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OLR Bill Analysis
sHB 5203
AN ACT CONCERNING THE PUBLIC UTILITIES REGULATORY
AUTHORITY'S POWERS, UTILITY ADVERTISING DISCLOSURES,
AND ELECTRIC BILL COMPONENTS.
SUMMARY
This bill makes various changes in laws related to how the Public
Utilities Regulatory Authority (PURA) sets rates for utility companies.
Among other things, it:
1. allows, rather than requires, PURA to decouple the distribution
revenues of the state’s gas companies and electric distribution
companies (EDCs, i.e., Eversource and United Illuminating) from
their volumetric sales, meaning their revenue is not strictly tied
to the amount of gas or electricity they sell, and gives PURA
greater discretion in how to do so;
2. limits the extent to which utility companies can use settlement
agreements to resolve PURA rate cases by (a) requiring that an
agreement’s terms and resulting rates meet certain principles and
guidelines and (b) limiting the extent to which an agreement can
be used to avoid future rate cases or general rate hearings for gas
companies and EDCs;
3. changes the deadline by which PURA must decide whether to
refund an EDC’s overearnings to ratepayers or apply them to
offset future rate increases; and
4. requires gas companies and EDCs to file public disclosure reports
with PURA that detail advertisement costs and funding sources,
among other information.
Lastly, the bill requires the PURA chairperson to prepare a report that
outlines and analyzes the delivery-side public policy components on 2022HB-05203-R000325-BA.DOCX
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each EDC’s customer electric bills. She must submit the report to the
Energy and Technology Committee by January 15, 2023.
EFFECTIVE DATE: October 1, 2022, except the requirement for
PURA to prepare a report on electric bills is effective July 1, 2022.
§ 1 — GAS AND EDC RATE DECOUPLING
Current law requires that PURA’s rate case decisions order the state’s
gas and electric distribution companies to decouple their distribution
revenues from their volumetric sales. For the EDCs, the decoupling
mechanism must be an adjustment of actual distribution revenues to
allowed distribution revenues. For the gas companies, the decoupling
mechanism must not remove the incentive to support the expansion of
natural gas use recommended in the 2013 Comprehensive Energy
Strategy. Current law also requires that PURA, when making these
determinations, consider decoupling’s impact on the EDC’s or gas
company’s return on equity and make any needed adjustments to it.
The bill removes these provisions and instead allows, but does not
require, PURA to order the EDCs and gas companies to decouple their
distribution revenues from their volumetric sales in any rate case begun
on or after October 1, 2022, or in any rate that has a final decision
pending on that date. The bill gives PURA discretion to determine the
coupling mechanism and methodology used in the decoupling orders.
§ 2 — SETTLEMENTS
Current law requires PURA, when it finds it appropriate, to
encourage using proposed settlements produced by alternative dispute
resolution mechanisms to resolve contested cases and proceedings. The
bill requires PURA to permit, rather than encourage, these settlements.
It also requires PURA, before approving a settlement for a rate case,
to determine that the resulting rates and other settlement terms conform
to certain existing statutory principles and guidelines for internal utility
management and rate structures. Among other things, these include
that the level and structure of rates:
1. is sufficient, but no more than sufficient, to (a) allow the company 2022HB-05203-R000325-BA.DOCX
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to cover its operating costs, (b) attract needed capital and to
maintain its financial integrity, and (c) provide appropriate
protection to the relevant public interests; and
2. reflects prudent and efficient management of the company.
The bill limits the term of any provision in a rate case settlement to
no more than three years after its approval by PURA. It also specifies
that a rate case settlement that follows a PURA-approved rate case
settlement is not a general rate hearing that the law requires for gas
companies and EDCs. In effect, this prevents these companies from
using multiple rate case settlements to satisfy the requirement for a
general rate case hearing before PURA at least once every four years
(CGS § 16-19a).
§ 3 — DEADLINE FOR APPLYING UTILITY COMPANY
OVEREARNINGS
Under current law, when an EDC exceeds its authorized return on
equity (i.e., earns more than what PURA authorized in a rate case), if
PURA intends to use the excess funds to offset a future rate increase
instead of decreasing present rates, it must either do so or refund the
funds to the company’s ratepayers within one year. The bill removes the
one-year deadline and instead requires that the offset or refund be done,
in a manner determined by PURA, by the end of the company’s next
general rate hearing.
§ 4 — UTILITY COMPANY ADVERTISING
The law generally prohibits the gas companies and EDCs from
recovering their political, institutional, or promotional advertising costs
as operating expenses in a rate case. However, it makes exceptions for
promoting or marketing efficient gas and electric equipment that PURA
determines meets certain criteria. The bill removes provisions in current
law that require (1) the companies to apply to PURA for a determination
about the equipment; (2) PURA to make the determination within 120
days, if practicable; and (3) the companies to pay the reasonable and
proper expenses required by PURA and the Office of Consumer
Counsel. 2022HB-05203-R000325-BA.DOCX
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The bill instead requires each gas company or EDC that recovered
advertising costs from ratepayers during the previous year to file a
public disclosure report with PURA by each February 1. For each
advertisement, the report must delineate the cost, funding source,
primary purpose, communications medium or platform, and
approximate dates of display transmittal to the public. The information
must also be broken down by type of advertising, month and year, and
advertising campaign.
Under the bill, a company’s failure to provide complete and accurate
data in the report is a violation for which PURA may levy civil penalties
of up $10,000 for each offense.
COMMITTEE ACTION
Energy and Technology Committee
Joint Favorable Substitute
Yea 26 Nay 0 (03/22/2022)