The Senate voted at 12:22 a.m. Friday for a 79-page bill that would overhaul utility regulation in Connecticut, acting just hours after a final version became public and minutes before senators recessed for a long Memorial Day break.
If passed by the House, the rewritten Senate Bill 7 could strengthen the standing and power of Marissa P. Gillett as chair of a divided Public Utilities Regulatory Authority as she pushes for a more adversarial posture to regulated utilities.
With a unanimous vote, the Senate essentially gave a vote of confidence to Gillett, placing in statute some of the policies she has advocated, which have angered the state’s largest utility, Eversource, and rattled stock analysts.
“Public utilities do not operate in a free market,” said Sen. Norm Needleman, D-Essex, co-chair of the Energy and Technology Committee. “They have every right to make a profit, but they have found a way to make a lot of money.”
The bill would strip the ability of the other two authority members, who increasingly have been at odds with Gillett, to name a new chair. It gives the responsibility to Gov. Ned Lamont, whose administration recruited Gillett.
At a critical juncture for PURA, the bill also would strengthen the powers of the chair, allowing her or her successor to unilaterally make decisions that now are subject to review by a panel of all three commissioners.
The vote came on the same day a Superior Court judge issued a stay indefinitely blocking PURA from enforcing a decision to cut rates charged by Aquarion Water Company, a subsidiary of Eversource. Aquarion’s rates will remain unchanged while the company appeals the rate decision.
The Aquarion decision authored by Gillett generated alarm among Wall Street analysts of public utility stocks and their creditworthiness.
Assessing the outlook for Eversource, Wells Fargo analysts concluded that Connecticut “remains a fly in the ointment as the regulatory environment under Chair Gillett has arguably become one of the worst in the U.S.”
Moody’s downgraded the credit outlook for Aquarion from stable to negative, calling the recent rate case “yet another indication that the Connecticut regulatory environment has become more challenging and less credit supportive for the state’s regulated utilities.”
Against that backdrop, Needleman presented the rewritten bill at 11:30 p.m., quickly summarizing a measure of significant complexity.
The bill clarifies that a utility’s lobbying, marketing and entertainment costs should be borne by shareholders and not ratepayers, as Gillett insisted in the Aquarion case.
“I think these are really, really important accountability issues that prohibit the recovery in rates for rate case expenses,” said Senate President Pro Tem Martin Looney, D-New Haven. “This is really an important move.”
Looney acceded to Needleman’s push for the vote before the holiday break to end intense lobbying and negotiations, some of which became heated. In one session, House Speaker Matt Ritter, D-Hartford, admonished Needleman for not engaging his members.
The meeting apparently ended amicably. Ritter downplayed the tensions.
“We just wanted to make sure the House was engaged, both Democrats and Republicans,” Ritter said. Smiling, he added, “Norm knows he’s my favorite senator, and I adore him.”
Ritter said he would vote for the bill when it arrives on the House calendar next week.
Senate passage came after a 40-minute debate in which the only dissent came from a former co-chair of the energy committee, Sen. John Fonfara, D-Hartford. He complained it was written to address personality conflicts.
“It’s a dangerous road to go down. No law should be written for a personality, for a person,” Fonfara said.
But he voted for the bill, as did every other member of the Senate except Sen. John Kissel, R-Enfield. Kissel, a lawyer employed by Eversource, recused himself.
Part of the drama at PURA turns on the uncertain status of the authority’s two other commissioners, former lawmakers John W. Betkoski III and Michael A. Caron. Their terms have expired, but they will serve unless Lamont names successors. Gillett’s term ends next year.
Like Gillett, the General Assembly has taken a more aggressive stance towards the regulated utilities.
The bill passed Friday was described as a continuation of the Take Back Our Grid Act passed in special session after Tropical Storm Isaias in 2020. Among other things, it directed PURA to establish performance-based regulation that is tied to specific goals and metrics, not simply the cost of providing service.
“What we said then was that we had to still continue to take more steps to build on that progress,” said Senate Majority Leader Bob Duff, D-Norwalk.
A bipartisan amendment rewriting the bill, which was co-sponsored by 33 of the 36 senators, also offered a ratification of Gillett’s insistence that full-blown rate cases that provided deep inspections of utilities are preferable to settlements.
Looney, the long-serving Senate leader, said praised Needleman for a bipartisan effort to strengthen the state’s limited oversight of electric rates since a deregulation law. PURA reviews and sets rates only for the distribution of electricity, not its generation. The cost of electricity is set in a competitive market.
“Sen. Needleman is doing all he can to move in a corrective direction here. This bill is is so important,” Looney said. “I think we made two mistakes in energy policy in the last quarter century. One was in 1998 when we passed the bill separating generation from distribution. That proved to be a mistake. That was bad policy.”
The other, Looney said, was placing PURA under the state Department of Energy and Environmental Protection, a change made during the administration of Gov. Dannel P. Malloy and supported by his successor.
Acceding to Lamont, the bill left PURA as part of DEEP.