Sick of high electric bills? State approves ‘performance-based’ rates

Up until now, customer satisfaction played no role in setting electric rates in Connecticut. But now, power companies will be subject to “performance-based regulation” after a key vote on Wednesday.

John Craven

Apr 26, 2023, 9:28 PM

Updated 356 days ago

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Up until now, customer satisfaction played no role in setting electric rates in Connecticut. But now, power companies will be subject to “performance-based regulation” after a landmark vote on Wednesday.
“It is simply common sense that we, as consumers in this state, pay for quality – pay for results – rather than simply paying for the costs incurred,” said state Sen. Ryan Fazio (R-Greenwich).
WHAT’S CHANGING?
The Connecticut Public Utilities Regulatory Authority unanimously approved a new standard for rate requests. Now, instead of simply covering utilities’ costs, electric bills will also be based on reliability, affordability, customer satisfaction, environmental protection and social equity.
“So, say, you know, their current duration of outages is 100 minutes a year. We'll say, ‘We want a 5% improvement in that year-over-year,’” said PURA chair Marissa Gillett.
PURA hopes to have exact metrics and dollar amounts set by mid-2024, in time for the next round of rate requests.
WHY THE CHANGE?
Regulators began crafting performance-based regulation almost three years ago, after Tropical Storm Isaias left some customers in the dark for 10 days.
“This will make the seventh day,” Walter Mish of Danbury told News 12 in August 2020. “It’s been miserable.”
Towns also complained about poor communication. That led state lawmakers to pass the Take Back Our Grid Act, which requires utilities to compensate customers for extended outages. It also began the process of developing performance-based regulation.
POWER COMPANIES MAKE CHANGES
Months after Isaias, PURA levied a $28.4 million fine against Eversource.
Since then, Eversource and United Illuminating have made major changes, including better systems for reporting outages and improved communication with communities to get trees cleared.
In a statement Wednesday, UI spokesperson Craig Gilvarg said: “Throughout this proceeding, UI has been supportive of the effort to craft a regulatory structure that incentivizes optimal efficiency and performance while delivering excellent outcomes for customers, and the framework finalized today advances those important goals.”
But Eversource is concerned that performance-based rates will mean fewer upgrades to critical infrastructure.
“Performance Based Ratemaking (PBR) is a regulatory framework that has proven to be an effective tool in our Massachusetts service area for increased transparency, improved performance on service metrics,” Eversource spokesperson Caroline Pretyman said in a statement. “Our concern is that the investor community has spoken loud and clear in recent months, warning that the regulatory environment created by PURA in Connecticut is imbalanced, harming the interests of customers given the need for sustained, long-term investment in utility infrastructure.”
Lawmakers aren't buying it.
“I think it's a lot of crap, so – sorry,” said state Sen. Norm Needleman (D-Essex), co-chair of the legislature’s Energy and Technology Committee.
Needleman noted that both utilities’ profits and executive pay are at record highs.
The committee recently advanced legislation expanding the Take Back Our Grid Act, but Needleman said the bill is likely to undergo changes before it hits the state Senate floor.
Gov. Ned Lamont said state regulators want to work with utilities.
“I'm not telling you how to do it,” he said. “In fact, you're probably better at figuring out -- tell us how you want to it.”
DOES NOT IMPACT RECENT PRICE SPIKE
Performance-based regulation does not affect the price spike customers just saw in January. That came from electricity suppliers and was largely due to swings in natural gas prices. Eversource recently announced it expects supply charges to drop this summer.


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