Norm Needleman

STATE SENATOR

Norm Needleman

DEPUTY PRESIDENT PRO TEMPORE

COMMON-SENSE SOLUTIONS

May 26, 2023

SENATOR NEEDLEMAN LEADS SENATE PASSAGE OF PRO-RATEPAYER LEGISLATION FIGHTING BACK AGAINST ELECTRIC UTILITIES

Today, State Senator Norm Needleman (D-Essex), Senate Chair of the Energy & Technology Committee, led the unanimous 35-0 passage of Senate Bill 7, a caucus priority bill this year that will provide relief for Connecticut utility ratepayers. Its provisions include preventing utility service companies from using ratepayer funds for lobbying expenses as well as board of directors and officers’ food, drink, transportation and entertainment; creating a fund that will allow ratepayers and ratepayer organizations legal representation to challenge utilities’ proposed rate increases; and creating a stronger regulatory environment for Connecticut’s utilities.

This bill aims to build on the regulative successes enacted in 2020 with the passage of the “Take Back Our Grid” Act, which was passed after Tropical Storm Isaias caused significant damage, and power outages as long as 10 days, across the state. That bill developed the framework of performance-based ratemaking for state utilities, tied executive compensation from ratepayers to company performance, developed minimum staffing levels for linemen and other needed personnel, and required utilities to provide bill credits and claims for food and medicine for outages lasting more than four full days and impacting less than 70% of the state.

“Connecticut ratepayers deserve better than what they’re getting, and it’s our responsibility as legislators to seek a better path forward. Senate Bill 7 works to relieve the pressure so many Connecticut residents feel today from utility costs,” said Sen. Needleman. “It ties regulations to the quality of service providers give their customers, keeping them honest. It closes loopholes that will prevent companies from charging ratepayers for lobbying. It provides consumers with new resources to make their voices heard during rate hearings. It’s a transformative, extensive piece of legislation that will improve quality of services in Connecticut.”

Senate Bill 7, “An Act Strengthening Protections For Connecticut’s Consumers of Energy,” seeks to create overhauls for Connecticut’s utilities industry. The overarching bill makes a significant number of changes to current standards, including but not limited to: ends the practice of allowing utilities to charge ratepayers for attorneys, expert witnesses, and other expenses at extravagant costs, which puts regulators, consumer advocates, and all other parties involved in arguing for just and reasonable rates at a severe disadvantage. This would require them to pay for these expenses from their own shareholders’ profits. According to testimony from the Energy and Policy Institute these costs are not insignificant – between 2016 and 2021 Connecticut electric utilities spent over $110 million on regulatory commission expenses.

Bars utilities from charging ratepayers for expenses related to building political influence including lobbying, advertising, marketing, sponsorships, and charitable contributions. They’d be required to submit itemized costs to the Public Utilities Regulatory Authority, or PURA, for those costs. Some Connecticut utility companies have not had expenditures like this scrutinized for nearly a decade.

PURA would gain increased authority to order rate decoupling for electricity or gas company rate cases. Decoupling is a regulatory mechanism designed to separate the interests of utilities and their shareholders from those of their customers and society by decoupling revenue from sales volume. In practice this will disincentivize a company from seeking to sell more energy to increase revenue and profits. It can then be better tied to key performance metrics aimed at achieving specific policy goals such as best interests of ratepayers, energy efficiency, renewable energy, and ratepayer satisfaction. Performance-based regulations are vital to ensure Connecticut ratepayers receive the quality of service they deserve.

It would create an Intervenor Compensation program, following 16 other states in passing similar policies. This would allow groups representing residential or small business interests to receive up to $100,000 in compensation for attorney’s fees and expert witnesses to participate in rate cases before PURA. Awards are capped at $300,000 per eligible proceeding and $1.2 million per year. This effectively allows consumers and consumer advocacy groups to contest and participate in rate case hearings. Award recipients will participate in PURA and Office of Consumer Counsel training programs and this program will be independently audited 2.5 years after its imposition.

Other changes made by this bill include: PURA would be required to consider economic conditions, company compliance with laws and regulations, rate impacts on all customers and other issues deemed relevant in determining rates of return in rate hearing proceedings; PURA would gain greater discretion to determine deadlines for electric distribution companies to refund funds exceeding authorized return on equity.
PURA would no longer be required to encourage using proposed settlements to resolve contested cases and proceedings; PURA could instead adopt proposed settlements when appropriate; in rate case hearings, guardrails would be used for the use of settlements, important because this will give regulators more opportunities to delve into utility information; sunsetting of Eversource Energy’s Electric System Improvements charge as of its next rate case; requiring reporting of major accidents by utilities no later than 12 hours after occurrence, and for minor accidents to be included in monthly reports. Fines for failure to report or comply will double from $500 to $1,000; PURA would be required to investigate and determine whether to expand low-income rates to water and gas company customers.

Senate Bill 7 comes as consumers around Connecticut continue to pay some of the highest utility costs in the nation while not receiving the quality of service they deserve. Its intent is to strengthen regulatory frameworks for state utilities with a specific focus on ensuring their performance for ratepayers drives their decision-making.

The legislation is inspired by other states’ approaches to legislation, including the 16 states that have adopted intervenor programs; it also spurred new legislation in other states. A new law in Colorado was passed with direct inspiration from SB7 that prevents utilities from using customer funds to support political activities.

Before its passage by the Senate, this bill passed the Energy & Technology Committee by a 16-4 vote in March. It now heads to the House for further consideration.