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CT House passes bill to reform energy regulation

Dec 20, 2023

A complicated and heavily lobbied bill that embraces the adversarial stance adopted by Connecticut's top regulator in utility rate cases won final passage Monday in the House of Representatives.

Senate Bill 7 marks the second time in three years the General Assembly has revised the legal structure and policies shaping how the Public Utilities Regulatory Authority oversees the state's two major electric utilities.

"Accountability, transparency, value — this is what SB 7 is all about," said Rep. Jonathan Steinberg, D-Westport, who presented the bill on the floor as co-chair of the Energy and Technology Committee.

The bill builds on the "Take Back Our Grid Act" passed in special session in 2020 after the utilities’ much-criticized response to Tropical Storm Isaias. It called on PURA to shift to setting electric rates based on performance and not strictly costs.

Passage comes at a pivotal time at PURA, where the first-term chair, Marissa P. Gillett, has taken charge of every significant case before the authority, a source of conflict with the other two, longer-serving commissioners.

The bill offers Gillett a measure of protection: Her position as chair no longer will be subject to a vote by the commissioners; effective this month, the selection of the chair will be up to Gov. Ned Lamont.

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"We could not have a greater ally in PURA than Chair Gillett, who has fought for ratepayer interests, over and over again," Steinberg said.

At her insistence, PURA recently ordered a rate cut at Aquarion Water Company, an unusual decision stayed by a Superior Court judge while it is appealed. The Aquarion decision generated alarm among Wall Street analysts of public utility stocks and their creditworthiness.

The bill also strengthens Gillett's hand in limiting the use of settlements to set electric, gas or water rates. Gillett says only full rate cases provide PURA with an accurate view of a utility's finances and operations.

While the current law encourages settlements, SB 7 would give PURA greater discretion.

The House passed the bill on a 115-33 vote, with every Democrat in favor. The measure passed the Senate unanimously.

[RELATED: Senate passes bill to reform utility regulation in CT]

Among other things, the bill would require the state's publicly traded electric utilities, Eversource and United Illuminating, to assess the significant costs of preparing or appealing rate decisions on their shareholders, not customers.

An overall thrust is to disincentivize regulated utilities, particularly electric companies, from relying on increasing sales for profits.

"So how are we going to accomplish this? We do it by holding the utilities accountable," Steinberg said. "We do that through a shift in the regulatory paradigm towards performance-based regulation."

The bill offers little hope of driving down the high cost of electricity in Connecticut, at least in the near future. PURA regulates only the costs associated with the delivery of electricity, not its generation.

[RELATED: Unanimous PURA vote on utility rates belies rifts among regulators]

Generation costs spiked in January, primarily due to rising costs of natural gas that fuel most of the region's power plants. The portion of an electric bill attributable to generation is set by a competitive market.

"I know it comes as a shock to people there's not more about that that we can do, because frankly utilities don't make a profit on that," Steinberg said. "That is purely a pass through."

Rep. Bill Buckbee of New Milford, the ranking House Republican on the energy committee, voted against the bill.

"The hard part is there's nothing in the bill that can help immediately, though I don't know if there's anything that can be done immediately," Buckbee said.

Buckbee said the legislature was too willing to promote green energy, even if it contributed to higher costs.

"We want to do what's best for the ratepayer, the consistency of the grid, and that balance of green energy. Those three pieces are critical to what we’re doing going forward," Buckbee said. "Are we putting the cart before the horse on our green before sustainable and most certainly above cost?"

An unlikely combination of a liberal Democrat, Rep. Peter Tercyak of New Britain, and and a conservative Republican, Rep. Craig Fishbein of Wallingford, sought to strike from the bill provisions promoting nuclear energy. Their amendment failed, 123-26.

One section would classify any future nuclear power generating facility a Class 1 renewable energy source, a category that currently includes solar, wind, hydro, biomass and certain other carbon-free sources of electricity.

The classification would allow the owner of a nuclear facility to sell renewable energy credits. The provision would not apply to the two operating reactors generating electricity at Connecticut's only nuclear plant, Millstone.

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Mark is the Capitol Bureau Chief and a co-founder of CT Mirror. He is a frequent contributor to WNPR, a former state politics writer for The Hartford Courant and Journal Inquirer, and contributor for The New York Times.

[RELATED: Senate passes bill to reform utility regulation in CT] [RELATED: Unanimous PURA vote on utility rates belies rifts among regulators]