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Conn. AG asks PURA to reject electric utility's rate increase request

By Bryan Cohen | Jun 5, 2013

HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General George Jepsen filed a brief on Tuesday with the Public Utilities Regulatory Authority asking that the authority reject an electronic utility's application for a $95 million rate increase.

The United Illuminating Company recently submitted a two-year plan to increase its electric distribution rates by $95 million. Jepsen argued that based on evidence, UI's distribution rates should actually decrease.

"Utility companies are allowed, under state law, to charge rates that are just and reasonable," Jepsen said. "I believe that, based on the evidence presented in this proceeding, the rates proposed by UI are far above levels that are just and reasonable. UI has the highest electric rates in Connecticut and has consistently met or exceeded its authorized return on equity. UI has failed to show that it requires even higher rates to cover reasonable operating costs."

Jepsen argued that electricity rates in the first year of the two-year plan are no more than $11.5 million higher than current levels, which is more than offset by the return of $14.4 million in over-earnings from 2010 and 2012, plus interest, to UI's ratepayers. As a result, Jepsen argued, UI customers should actually receive a distribution rate reduction of at least $2.9 million during the first year.

Jepsen also said that the expiration of UI's Competitive Transition Assessment charge on Jan. 1, 2014, would effectively reduce the company's distribution rates by an added $81.5 million per year. He said evidence supports no more than $12 million in increased electricity rates over the first year, which would be offset by UI's $20.3 million surplus CTA collections in 2013.

The brief also argued that the company's requests for more than $120 million to fund its Central Facility, $225 million over four years to fund its Transmission and Distribution Operational Excellence Initiative and $52 million over six years for storm cost recovery for purportedly major storm costs since 2008 should not be approved as is.

Jepsen said UI failed to demonstrate it was prudent enough to spend $120 million on the Central Facility as the project was previously approved by the Department of Public Utility Control at a cost of $100.5 million. He argued PURA should approve a portion of the $225 million TDOEI plan, but he said the company must submit long-term plans in greater detail before approval of a higher amount. Jepsen's brief said that PURA should reject part of UI's requested $52 million in storm recovery costs because the company improperly included weather events that do not qualify as major storms.

Jepsen anticipates that a final decision from PURA on the ratemaking proceeding will occur in August.

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