United Illuminating (UI) won’t be able to raise their rates as high as they were hoping, following a ruling by the Public Utilities Regulatory Authority (PURA).
UI, which provides electrical services to 341,000 customers, had requested a rate increase of $131 million over three years. Instead, PURA ordered a rate increase of only $22.9 million, resulting in an average increase of about 2% on customer bills.
Regulators also lowered a requested increase in the company’s Return on Equity.
The new revenue plan will go into effect on September 1st.
“Rate cases are a vital tool for regulators to assess company performance and to ensure that ratepayers are receiving commensurate value for investments made on their behalf,” said PURA Chairman Marissa P. Gillett in a statement. “This 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.”
PURA is tasked with reviewing any proposed rate increase for the state’s electric companies, but notably, only those that are planned for the distribution side of your bill, the cost to deliver power to your home or business. The supply side – the cost to generate that power – has been shielded from PURA regulation.
Delivery rates are often far less clear than supply rates – which remain largely constant throughout a region – and can include myriad ways for a company to recoup costs. Companies are allowed to use delivery rates to pay for infrastructure updates, taxes, charitable contributions, and other expenses.
Gillett, however, is hoping for a change in state law that would allow her and her fellow regulators the power to oversee all sides of utility rate setting.
In the meantime, PURA has begun working toward Performance-Based Regulation (PBR), a system that would alter the requirements for rate increases. Under PBR, rate increases would be based on a company’s investments in maintenance, improvements, and customer programs, rather than on a company’s need to recoup costs.
This decision marks the second time that PURA has altered rates for a utility company this year. In March, the authority ordered Aquarion, a water utility, to decrease rates for its customers by about 11%, saving customers an average of $67 per year. Aquarion did not react positively to the decision. The company’s CEO Don. Morrissey has said that such decisions could force the company to move out of the state.