Ratepayers and lawmakers applauded a recent decision by state regulators to limit a price hike for rates requested by power provider United Illuminating.
UI serves 17 towns in Connecticut. And in one case, they requested about an 8% hike on residential customers. PURA, the Public Utilities Regulatory Authority, granted them 2%.
United Illuminating leadership and employees are pushing back now though. The decision on regulators - they are not happy with it and they're filing an appeal in court.
United Illuminating CEO Frank Reynolds tells us why he thinks PURA got it wrong.
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Mike Hydeck: So first question, PURA says hundreds of interviews and requesting documents over the last year is what led to their decision. When you heard their decision, you said, "Look, we believe that PURA is out of step with the state's needs." What do you mean by that?
Frank Reynolds: So I guess a couple of things. One is, you know, as we requested when we filed our rate case last year, a three-year plan, roughly $131 million, roughly $11 per month on customer bills in terms of impact. And, you know, the intent of those investments that we were requesting was to continue to build a resilient system, continue to invest in reliability. We have some of the top quartile reliability that we get to provide our customers. And also to help with the clean energy transition. Of course, the goal in the state here is to reduce carbon emissions by 2040, 2035, 2040. And these investments that we were requesting from PURA were to help enable that transition. So as you said there, unfortunately, they came back with a much lower offer than what we had requested, roughly $22 million. And that's just going to make it much more difficult for us to make those types of investments in our clean energy future.
Mike Hydeck: So let me give you a couple of quotes that PURA came out with after the decision came down. This is from the chair Marissa Gillette, she said after it was approved unanimously, "The decision recognizes areas in which the company has made progress since its last rate case, as well as areas in which PURA expects UI's management to enhance its efforts moving forward." And PURA Commissioner Michael Caron added this: "Ratepayers legislators and other parties in these proceedings and PURA must be satisfied that customers are receiving verified value for their dollar." What's your response to those quotes? Do you believe that first, one, that the documentation they say was asked for over the year period and the interviews, were they not up to snuff? Did you not feel as if you were informed along the way? They seem to say that they've done all these interviews and gotten all these documents.
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Frank Reynolds: Yeah, so I guess I got a few responses to that. And so you know, we've done rate cases in front of PURA for many, many years, and PURA has what they call a standard filing requirement. And so in the last three rate cases that we've gone through, we followed the standard filing requirements. And this rate case, we followed the standard filing requirements. We had no problems in the past rate cases. But for whatever reason, there seemed to be an issue with the standard filing requirements that we followed in this particular rate case. And so we believe, you know, PURA has deviated from long standing standards, precedent that has been set. And that's why, you know, we've decided to appeal the outcome of this case.
Mike Hydeck: So among the things that is talked about regularly, especially moving forward with our transition to electric vehicles, trying to reduce our carbon footprint, the need to have grid reliability is very, very important. And that came into focus, as I'm sure you remember with Tropical Storm Isaias. Parts of the state were out of power for five days, some cases, seven days, depending on where you were. What kind of grid investments do power providers like UI, what kind of changes have you made since Isaias and what are you hoping to make moving forward? Because the customer wants to know if we're going to get a rate increase, where's my money going?
Frank Reynolds: Yeah, no, that's a great question. So as I said, and tried to allude to, our folks take great pride in providing top quartile reliability to our customers. We have some of the best performance when it comes to electric reliability. Our customers see less than one outage every couple of years. And typically, that outage will last for less than an hour. Our employees are incredibly motivated and dedicated to providing that type of top quartile reliability. I think, you know, as you talk about just Isaias and Lee and what we learned from that, one of the things that we had to do, unfortunately, back during those storms was we had to shut down one of our substations, in Bridgeport, and that impacted 60,000 customers. And we had to shut that substation down because of the flood wall or the floods that flood zone that it was in and the impact that that was having to our equipment. We have now, we're nearly done, in building the new Pequonnock substation, which is going to be more resilient, it's going to enable us to bring more renewables onto the distribution system, which is something that will do a few things for us in terms of decarbonizing our clean energy future. But also, we think that will have an impact on rates in the future by bringing rates down for our customers.
Mike Hydeck: So there have been calls for more transparency on how energy companies use the rate increases in revenue overall, because you basically have a monopoly and you're interfacing with the government as well. So it's a difficult situation. If I were to take a UI bill and hold it up and look at the transmission rates, and all the line items, among the things that's not on there is this amount of money that went into grid enhancement, this amount of money went into mitigating the climate change concerns. Would more transparency, either on the bill, or in public relations, help you in a situation like this, do you believe?
Frank Reynolds: Mike, I totally agree with that. And so I'd say a couple of things. So we have had a number of what we call customer pop-up events throughout this year to help customers who may have been struggling with their bills find out the different programs that we have and offer to customers to help pay their bills. We also worked collaboratively, I think with the legislature as well as with PURA in terms of ushering in what's called a low income discount rate against it, again, to help customers who may be struggling to pay their bills and for customers who qualify for this new low income discount rate. But I do believe, you know, there's an opportunity and this is forthcoming as well, a new bill that's going to be presented that is going to provide more transparency. I don't know if it's going to provide the level of transparency that you've just referenced. But it certainly is going to provide more transparency in the future for customers to understand those different tranches of the bill. I like to remind folks that we are purely an energy distribution company. So when you look at the distribution portion of the bill, which has remained flat for the past six years, by the way by, Mike, that is poles, wires, transformers, our employees that go into that portion of the bill. It's not the generation portion of the bill.
Mike Hydeck: You're getting it from the substation to the homes, right? That's what you mean?
Frank Reynolds: Exactly. The generation portion of the bill, the energy itself, no transparency, we have no control over that. That's strictly a pass through to customers. What we get it for in the market gets passed on to the customer, no markup whatsoever.
