Recently, Eversource requested a rate adjustment of $784 million, which would increase the electric rates charged by Connecticut Light & Power by about 19%. Starting on May 1, the average residential customer would pay an additional $38 per month.
The smaller of Connecticut’s two regulated electric monopolies, United Illuminating Company, an Avangrid affiliate, plans to file a similar document the following week, albeit probably at a much less startling level.
The utilities apply for rate adjustments twice a year to recoup costs associated with government regulations, most notably a mandate to buy electricity at a favorable rate from Millstone, the state’s last nuclear plant and its primary source of carbon-free power.
Sixty-five million of the $784 million in unrecovered expenditures, according to Eversource, are attributable to the Millstone credit approved by the General Assembly in 2017. Mandatory assistance for the underprivileged and situations of medical hardship account for an additional $160 million.
The disclosure was made the day after Eversource informed stock analysts that Connecticut authorities were exacerbating its liquidity constraint. Eversource is attempting to generate funds through the sale of Aquarion Water to offset a one-time $1.9 billion loss on offshore wind investments.
Eversource claims that cost recovery has been hampered by modifying the Public Utilities Regulatory Authority’s process for evaluating biannual rate hikes, which the authority unanimously approved in December 2020.
According to Eversource Chief Financial Officer John M. Moreira, the company’s liquidity problems were “primarily driven” by PURA’s change in approach from estimates of recoverable costs to utilizing actual expenses from the prior year as a benchmark.
On a recent results call, Moreira informed stock analysts, “We were significantly under-recovered at the CL&P franchise in 2023 by a sizable amount, close to $1 billion.”
However, Eversource needed to estimate how applying the previous methodology would have reduced the suggested rise by enabling some cost recovery at an earlier stage. Eversource suggested implementing the increase gradually on Thursday.
Consumer counsel for the state, Claire E. Coleman, stated that her office will attempt to determine which approach would best serve customers’ interests and stability.
Lawmakers stated that regardless of the accuracy of the figures, the kinds of costs that Eversource has alleged are recoupable.
According to Fazio, that was unaffected by Eversource’s contested methodology.
As the ranking Republican on the Senate energy subcommittee, Fazio stated, “It’s a question of when they’re going to pay costs, not if they’re going to pay costs.”
At the time, Millstone’s owner said that the company’s survival was in jeopardy if assistance wasn’t provided. Competition from power produced by cheap, abundant natural gas was eating away at Millstone’s profits.
The statute, thanks to permission from the Department of Energy and Environmental Protection and PURA, allowed Millstone to compete against more expensive solar, wind, and hydropower in a more advantageous market.
As a result, most of the electricity Millstone produced was sold at a set price. It would be purchased by Eversource and Avangrid, who would then promptly resell it in the cutthroat market.
The utilities suffered a loss during low market pricing, which PURA allowed them to recoup from ratepayers. The utilities made money on the Millstone electricity that flowed back to customers when rates increased, as they did during the first year of the conflict in Ukraine.
Since Millstone’s electricity is once again priced above market rates, UI and Eversource are entitled to reimbursement for their expenditures.
