Significant changes to the way the state regulates public utilities are on the way in 2023, at least according to the Public Utility Regulatory Authority (PURA).
PURA released its 2022 Annual Report on Wednesday, looking to highlight its successes last year, put forth a plan for 2023, and provide better clarity on the inner workings of the state agency.
High on the list of priorities is a change in the way PURA approaches regulating the state’s major electricity suppliers, namely Eversource and United Illuminating. Those two companies serve roughly 90% of the state’s population and rate hikes in recent months have caused a spike in concerns among consumers and lawmakers.
PURA has limited ability to stop those hikes, as Chairman Marissa Gillett has stated both in public comment at the General Assembly and in an interview with CII. Under state law, the authority is only able to regulate rate changes to one-half of a customer’s bill – the delivery rate – while the supply rate remains unregulated.
While Gillett and PURA argue for additional regulatory power, the authority is also exploring “performance-based regulation” of the companies to address “a disconnect between the outcomes from an electric service and what they’re hoping for.”
“What performance-based regulation is seeking to achieve, at a very high level, is to better align the utilities service and regulations with the expectations of consumers and the public policy of the state,” explained Josh Ryor, Managing Director of Technical Staff at PURA during a presentation on the report.
A better understanding of exactly what that means likely won’t come for another month or so. According to the report, PURA spent much of 2022 figuring out internally exactly how performance-based regulation might work. They’ve spent 2023 so far continuing work on Phase 1 of the project and are expecting to publish a draft decision on the project in mid-March.
A final decision, which will also include adoption of the new framework, is expected at the end of April. That decision will reportedly include more concrete steps toward achieving the goal of performance-based regulation.
PURA also plans to prioritize the ongoing grid modernization project in 2023, according to the report, having made significant progress on nine of its 11 dockets. These dockets seek to modernize the state’s infrastructure, support green innovations, and work toward more affordable energy solutions.
Last year’s efforts included building a framework for more resilience and reliability; designing a means of comparing different types of energy upgrades, including traditional “wire” solutions as well as “non-wire” green solutions; and approving a low-income discount rate.
PURA also offered an update on major rate cases from 2022, which are still before the authority. Among them is an increase from United Illuminating which will reportedly affect 341,000 customers across 17 towns in the state. A decision there is expected on August 25th.
“Rate cases are a vital regulatory tool to ensuring just and reasonable rates and to holding the utilities accountable,” said Ryor. “These are vital proceedings before the authority and we anticipate more from our larger utilities in 2023.”
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PURA ability to control rate hikes is not very limited. It has complete purview over the part of the bill that deals with service costs, distribution costs, administrative costs, and rate of return on investment. The only other portion of the rate is the actual energy input cost, which is market based, but could be more controlled by the market with more robust competition and less hampering of non-regulated entities, other than for legitimate consumer protections. PURA and the legislature continue to make the energy cost more expensive with the additions of less reliable, more expensive “green” energy. Solar and wind must have back-up unless or until affordable and reliable battery storage is made available. Duplicate cost means more cost for the consumers. It also means greater cost for the fuels providing the back-up, as they will be used intermittently. The system is being unnecessarily broken.