The state’s utility regulator issued final decisions Monday not only denying rate increases proposed by two natural gas companies, but requiring them to collectively pay back $120 million to customers.
In the decisions, the Public Utilities Regulatory Authority (PURA) approved $417.5 million in revenue for Connecticut Natural Gas (CNG), 9.6% less than the $461.81 million it requested for the rate year that runs from Dec. 1 to Nov. 30, 2025. The utility company’s current revenue level is set at $442.11 million.
Also, PURA approved $425.29 million in revenue for CNG’s sister company, Southern Connecticut Gas (SCG), which was 11.3% less than the $479.24 million it requested. SCG’s current revenue level is set at $436 million.
CNG and SCG are both owned by Orange-based Avangrid. Together, they serve roughly 391,000 customers in Connecticut.
PURA’s decision further requires CNG and SCG to return $24 million and $96 million, respectively, to customers over the next three years.
Those sums are credits from the 2017 corporate tax plan (known as “Trump tax credits”), according to an Avangrid spokesperson.
“Since this is the first rate case that CNG and SCG have been in since those tax adjustments took effect, PURA had then instructed us to hold those credits until we filed a new rate case for the companies,” the spokesperson said.
Customers will receive a credit that is reflected in their bills, but it will not appear as a separate line item.
Under the new rates, which include the credit, CNG estimates that the average customer will see a $6.97 monthly bill decrease (-5.3% on total bill).
For SCG customers, the average monthly bill will decrease by $5.25 (-4.7% on total bill).
CNG and SCG filed applications to amend their rate schedules with PURA in November 2023. They said the increases were needed to fund reliability and resiliency projects.
During the review process, the Office of the Attorney General and Office of the Consumer Counsel submitted testimony advocating for a reduction in the companies’ revenue requirements.
Ultimately, PURA found that the utilities’ “management did not offer sufficient evidence to support such a higher number,” according to the decision.
PURA denied capital expenditures that it determined were “not used and useful,” including gas mains that have not yet gone into service.
Utility companies have been engaged in a highly publicized battle with PURA over its new ratemaking policy, which allows utilities to earn a reasonable return on invested capital only once a project has been completed and is providing a benefit to the public. Until recently, utilities had been able to more readily recover capital expenses.
In October, after PURA issued draft decisions in CNG and SCG’s rate cases, Frank Reynolds, president and CEO of the utilities, said he strongly opposed the cuts.
“These exorbitant decreases, which exceed the net income the companies earned last year, will almost certainly lead to immediate credit rating downgrades, even by more than one rating,” Reynolds said. “Already, credit agencies are evaluating these draft decisions as ‘worse than expected, ‘punitive’ and demonstrative of ‘a challenging regulatory environment in Connecticut’ – all of which signal downgrades on the horizon.”
CNG and SCG had not requested an increase in rates since 2018 and 2017, respectively.
PURA approved both decisions 2-1 on Monday, with Chair Marissa Gillett and Vice-Chair John Betkoski voting in favor, and Commissioner Michael Caron opposed.
“In an apparent effort to distract from these shortcomings, the company has and will likely continue to assert unprecedented claims of bias and impropriety against the authority staff,” the decision states. “However, the approved rate reduction is largely a mathematical function of the record in this proceeding, and, to the extent that record is deficient in demonstrating the company’s legitimate operational costs, the onus for that deficiency falls squarely upon the company’s leadership.”
