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    Home»Utilities»CT’s utilities are broken
    Utilities

    CT’s utilities are broken

    August 22, 20245 Mins Read


    While Connecticut residents are suffering under enormous energy bill hikes, United Illuminating (UI) is complaining about its profitability.

    Do you know that our utilities can earn an authorized return on equity (ROE) of over 9% annually? That is on top of the recovery they receive from ratepayers, i.e. us, for all infrastructure, customer service, salaries, and even their taxes.

    State Rep. Jennifer Leeper

    On the transmission side, utilities receive an 11% ROE, a fact they routinely ignore. Regardless, Frank Reynolds, President and CEO of United Illuminating published a press release claiming our regulatory environment in Connecticut is punitive and preventing our investor-owned utilities from being profitable enough for shareholders!

    The idea that ratepayers should be concerned with the profitability for shareholders is preposterous, firstly. Secondly, the profitability of a utility is entirely a function of the management team. It surely is not the job of the legislature nor our Public Utilities Regulatory Authority (PURA) to make sure UI’s and Eversource’s shareholders believe they are getting a good enough profit margin on their investment. PURA is charged with balancing the interests of shareholders and customers, and for too long, that balance has been out of whack.

    The utilities are responsible for managing their finances and operating expenses, including things that are not recoverable from ratepayers due to actions we took in the legislature last year through Public Act 23-102, such as executive bonuses, lobbying costs, legal fees, and in the case of UI, cash transfers to its parent company, Avangrid. Consequently, the company’s earned ROE is, to a large extent, determined by the management team.

    If the utilities believe that there is a problem with the ROE, then there is a mechanism through which they can appeal the decision or file another rate case. However, they need to meet the burden of proof rather than sending out press releases.

    It is truly unfathomable to me that UI’s CEO would send out a letter lambasting our regulatory authority for not being sufficiently concerned about their profitability during a time when ratepayers are truly suffering.

    We are living through the hottest summer ever recorded, usage is up for people, and customers have just been slammed with a rushed rate recovery of 10 months for what much more responsibly should have been recovered over 24 to 36 months. A 24-month recovery period is what the Chairwoman, Marissa Gillett, advised and her fellow commissioners out voted her because of the relentless scare tactics the utilities have been using to lobby against her for over a year now.

    I continue to be shocked that UI feels comfortable publicly decrying their profitability while “collecting money from its customers for over 200 employee positions that the company did not fill. Between 2018 and 2022, UI collected more than $55 million from customers for these unfilled employee positions. The number of employees for which the company received money, but did not employ, ranged from 153 to 211 over this period, or between 19% and 27% of the total number of authorized employees. For comparison purposes, the percentage of unfilled positions is typically around 5-6%,” per PURA’s Docket No. 22-08-08 FAQs.

    Having just taken on UI for their egregious transmission line “rebuild” proposal through Fairfield, I know how the utilities use their size and the complexity of the energy markets and regulatory framework to overwhelm the public and even regulators with scores of documents, interrogatories, briefings, and are accustomed to getting their way.

    Engaging with this system has left me with the chilling realization of how profoundly broken our deregulated grid is. I cannot wait to get to work next session to improve our system.

    In the interim, I hope our Energy and Technology Committee will convene a public information session with experts from ISO-New England – our regional grid system operator, which administers the markets, and plans the region’s power system. I also want to hear from Our Power Maine, the organization that organized to bring the state’s grid back under state control. Similarly, I want to hear from VT’s Green Mountain Power who run a vertically integrated utility, meaning they control both energy generation (supply) and delivery (demand). There are alternatives to the way our utilities serve us that are worthy of serious consideration.

    I strongly believe that it is not the right thing to do for ratepayers to continue to throw money at the status quo here in Connecticut. An honest review of where we are and how we got here is overdue.

    Additionally, serious consideration must be made to dissolving franchise agreements for utilities who are failing to meet their legal obligation to operate the distribution system with economy, efficiency, and care for the public safety and energy security. Lastly, I look forward to conducting a thorough analysis of what it would look like to bring our utilities back under state control where they are not-for-profits focused solely on ratepayers and not on shareholders.

    Jennifer Leeper represents Connecticut’s 132nd House District in Fairfield.



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