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General Assembly Raised Bill No. 5203
February Session, 2022
LCO No. 1489
Referred to Committee on ENERGY AND TECHNOLOGY
Introduced by:
(ET)
AN ACT CONCERNING UTILITY COMPANY COST -SHARING
MECHANISMS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Subsection (b) of section 16-19tt of the general statutes is 1
repealed and the following is substituted in lieu thereof (Effective October 2
1, 2022): 3
(b) [In any rate case initiated on or after July 8, 2013, or in a pending 4
rate case for which a final decision has not been issued prior to July 8, 5
2013, the Public Utilities Regulatory Authority shall order the state's gas 6
and electric distribution companies to decouple distribution revenues 7
from the volume of natural gas and electricity sales. For electric 8
distribution companies, the decoupling mechanism shall be the 9
adjustment of actual distribution revenues to allowed distribution 10
revenues. For gas distribution companies, the decoupling mechanism 11
shall be a mechanism that does not remove the incentive to support the 12
expansion of natural gas use pursuant to the 2013 Comprehensive 13
Energy Strategy, such as a mechanism that decouples distribution 14
revenue based on a use-per-customer basis. In making its determination 15 Raised Bill No. 5203
LCO No. 1489 2 of 5
on this matter, the authority shall consider the impact of decoupling on 16
the gas or electric distribution company's return on equity and make any 17
necessary adjustments thereto.] In any rate case initiated on or after 18
October 1, 2022, or in a pending rate case for which a final decision has 19
not been issued prior to October 1, 2022, the Public Utilities Regulatory 20
Authority may order the state's gas and electric distribution companies 21
to decouple distribution revenues from the volume of natural gas and 22
electricity sales. The authority shall have the discretion to determine the 23
decoupling mechanism and methodology used in decoupling orders 24
made pursuant to this subsection. 25
Sec. 2. Subsection (g) of section 16-19 of the 2022 supplement to the 26
general statutes is repealed and the following is substituted in lieu 27
thereof (Effective October 1, 2022): 28
(g) The authority shall hold either a special public hearing or combine 29
an investigation with an ongoing four-year review conducted in 30
accordance with section 16-19a or with a general rate hearing conducted 31
in accordance with subsection (a) of this section on the need for an 32
interim rate decrease (1) when a public service company has, for [the 33
rolling twelve-month period ending with the two most recent 34
consecutive financial] two of the previous four quarters, earned a return 35
on equity which exceeds the return authorized by the authority by at 36
least [one] one-half percentage point, (2) if it finds that any change in 37
municipal, state or federal tax law creates a significant increase in a 38
company's rate of return, or (3) if it [finds] provides appropriate notice 39
that a public service company may be collecting rates or may have an 40
authorized rate of return which are more than just, reasonable and 41
adequate, as determined by the authority, provided the authority shall 42
require appropriate notice of hearing to the company and its customers 43
who would be affected by an interim rate decrease in such form as the 44
authority deems reasonable. The company shall be required to 45
demonstrate to the satisfaction of the authority that earning such a 46
return on equity or collecting rates which are more than just, reasonable 47
and adequate is directly beneficial to its customers. At the completion of 48
the proceeding, the authority may order an interim rate decrease if it 49 Raised Bill No. 5203
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finds that such return on equity or rates exceeds a reasonable rate of 50
return or is more than just, reasonable and adequate as determined by 51
the authority. Any such interim rate decrease shall be subject to a 52
customer surcharge if the interim rates collected by the company are less 53
than the rates finally approved by the authority or fixed at the 54
conclusion of any appeal taken as a result of any finding by the 55
authority. Such surcharge shall be assessed against customers in such 56
amounts and by such procedure as ordered by the authority. If the 57
authority elects to pursue an earnings sharing mechanism to address a 58
company's over earnings, such mechanism shall direct not less than 59
eighty per cent of the over earnings to the company's ratepayers. 60
