The Connecticut Public Utilities Regulatory Authority (PURA) on Wednesday issued a final decision that not only rejected Aquarion Water Company’s proposed distribution rate increase, it also reduced current customer rates, effective immediately.
— from a PURA announcement and public documents
PURA’s action will decrease the average residential customer’s total bill by about $67 per year.
The PURA commissioners voted 2-1 Wednesday to approve the decision. Chairman Marissa P. Gillett and Commissioner Michael A. Caron voted to approve the decision, Vice Chairman John “Jack” Betkoski III dissented.
Under the decision, PURA approves an annual revenue requirement for Aquarion in the amount of $195,561,690 in base rates for the rate year that started March 15, 2023, and a return on equity (ROE) of 8.70%.
This authorized annual revenue requirement represents a decrease of almost $2 million, or 1%, compared to current levels, and, paired with the Water Infrastructure Conservation Adjustment (WICA) surcharge being reset to $0, results in an 11% decrease in Aquarion customers’ rates.
Aquarion had requested an approximately $37 million increase in distribution revenues and a 10.35% ROE.
The executive summary of the decision, published online by PURA, described Aquarion’s reasons for its rate-raising request this way:
“According to Aquarion, its current rates are insufficient to cover the costs of providing safe and reliable service to customers. The company also alleges that the rates are insufficient to cover the capital infrastructure investments the Company has made since the 2013 rate case. Accordingly, the company is requesting approval to increase base rates for a three-year period to address revenue deficiencies.”
Additionally, the decision authorizes a new three-tier pricing structure for Aquarion residential single-family customers designed to encourage conservation by sending appropriate pricing signals to higher-volume users.
The initial consumption rate tier, which applies to the first 9 hundred cubic feet (CCF) of usage per month, will capture 76% of customer bills based on an historic usage analysis. Other approved rate design includes a Low-Income Rate Assistance Program (LIRAP) that will provide a 15% credit to qualifying residential customers on their total monthly bill.
In total, PURA’s ruling reduced the company’s requested revenue requirement by over $10.7 million for O&M expenses that PURA decided Aquarion had failed to adequately demonstrate would benefit ratepayers.
Here’a an excerpt from the news release:
These [expenses] include costs such as those associated with Aquarion’s share of costs linked to its 2017 merger with Eversource ($4.9 million); outside legal costs related to this rate case ($390,000); industry and non-industry membership dues ($300,712); charitable donations ($81,491); entertainment expenses ($37,812), among others.
Importantly, the company is obligated by law to provide safe, adequate, and reliable service to all customers regardless of the company’s failure to demonstrate the need for a rate increase in this proceeding.
Moreover, Aquarion has access to a unique interim rate adjustment mechanism known as the WICA that will allow them to make incremental strategic water quality and conservation investments up to $19.6 million through their next rate case proceeding should the need to do so arise.
In August 2022, Aquarion submitted an application that requested PURA approval to amend the company’s existing rate schedules. This kicked off a 200-day proceeding at the authority [PURA] that included four public comment hearings, several days of field audits and inspections, seven days of evidentiary hearings, two days of late filed exhibit hearings, oral arguments and the issuance of several hundred discovery requests.
Aquarion’s last rate case was completed in 2013. Today, the Bridgeport-based company serves 207,000 customers in 56 Connecticut municipalities.