State Sen. Norm Needleman disagreed when told at a hearing Tuesday that a bill aimed at trimming unnecessary costs charged to Connecticut’s utility customers would undercut the Take Back Our Grid Act – the wide-ranging attempt at reform passed amid outrage over Eversource and United Illuminating’s response to the damaging Tropical Storm Isaias in 2020.
“What?” Needleman, co-chair of the Energy & Technology Committee asked. “What? Where do you think this dismantles Take Back Our Grid? If anything it enhances Take Back Our Grid. It’s the exact opposite.”
Representatives for the business advocacy organization CBIA and Eversource both said the lengthy bill, with a long list of tweaks to the state’s utility regulation, would conflict with PURA’s efforts to create a system of performance-based regulation – one of the key pieces of the 2020 Take Back Our Grid Act.
“[Performance-based regulation] penalizes utilities for poor performance and incents them to achieve superior results,” Eversource counsel Vincent Pace told the committee. “But many sections in the bill conflict with [performance-based regulations] because they punish utilities by disallowing costs regardless of our performance.”
Pace said it was premature for the legislature to make wide-ranging changes to utility regulation now, while PURA is still working to implement performance-based regulation. Instead, he said, lawmakers should wait for that system to be put into place and then consider if any more changes need to be made.
“I just want to be very clear. I am the remaining leader on this committee that negotiated Take Back Our Grid,” Needleman said. “We negotiated it, we pushed it forward, we made sure it happened – and I would be the last person who would be advancing any issues that undermine it. Our intent, whether we got it right on the first draft or not, is to enhance that and enhance [performance-based regulation].”
The state’s two regulated electric utilities – Eversource and Avangrid, the parent company of United Illuminating – told lawmakers they are aiming in the wrong direction. The two utilities said the bill made “band-aid” fixes with minimal impacts on customer bills, which would undercut previous attempts at reform, while doing nothing to address underlying issues of regional fuel shortages and a challenging transition to renewable energy.
Among many other changes, the bill would prevent utilities from charging customers for capital costs without having PURA approve them in a full rate case, offer grants to “stakeholder” groups like residents of environmental justice communities or small businesses to intervene in rate cases, and ban utilities from charging customers for contributions to trade organizations, for the cost of arguing rate cases before PURA and for lobbying and marketing.
Pace said the lawmakers should be looking at fuel shortages causing high power prices in New England.
Kenna Hagen, counsel for United Illuminating, the parent company Avangrid, said that high and volatile energy prices, a “lack of transparency” into generators, and the lack of a plan to achieve clean energy goals need to be addressed, while the bill would just add regulation and “unnecessary costs.”
Doug Horton, Eversource vice president of distribution, said that while some parts of the bill may make people feel good, they won’t help with the current problem, and will limit the company’s options to address the deeper, multistate issues.
Rep. Jaime Foster, D-Ellington, said that when she talks to people about their high electric bills, they don’t want to just hear her say that the biggest driver of the cost increase is out of her control. The bill is trying to make an earnest attempt to take control of the things that legislators can control, she said.
“What’s written here is that, because this isn’t the biggest thing, it’s not worth our time and energy, and I disagree,” Foster said. “I think most of our ratepayers do as well, because I think they would like us to do everything in our power to address costs.”
PURA Chair Marissa Gillett said that there could be real cost benefits to customers from not allowing utilities to charge them for certain costs, like the costs of arguing rate cases. She said Aquarion Water is projecting costs over $1 million for its current ongoing rate case – which doesn’t sound like a lot, but could amount to $1 per customer.
Foster said $1 a month was meaningful for her constituents.
“I represent a great number of constituents who don’t have savings roll over from paycheck to paycheck, and $1 per month, per action we take under this law… those might not matter for your executives, but they matter very significantly to my constituents who live paycheck to paycheck, and who are strangled right now by inflation,” Foster said.
Hagen said Avangrid isn’t opposed to regulation, but would rather focus on “solutions to key energy problems instead of adding regulations that distract from the key issues.” The key stakeholders in energy need to come together to work towards solutions, and adding regulations won’t lower costs, she said.
State Rep. Jonathan Steinberg, D-Westport, co-chair of the committee said it was brave of Hagen to take the same approach as Eversource after the lawmakers had grilled Eversource for suggesting they focus their attention elsewhere.
“I’m going to give you an opportunity, perhaps to offer us any constructive advice about a bill that we’re very serious about and intend to move forward on,” Steinberg said. “Is there something you might offer us that would make the bill better, rather than simply dismissing it?”
Hagen said she didn’t mean to tell the lawmakers they were looking in the wrong direction, but said that since the energy markets were deregulated in the 1990s, regulations have been patched with a series of makeshift solutions, without looking at the underlying problems.
“Where we’ve come to now in 2023 is decades of bandaids,” Hagen said. “So how do we peel those back and say, ‘What’s the foundation to which a regulatory framework should be built? How do we ensure that PURA is vested with the authority necessary to regulate the monopoly of utilities, but still ensure that balance that utilities earn an established, just and reasonable rate to attract capital to continue to make investments for customers?’”