Sec. 3. Section 16-19bb of the general statutes is repealed and the 61
following is substituted in lieu thereof (Effective October 1, 2022): 62
The Public Utilities Regulatory Authority shall require that any funds 63
held by an electric distribution company in excess of the company's 64
authorized return on equity, which funds are intended by the authority 65
to offset future rate increases in lieu of a present rate decrease, shall be 66
applied to such rate increases or shall be refunded to the company's 67
customers, [within one year of receipt] in a manner determined by the 68
authority in its sole discretion, not later than the conclusion of the 69
company's next proceeding conducted pursuant to section 16-19a. 70
Sec. 4. Subsection (c) of section 16-19d of the general statutes is 71
repealed and the following is substituted in lieu thereof (Effective October 72
1, 2022): 73
(c) [A public service company shall make application to the authority 74
for determination that equipment meets the requirements of 75
subdivision (4) of subsection (b) of this section. The authority shall, to 76
the extent practicable, make such determination within one hundred 77
twenty days of such filing. All reasonable and proper expenses, required 78
by the authority and the Office of Consumer Counsel, including, but not 79
limited to, the costs associated with analysis, testing, evaluation and 80
testimony at a public hearing or other proceeding, shall be borne by the 81 Raised Bill No. 5203
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company and shall be paid by the company at such times and in such 82
manner as the authority directs.] On or before February first each year, 83
any gas company or electric distribution company that recovered 84
advertising costs against ratepayers during the previous year shall file a 85
public disclosure report with the authority. For each advertisement, the 86
report shall delineate the dollar amount, source of funding, primary 87
purpose of the advertisement, communications medium or platform 88
and approximate dates during which the advertisement was displayed 89
or transmitted to the public, broken down by type of advertising, by 90
month and by year, and by advertising campaign. Failure to provide 91
complete and accurate data in the report shall constitute a violation for 92
which the authority may levy civil penalties against such company 93
pursuant to section 16-41. 94
Sec. 5. Subsection (a) of section 16-19gg of the general statutes is 95
repealed and the following is substituted in lieu thereof (Effective October 96
1, 2022): 97
(a) During each proceeding on a rate amendment under section 16-98
19, as amended by this act, proposed by an electric or gas public service 99
company, as defined in section 16-1, the Public Utilities Regulatory 100
Authority, when determining rates for individual rate classes, shall give 101
consideration to the energy cost of manufacturers by analyzing the 102
following: (1) The effect of different rates of return among rate classes 103
upon manufacturers; (2) the use of different cost allocation 104
methodologies; (3) the use of flexible pricing; (4) macroeconomic 105
conditions; and [(4)] (5) any other issue deemed relevant by the 106
authority. 107
Sec. 6. (NEW) (Effective October 1, 2022) On and after January 1, 2023, 108
new capital expenditures shall not be eligible for cost recovery through 109
an on-bill reconciling mechanism first authorized in 2018. 110
Sec. 7. (NEW) (Effective October 1, 2022) No public service company 111
shall recover through rates any cost associated with membership, dues 112
or contributions to a business or industry trade association, group or 113 Raised Bill No. 5203
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related entity incorporated under Section 501 of the Internal Revenue 114
Code of 1986, or any subsequent corresponding internal revenue code 115
of the United States, as amended from time to time. 116
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2022 16-19tt(b)
Sec. 2 October 1, 2022 16-19(g)
Sec. 3 October 1, 2022 16-19bb
Sec. 4 October 1, 2022 16-19d(c)
Sec. 5 October 1, 2022 16-19gg(a)
Sec. 6 October 1, 2022 New section
Sec. 7 October 1, 2022 New section
Statement of Purpose:
To give the Public Utilities Regulatory Authority greater discretion to
design utility revenue decoupling mechanisms or formulas, to require
the authority to adopt cost-sharing mechanisms for excess earnings that
direct most of these earnings to ratepayers, and to make other changes
affecting electric utility companies.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]