Norm Needleman

STATE SENATOR

Norm Needleman

DEPUTY PRESIDENT PRO TEMPORE

COMMON-SENSE SOLUTIONS

August 22, 2023

ENERGY & TECHNOLOGY LEADERS, ATTORNEY GENERAL TONG, CONSUMER COUNSEL COLEMAN REINFORCE NEED FOR STRONG OVERSIGHT OF CONNECTICUT UTILITY SECTOR

Today, leaders of the Energy & Technology Committee including Senate and House Chairs State Senator Norm Needleman (D-Essex) and State Representative Jonathan Steinberg (D-Westport), Senate Ranking Member State Senator Ryan Fazio (R-Greenwich), Attorney General William Tong and Consumer Counsel Claire Coleman gathered to reinforce the need for and importance of Connecticut’s regulatory environment on utility companies.

Since Connecticut deregulated its energy market in the late 1990s, energy costs in the state rose to some of the highest in the nation. In that time, residents saw poor performance by utility companies, especially in response to significant storms, spurring significant changes in state regulations to address these disparities.

Since then, utilities have claimed under increased regulations that they may not be able to invest in Connecticut and have called out Public Utilities Regulatory Authority staff by name, despite their track record in the absence of regulations speaking for itself.

“Even after the passage of new regulations in recent years, utility companies continue to see record profits and executive pay has remained in the millions of dollars,” said Sen. Needleman. “I’m more focused on the needs of their customers struggling to make ends meet and facing exorbitant utility bills, some of the highest in the country, without receiving the performance level they deserve. That’s why my colleagues and I have supported performance-based ratemaking, where utilities need to deliver on their promises. If the utilities put half the effort they’ve thrown into fighting these regulations into doing things they should have done years ago, we probably wouldn’t be here.”

“Connecticut ratepayers demanded that Government hold the electric utilities accountable. We’ve passed laws to enable PURA to do just that,” said Rep. Steinberg. “The utilities will have to adjust to the new performance-based compensation paradigm. They should respect the process and not seek to undermine it. There’s plenty of profit to be made by investing in our state’s energy future. Let’s not get distracted by this ill-advised public campaign.”

“We need a balanced regulatory environment in Connecticut to better protect consumers,” said Sen. Fazio. “Independent reviews and ratings of the level of customer service of utilities in Connecticut have consistently fallen short of satisfactory and fall far below the average of the country. I believe that strong regulatory oversight is necessary to rectify that.”

“The Public Utilities Regulatory Authority’s review of United Illuminating’s request for a rate hike was comprehensive and fulsome,” said AG Tong. “It included 16 days of hearings and thousands of interrogatories over the past year-plus, giving UI’s leadership ample opportunity to make the case that they need $131 million more from ratepayers—and they did not meet their burden. It was always on UI’s leaders to justify this rate hike, and they failed to meet that standard. There is no doubt that PURA is rigorous and demanding and the decision is fair, well-reasoned and thoughtful.”

“Connecticut is a leader in utility regulatory reform, and I am proud to stand with our state regulators, fellow state officials, and legislators on both sides of the aisle who continue to fight utility demands for a blank check signed by Connecticut’s ratepayers,” said Consumer Counsel Coleman. “We understand that we need to make major investments in our energy grid, and that our utility companies are entitled to a return on those investments that they can demonstrate are benefiting customers. But we refuse to accept a system where companies are granted whatever they ask for even without the proper justification.”

In recent years, legislators have worked to improve standards of operation for Connecticut utilities after a number of storms and related outages, as well as high consumer costs, have led to criticism of utility practices.

In June, the General Assembly passed Senate Bill 7, which sought to close loopholes and improve standards of service for utility customers. It prevents utility companies from using ratepayer funds for lobbying expenses as well as board of director/officer food, drink, transportation and entertainment. Further, the bill created a fund allowing ratepayer and ratepayer organizations legal representation to challenge utility rate increase proposals and strengthened Connecticut’s utility regulatory environment.

These changes are significant; from 2016 to 2021, Connecticut utilities spent more than $110 million on regulatory commission expenses; under the bill, companies would now need to pay for expenses from shareholder profits, not ratepayers’ pockets. Further, the ending of charging ratepayers for expenses comes as some utility companies have not had lobbying and advertising expenses, among others, scrutinized for nearly a decade.

The legislation also provides the Public Utilities Regulatory Authority with increased authority to order rate decoupling for electric or gas rate cases, disincentivizing companies from selling more energy to increase energy and profits and emphasizing performance metrics to ensure state ratepayers receive the quality of service they deserve.

This built on the “Take Back Our Grid Act,” passed in 2020, which created a framework establishing performance-based ratemaking. Under performance-based ratemaking, state regulators establish standards of consumer care that utilities must meet and regulate utilities based on those standards. It further took action to tie portions of executive salaries paid by ratepayers to company performance, required utilities to provide credits to customers when power outages last more than four days, and develop minimum staffing levels for staff.