and asked the regulator to allow the company another $2 million in revenue because the company had made an accounting mistake on one specific tax matter in the complex rate-making process. 

In a written dissent opposing the PURA board’s 2-1 decision last week to allow Connecticut Water to raise its rates another 2 percent, months after PURA approved a 5 percent increase for the company – Gillett criticized the company for using it’s own mistake in the earlier rate proceedings to push PURA to open the docket back up and raise rates even further.

Gillett said it was part of an “emerging pattern” among the state’s regulated utilities to shift the burden of proof in ratemaking decisions away from themselves and onto PURA.

The inaccurate information Connecticut Water provided on earlier filings understated how much revenue it should be allowed to make, and the company asked PURA to re-open the case to correct the issue – allowing the company to make a total revenue of $110.26 million on its base rates, about $2.1 million more than PURA approved in July.

Gillett said that, while an “error of fact” is a legitimate reason to reconsider a decision, that only includes cases where the regulator made the error. In this case, Connecticut Water admitted that the error came from the information it submitted to PURA. The authority shouldn’t have to reconsider a decision because of a mistake the utility made, she said.

“That this error resulted in a lower authorized revenue requirement is neither the Authority’s fault, nor more importantly is it the fault of the company’s ratepayers,” Gillett said.

Gillett said state statutes place the burden of proof in utility regulations on the regulated company, in this case Connecticut Water. Reconsidering a decision because of an error the company made in presenting evidence to the authority “negates the very premise” of the statute,” Gillett said – and it’s unfair to ratepayers and other companies, and is an administrative burden for the regulator.

Connecticut Water spokesman Dan Meaney said the company respects Gillett’s dissenting opinion and appreciates the time and resources PURA and other parties spend in regulatory proceedings.

“We strive to provide complete and accurate information in our filings to allow for the necessary level of review to ensure that the decisions best reflect the interests of all parties and are fair to our customers,” Meaney said.

After already seeing an increase to their water rates this July, Connecticut Water customers will see another increase as a result of this decision. It is about a 2 percent increase – though the company said it didn’t know yet what the exact impact on residential customers would be.

The decision brings an end to Connecticut Water’s general rate case, which ended up raising the average customer’s water rates by about $3.80 per month, and increasing the company’s revenues by $7.3 million a year to $110.2 million – an increase of about 7 percent in total.

It was the company’s first general rate case since 2010, and the company originally asked regulators to approve a 20 percent increase that would have raised bills by about $10.50 a month to cover rising costs and a decade of infrastructure investments.

Even with the additional increase approved last week, the rate increase is about a third of what the company originally requested. But Gillett said in her written dissent that she may have changed her position on elements of the regulator’s first decision back in July if she knew how much the company would ultimately be asking for.

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