State regulators approve deal with Eversource, but PURA’s head votes ‘no’
The Public Utilities Regulatory Authority approved a settlement agreement Wednesday between the state and utility Eversource over its response to Tropical Storm Isaias.
The 2-1 vote approves a deal that will get the average ratepayer a total bill credit of about $35 over two months, but it drops a penalty to reduce Eversource’s allowable profits from Connecticut customers.
Isaias knocked out power to half of Eversource’s Connecticut customers (about 600,000 people) in 2020, leaving some with no electricity for more than a week. The disaster prompted a flurry of responses from state legislators and outraged consumers, who wanted to see the utility punished for its storm response.
Earlier this year, the Public Utilities Regulatory Authority, which holds power over many decisions governing electric bills in Connecticut, proposed a very specific penalty: cutting Eversource’s allowable profits from state ratepayers by at least $135 million over four years.
Policy wonks call that a “return on equity” or “ROE” reduction. But a deal promoted by Democratic Gov. Ned Lamont, Attorney General William Tong and a coalition of other state officials dropped that ROE penalty, opting instead for a lump-sum payout of $75 million and a slate of other concessions from Eversource.
“I appreciate the efforts of the settling parties,” PURA Chairman Marissa Gillett said during a regular meeting of PURA Wednesday. “However, I’m just — I’m not able to get there at this time. So I will not be able to support the settlement.”
“I worry that this will not be the last time that we are in this situation — more devastating storms will come to pass — and a tool such as a ROE reduction would more acutely encourage Eversource’s executives to properly prepare for and respond to such storms,” Gillett wrote.
Gillett said ROE reductions are “one of the most effective tools at a regulator’s disposal to effectuate long-term, systemic change” for private corporations like Eversource.
“Simply put: sometimes it is worth going to the mat, and I am apprehensive of a future where we still do not have a court-backed interpretation of PURA’s regulatory authority in holding utilities accountable following a storm event,” Gillett wrote.
But PURA’s other two commissioners — Jack Betkoski and Michael Caron — voted in favor of the agreement. Both said during PURA’s Wednesday meeting that they have seen an improvement in the way Eversource handles storm emergencies.
“I think it’s in the best interest of the ratepayers of the state of Connecticut that we do this,” Betkoski said. “I know this has not been an easy decision for any of us, including all the stakeholders that were part of this, but hopefully this chapter will be behind us.”
Lamont praised the settlement in a statement Wednesday afternoon. Other supporters of the deal say it will avoid the risk of future legal action that could potentially endanger relief to ratepayers.
Now that the deal is finalized, Eversource will have to appoint a Connecticut-specific president. It will also expand the function of a service center in Waterbury, which “will reopen the facility to permanent staffing of overhead and underground line resources, along with supervisory support,” according to the agreement.
Eversource will also drop its challenge of a separate $28.4 million penalty that is already being paid out to customers and will introduce a rate freeze on one portion of Connecticut electric bills that will remain in effect until at least 2024, but other parts of the bill could still rise.
In a statement Tricia Taskey Modifica, a spokesperson for Eversource, said, “the settlement provides immediate, tangible relief for our customers as we continue to deal with COVID-19 and prepare for winter. We learned valuable lessons as a result of Tropical Storm Isaias and have made numerous improvements that have changed how we respond to communities and communicate during storms.”
The bill credits should begin to show up for Eversource electric customers starting in December.