United Illuminating is proposing a distribution rate increase it estimates will raise electric bills about five percent each year for three years beginning in 2023, the company told state regulators on Monday.
In a “notice of intent” to request a rate increase, United Illuminating told the Public Utilities Regulatory Authority that it will file a formal application in the next two months. The 5 percent increase in the first year of the plan means the average United Illuminating residential electric customer with a $188 monthly bill would see their bill increase about $9.69 in September 2023, according to the company.
In a statement, United Illuminating spokesman Gage Frank said that since United Illuminating’s last distribution rate increase in January 2019, inflation has increased the company’s cost of doing business by over 7 percent.
“UI has and continues to make significant investments necessary to continue to provide safe and reliable service to its customers all while keeping rates stable,” Frank said. “UI’s anticipated rate application will enable UI to build a stronger, smarter and more resilient grid, focused on maintaining reliability and strengthening the resiliency of the system to meet customer needs and evolving expectations.”
United Illuminating is the second-largest electric utility in Connecticut, serving about 341,000 customers across 17 municipalities in Fairfield and New Haven Counties – including Bridgeport and New Haven.
In its letter to PURA, the company said it recognized that consumers were also challenged by inflation. UI said its application will include a “low-income discount rate” – a concept that PURA approved in Connecticut Water’s 2021 rate case – and an “economic development rate” to support commercial growth.
United Illuminating also told PURA that its application will propose to spread the total proposed increase out over the three-year plan so that the average bill will increase about 5 percent each year, instead of a larger increase in 2023, the first year of the proposed plan.
In a full rate case, PURA has 350 days from when the rate application is filed to make its decision. PURA’s staff review data and testimony, and cross-examines witnesses in public hearings, to determine how much of the utility’s request is reasonable and should be allowed.
In 2016, United Illuminating requested a rate increase that would have raised its revenues by more than $98 million over three years. PURA ultimately approved a rate increase that increased the company’s revenues by $58.8 million – about 40 percent less than the company requested.
Connecticut’s Consumer Counsel Claire Coleman and Attorney General William Tong both vowed to carefully scrutinize United Illuminating’s proposal.
“Connecticut families pay far too much for their energy, and a rate increase at this time will only make that worse,” Tong said in a written statement. “My office will intervene on behalf of consumers, and we intend to aggressively scrutinize every charge and assumption in search of savings.”
The company said its three-year plan would increase its revenues about $57 million each year from 2023 to 2025. The company told PURA that, when its proposed rate increase takes effect, it will be nearly five years after its last distribution rate increase.
“By the time UI’s proposed new rates take effect for Rate Year 1 commencing on September 1, 2023, UI will have operated for nearly five years without a distribution rate increase, while continuing to make necessary system investments,” the company said in its letter.
The company also said it “agreed” in 2021 to return about $45 million to its customers, which also reduced the “net cost” of its distribution to customers. The company was required to return that money because it had overcharged customers after the 2017 federal corporate tax cut.
“UI customers are paying less today for distribution service than they were when rates were approved in 2016,” the company said.
While distribution rates have remained the same since January 1, 2019, the overall cost of electricity has not. The average residential electric bill in Connecticut was $198.80 in January 2022, about 10 percent higher than the $180 average bill in January 2019, according to the U.S. Energy Information Administration.
That increase came mainly in the last year, as Russia’s invasion of Ukraine and the COVID recovery have in part driven the global price of natural gas to spike – leading to higher rates in New England, where power generation is heavily reliant on natural gas-burning power plants.
The EIA has forecast that natural gas prices could decline in early 2023 as domestic production ramps up.
“UI’s customers are already struggling with high costs from inflation and record-high electricity rates due to global energy market volatility,” Consumer Counsel Claire Coleman said in a written statement. “My office will be carefully examining the details of UI’s request and will offer PURA an alternative that prioritizes the welfare of Connecticut ratepayers.”