Eversource announced its intention to seek a $503 million rate increase from its electric customers in Connecticut, citing the need to keep up with inflation and spend more money to maintain the electrical grid in a state of good repair.
The proposed rate hike, which requires approval from regulators, would increase customer bills on average by about 11% across all customer classes, the company said in a letter to the Public Utilities Regulatory Authority Wednesday.
The letter serves as the first step in the opening of a formal rate case, in which PURA will review the company’s finances and spending to determine whether the requested rates are in the public’s interest and allow Eversource sufficient revenues to operate its portion of the electrical grid. If approved, the new rates would take effect in July 2027.
“A rate review typically means a rate increase, so we’ve been doing everything we can to kind of hold the line, stay within those rates, while still being able to deliver on our reliability,” Eversource President of Connecticut Electrical Operations Steve Sullivan told reporters. “And right now we’re just at that point with the level of investments that we’ve made, and what we can see coming forward, we just won’t be able to do that anymore.”
A spokesperson for PURA declined to comment on the letter Wednesday, citing the agency’s neutrality in the proceedings.
Eversource’s last rate case was settled in 2018. Since then, the company has invested more than $3.3 billion in Connecticut, Sullivan said, of which around $600 million has yet to be recovered through the utility’s existing distribution rates.
Those previously-incurred expenses account for about half of the Eversource’s requested rate increase, according to the letter sent to PURA on Wednesday. The other half was attributed to the rising costs of operations and maintenance on the utility’s network of utility poles, wires, substations and other electrical infrastructure. The company also said it’s had to spend more money on tree clearing efforts and responding to increasingly frequent storms.
The letter filed with PURA on Wednesday did not provide a detailed breakdown of Eversource’s requested rate of return, and it did not detail plans to invest any additional revenues on building and maintaining its electric grid. That information will be included in the company’s completed application it will file with PURA in mid-July.
Nor did the letter include information about specific rates under its proposed increases. It did state that the monthly bill increase for the typical residential customer would be around 13%, but it didn’t mention specific rate increases for other customer classes, aside from saying the overall increase would be 11%.
Claire Coleman, who leads the state’s Office of Consumer Counsel, responded to Eversource’s letter on Wednesday promising to rigorously vet the company’s application and questioning utility officials about the need for additional revenues.
“My office will prioritize keeping costs as low as possible for consumers already struggling with affordability challenges, while promoting critical infrastructure, cybersecurity, consumer protections, and overall system reliability,” Coleman said in a statement. “Because Eversource has not undergone a rate review since 2018, this case will provide the first real opportunity in years to thoroughly examine the company’s operations, spending decisions, and priorities under a microscope.”
In addition to its upcoming rate case, Eversource is also seeking approval to recover more than $1 billion from customers to pay off costs related to company’s response to several large storms between 2018 and 2023.
Those “catastrophic” storm costs are part of a separate docket that is currently being reviewed by PURA. If approved, Eversource’s Sullivan said the company will seek to recover those costs through securitization — a process passed by lawmakers last year in which the utility can borrow money at reduced interest rates to pay off major storm costs over 20 years. (Costs related to smaller, more routine storms are recovered through base rates.)
“If we were able to use that, that would allow us to keep the full storm amount out of this [rate] application,” Sullivan said. “Therefore, you know, the kind of monthly impact on customers’ bills would would be lowered.”
The long gap since Eversource’s last rate case also coincides with a period in which the company was engaged in a bitter dispute with PURA under the leadership of its former chair, Marissa Gillett.
Officials at both Eversource and the state’s other electic utility, United Illuminating, accussed Gillett of violating open records laws and exerting unilateral control over the authority and its rate-making decisions. In October, Gillett resigned amid an ongoing legal battle with both utilities as well as mounting discontent among lawmakers.
In a statement on Wednesday, Attorney General William Tong accused Eversource of waiting until after they “ran their chief regulator out of town” before seeking to increase rates.
“They want a rate hike now not because they need one, but because they think they can get away with it,” Tong said. “We’re going to scrutinize every profit, every bonus, every perk and every padded expense in their application and we’re going to be fighting for Connecticut families and small businesses at every step of this process.”
A spokesperson for Eversource, Jamie Ratliff, said Wednesday that the rate application will not include any requests for salaries or bonuses for the company’s president, chief executive or chief financial officers.
During the height of its feud with PURA in 2024, Eversource announced plans to cut investments in Connecticut by $500 million over a period of five years as a result of what the company said were “unreasonable, arbitrary decisions” by regulators.
When asked about that decision this week, Sullivan said the investments that will be proposed in the company’s upcoming rate application will be in line with what is needed to operate and maintain the system. But even the abbreviated cuts, he said, had had a noticeable impact on the performance of the grid.
“If you look close at our reliability numbers, just cutting back on investment for that one and a half year period, we flattened out, we actually dipped a little bit last year,” Sullivan said. “That’s how sensitive this system is. It’s a massive system, even with all the investment we’ve been making, it continues to age.”
Sullivan also offered modest praise for the new slate of PURA commissioners that were appointed by Gov. Ned Lamont following Gillett’s departure. Those new commissioners include Chairman Thomas Wiehl, a former attorney in the Office of Consumer Counsel, as well as former state Rep. Holly Cheeseman, energy policy professor Janice Beecher and investor Everett Smith of Greenwich. They joined Vice Chair David Arconti, a former state lawmaker and lobbyist for United Illuminating.
“They really appear to me that they’re going to listen to all points of view and then follow the law,” Sullivan said.
The requested increase is limited to distribution charges, which represent Eversource’s operation of the local electric grid throughout Connecticut. In addition, the company operates transmission wires serving customers across New England. Those two systems are where the company derives its profits from customers.
Two other portions of electric bills represent costs that are borne by Eversource and passed along to customers without any markup: supply charges, which are the cost to purchase electricity from power plants, and public benefits charges, which are the cost of various state-mandated energy policies.
Together, supply and public benefits charges have fallen around 18% in recent months, according to the Office of Consumer Counsel, which advocates on behalf of utility customers.
That decrease has been mostly attributed to savings that have come from Connecticut’s long-term agreements to purchase power from the Millstone and Seabrook nuclear power plants, as well public borrowing to offset other portions of the public benefits charge.
