The battle between utilities and lawmakers is ramping up once again. Earlier this year, both Eversource and United Illuminating requested a rate increase on power bills and got them, which led lawmakers to cry foul and ratepayers to protest at the capitol.
Now, natural gas providers are going down the same path. This week, Yankee Gas, owned by Eversource, asked for a $209 million increase.
Connecticut Natural Gas and Southern Connecticut Gas, which is owned by Avangrid, the parent company of United Illuminating, is awaiting a final decision on its request of $60 million.
So why is this needed, according to the companies? United Illuminating CEO Frank Reynolds gives us their side of the story.
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Mike Hydeck: So the $60 million increase you say is needed for the company. Why is that? And what happens if PURA upholds its decision to actually cut the revenue instead?
Frank Reynolds: Yeah, Mike, I appreciate the question. So you know, we've been providing safe and reliable service to our customers for a number of years, and our intent is to continue to provide safe and reliable service to our customers. And so the request is all about making investments in our infrastructure. We've been providing, you know, service for over 175 years to our customers. We've been continually investing in our system and upgrading our system to make sure that we could continue to provide that safe and reliable service to customers. So you know, the reliability investment plan that we put forth is all about continuing to be able to provide that service for customers. And as you noted there, PURA has come back with a draft decision essentially reducing rates by $75 million. Last year, these two companies made $60 million so that the math really doesn't add up for us. And so that's why we're putting forth our investment plan to make sure that we can continue to provide safe service for our customers.
Mike Hydeck: So for the average customer, infrastructure is a very vague term. What do you mean by that? Is it new meters? Is it new gas lines? Is it, you know, when I have a gas line in my house for propane, it works pretty much all the time. So tell us what infrastructure means?
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Frank Reynolds: Yeah, so infrastructure is essentially what you're referring to there. It's the pipes, it's the meters, it's the gate stations that regulate the pressure of the gas. And a lot of the pipes that we have are cast iron mains and services, bare steel mains and services, and those are what we call leak-prone pipes. So what we're attempting to do is replace those with state-of-the-art pipe, plastic pipe, which is more resilient, certainly more efficient and better for the environment, and will help us to better serve our customers.
Mike Hydeck: So let's talk about a bigger picture here. The average consumer can Google the price of natural gas and see it's down 5% year over year. Does that factor into this at all? Because we know that the price of natural gas was blamed for electric spikes last year, too. So does that factor in this particular number?
Frank Reynolds: Yeah, so there's a couple of things going on there. We do not charge for the commodity. The commodity is purely a pass through. What we're talking about is 30% of the bill. Our utilities make up 30% of the bill. That's the infrastructure costs that we just referred to, in terms of the pipes to the regulators, the gate stations, that infrastructure is what we're talking about here, not the commodity cost. The commodity cost is purely a pass through to customers. What we get it for on the market, it's passed through to customers at no markup, and that's what customers pay. We're talking about the distribution portion of the bill right now.
Mike Hydeck: Got it. So earlier this week, you saw how state lawmakers, I'm sure, the attorney general, said Eversource's request for Yankee Gas for that $209 million increase was tone deaf, and lawmakers said PURA needed to seriously probe this request. Does that impact your chances, you think, of getting this increase approved? You've already seen something come before you that was not necessarily in the gas company's favor.
Frank Reynolds: Well, you know what we've been attempting to do, Mike, is make sure that we inform the regulators, the policy makers, the other stakeholders, what these investments are going to go through. So we have conducted a number of meetings. We've provided a lot of documentation. We've provided tours, taking stakeholders out to the facilities that you can obviously see are aging and are in need of repair and investment. So I think that should substantiate and corroborate the need for the investment that we're asking for from our regulators.
Mike Hydeck: So the lawmakers on both sides of the aisle know the state policy. They know the market forces. They've studied the nuance of how the gas companies work. Do you feel like those tours helped change their opinion at all, or should you be concerned moving forward?
Frank Reynolds: I think they were eye-opening. You know, we took them to some facilities that are 1960s vintage. And if we're talking about making the clean energy transition, certainly our gas infrastructure is going to be needed as we make that transition. But if we're talking about the electrifying of our economy, we're going to need to invest in that infrastructure as well in order to meet the increased demand that EVs will put on the system, that electric heat pumps will put on the system. All of that is going to require investment in order to unlock that potential to make that clean energy transition. So I do believe that is as we educate these stakeholders around where these investments are going and exactly the method and thought that has been put into making this transition and these investments as part of that transition, I think that's helping our policymakers and regulators come to different conclusions.
Mike Hydeck: Helping people understand where that money is going to be spent, I think would help as well.
