The Public Utilities Regulatory Authority on Friday denied an unusual request by electric company United Illuminating for an interim rate increase, while the utility’s appeal of the regulatory agency’s Aug. 25 rate decision remains pending in court.
On Nov. 30, Orange-based UI, a subsidiary of Avangrid, applied for a $14 million revenue increase, which would have gone into effect Feb. 1, 2024 if approved.
Company officials said the $14 million would help UI invest in system upgrades, at a time when deteriorating returns are making it difficult to attract investors.
In its Friday ruling, PURA said UI’s request was “largely speculative” and that, in order to approve an interim rate increase, PURA would have needed to find that the increase was necessary to prevent “substantial and material deterioration of the financial condition of a public service company” or “substantial deterioration of the adequacy and reliability of service to its customers.”
“Here, even if the facts alleged in the petition are taken as true, the authority could not conclude that the interim rate increase is necessary because the crux of the company’s argument expressly relies on prognostications,” the ruling states.
In 2022, UI applied for a rate increase totalling $131 million for the three-year period that runs from Sept. 1, 2023 to Aug. 31, 2026. PURA on Aug. 25 approved a $23 million increase – 22% less than the revenue requirement UI requested.
Following the decision, UI filed an appeal in New Britain Superior Court seeking tens of millions of dollars it claims was unfairly and illegally cut by PURA.
After that, the electric company filed a petition with PURA requesting the $14 million interim rate increase.
“The $14 million would help us to get some additional revenues in, it would go towards some of the reliability and resiliency projects that we would like to invest in right now,” UI President and CEO Frank Reynolds said in an interview with the Hartford Business Journal prior to Friday’s decision.
Because UI planned to bond the $14 million, it would have had a minimal impact on customers’ rates, Reynolds said. Also, UI would have had the ability to refund part, or all, of the $14 million to ratepayers, with interest, if it was nullified by the court in UI’s pending appeal.
According to PURA, an interim rate increase request has never been approved in Connecticut. UI’s request marks the fifth time that a utility has sought an interim rate increase. The most recent was filed by Jewett City Water Co., a privately owned public utility that serves part of Griswold, which filed an interim rate increase request in 1999. It was denied in a final decision issued by PURA on Jan. 19, 2000.
The other denials stemmed from requests filed in 1986 and two in 1984.
UI issued the following comment late Friday afternoon:
“United Illuminating submitted uncontroverted evidence in support of this filing and with this summary dismissal, it is disappointing that the Public Utilities Regulatory Authority didn’t allow a public process to allow UI to prove its case,” said Craig Gilvarg, a spokesperson for the company. “UI is reviewing the decision issued by PURA and assessing its options.”
