Submitted by Jamie Ratliff
(February 16, 2024) — In an effort to shield customers from “rate shock” expected May 1, 2024, Eversource has engaged multiple state agencies and policymakers to collaborate on a thoughtful solution for customers.
Over several years, state regulators have changed the way electric distribution companies charge for supply and other costs that are covered by electric companies for customers. These supply charges and other annual costs are passed through reconciling rates, outside of base rates. Most of the increased costs for customers would be reflected in the Public Benefits portion of their electric bills.
This new method changed the way those costs are calculated, leading to a significant delay in collecting reconciled costs and leading to the prospect of a $38 per month rate increase later this year. Also causing the rate increase is the high number of unpaid customer balances going back multiple years during the COVID-19 pandemic. Overdue customer balances are paid for by all customers. Any collaborative proposal for rate stabilization would be subject to review and approval by the Public Utilities Regulatory Authority (PURA).
Electric delivery companies are required to notify PURA of these rate adjustments on February 15, 2024 including the bill impacts for customers. Along with its required rate filing, Eversource is urging active collaboration by Connecticut state agencies and executive offices, including the Office of Governor Ned Lamont, Attorney General William Tong, the Department of Energy and Environmental Protection and the Office of the Consumer Counsel.
Collaboration, partnership, and a healthy sharing of ideas will be vital to craft a path forward on two important customer goals: providing rate stability — not rate shock — for customers, and enabling timely payback to electric companies so they can be held accountable in their statutory obligation to provide safe and reliable electricity to customers.
“In the past two years, we have advocated for various changes to provide value and rate stability for our customers,” said Eversource President of Electric Operations in Connecticut Steve Sullivan. “Our customers want predictability, and not a constantly and significantly changing electric bill each year. We’re coming forward with a menu of solutions to achieve the goals of providing our customers with stability for several years, modifying policies to help prevent this kind of rate shock from happening in the future, and ensuring we have the resources needed to manage the electrical system and provide high-quality customer service.”
The standard rate adjustment causing the impact is used primarily to collect the cost of state-mandated programs and initiatives, with electric companies required to reconcile actual costs with projected costs so there is no over-recovery from customers. Previously, electric delivery companies were able to factor in the forecasts of future costs as part of the annual rate adjustment, aligning future cost increases or decreases with collection from customers to avoid unnecessary rate swings for customers.
Changes to the regulatory framework in recent years set pricing for market-sourced supply and other costs using the previous year’s actual costs and pushes large differences into the future. Without aligning current costs to collection from customers, rates for customers will consistently tend to be higher and more volatile for customers than market trends. Collaboration is needed to revisit policies that layer past and future costs to avoid constant rate shock now and in the future.
In a filing with PURA, Eversource proposed the following:
• Phasing in any potential rate increase over a period of time later this year where customers could see the benefit of lower supply costs, thereby minimizing the impact of the rate increase.
• Changing ratemaking methodology prospectively to allow for the forecasting of costs and factor them into rates to avoid this issue in the future to better align current costs with rates charged to customers.
• Working collaboratively on creative solutions with policymakers to mitigate the impact of future unpaid balances on the whole of the customer base.
“We’re taking the necessary steps to put solutions on the table and to work collaboratively with state leaders to minimize volatility in customer bills from this increase and reduce bill volatility going forward,” said Sullivan. “We’ve spent much of the past year proactively engaging elected officials, the communities we serve, and our many stakeholders to help them understand the importance of a constructive platform between the state and its utilities. This is an opportunity to show how we can work together in the interests of the state.”
