As United Illuminating fights state regulators in court to raise its electric rates, the company’s two natural gas subsidiaries announced on Friday plans to hike rates as well.
The requests to increase distribution rates – which would raise revenue by 5 percent for Connecticut Natural Gas and 9 percent for Southern Connecticut Gas – come at a tense time between utilities and the Public Utilities Regulatory Authority tasked with overseeing them.
Customers have bristled at high costs, lawmakers and PURA have pushed for more accountability from utilities, and the companies have warned that the state’s new direction will make it harder for them to attract outside investments.
It’s particularly tense for the two subsidiaries’ parent company, United Illuminating, which just had its request for a rate hike rejected by PURA and is appealing the decision in court.
“These rate increases will go directly towards investments in our natural gas infrastructure that are essential to our commitment to ensure safe and reliable service, today and into the future,” United Illuminating spokesman Craig Gilvarg said in a statement. “The increase will also fund new headcount for our union workforce as we look to expand our gas operations and customer call centers to better serve customer needs.”
The notice from the two subsidiaries comes about a month after PURA rejected United Illuminating’s request for an electric rate hike, and about two weeks after the company challenged that ruling in court.
It also comes about two weeks after a S&P Global Ratings report that lowered the ratings outlook for United Illuminating and Connecticut Natural Gas to “negative,” saying they could downgrade both companies in the next 12 to 18 months because they believe Connecticut’s regulatory system is “becoming less supportive for credit quality,” after PURA rejected United Illuminating and Eversource subsidiary Aquarion Water’s requests for rate hikes this year.
“These rate orders did not approve the multiyear rate plans filed and included material disallowances, penalties for UI, and below-average returns on equity,” the report said. “In addition, we expect that these rate orders will increase regulatory lag for these utilities.”
CNG, which serves about 185,000 customers in 25 municipalities in central Connecticut and Greenwich, will ask to raise rates to increase its revenue by about $21 million – a 10 percent increase to delivery revenues and 5 percent increase in overall revenue, the company said.
SCG, which serves about 208,000 customers in 24 municipalities, is asking to raise rates to increase its revenue by $42 million – a 20 percent increase to its delivery revenues, and 9 percent increase to its overall revenues.
Both companies told PURA that they need the rate increases to make up for “operating deficiency” in their revenues since their last rate cases in 2017 and 2018. That revenue shortfall is the result of the companies speeding up replacement of “leak-prone” cast iron gas mains and bare steel service lines.
The companies also said the additional revenue will allow it to invest more in the “clean energy transformation,” including pilot programs for recapturing purged gas and advanced leak detection systems.
Attorney General William Tong, who has been critical of recent utility rate hike requests and of United Illuminating’s public campaign to support their rate hike, said in a statement that he would be watching the case closely.
“Connecticut families pay far too much already for basic, necessary utilities, and these increases are just one more added expense,” Tong said. “I will be thoroughly scrutinizing these applications and actively engaged at every single step of this process to ensure that Connecticut ratepayers don’t pay a penny more than they need to.”