February 3, 2014
PURA Issues Draft Ruling on CL&P Storm Costs
Ruling would reduce CL&P storm reserve request by $49M
Connecticut's Public Utilities Regulatory Authority (PURA) today issued a preliminary ruling that would reduce by $49M the amount that The Connecticut Light & Power Company (CL&P) may recover from Connecticut ratepayers through its storm reserve account for costs associated with five major storms that hit Connecticut in 2011 and 2012.
Under the draft ruling, CL&P would be eligible to recover $365M for storm costs, to be amortized over six years, beginning no earlier than December 2014.
CL&P identified costs in its preparation and response to Storm Irene in August 2011, the October Noríeaster in October 2011, Storm Sandy in October 2012, and two additional major storms in June 2011 and September 2012. CL&P proposed capitalizing a portion of those costs, and placing $462.3M in its storm reserve account.
In April 2012, PURA approved a Settlement Agreement that CL&P parent company Northeast Utilities (NU) and Boston-based utility company NSTAR entered into with the Connecticut Office of Consumer Counsel and the Office of the Attorney General. PURA's approval of the Settlement Agreement led to the subsequent NU/NSTAR merger. The Settlement Agreement included a clause that subjected CL&Pís recent storm costs to review and approval in a PURA adjudicatory proceeding. The Settlement Agreement also required that CL&Pís distribution rates remain frozen until at least December 1, 2014, and that CL&P absorb the first $40M in storm costs.
In the resulting storm cost review case now before PURA, CL&P's storm reserve account request totaled $414M of incremental, non-capital storm costs, after PURA applied $8.3M in storm cost reserve funds, and the $40M write-down pursuant to the 2012 Settlement Agreement. CL&P requested that the PURA approve its recovery of prudently incurred net storm costs in future rates.
PURA's adjustments were based on evidence CL&P submitted that includes storm costs transferred to capital, reimbursements received subsequent to the initial regulatory filing, and elimination of storm costs found to be already included in CL&P's rates. PURA was assisted in its review by an independent Prosecutorial Team it formed to facilitate analysis of CL&P's request, and the Office of Consumer Counsel and the Office of the Attorney General, which were also active parties to the proceeding.
Today's draft decision
would also defer ruling on recovery of certain costs, return on equity adjustments, and specific tax issues until CL&P's next rate case.
The balance of the schedule in the case calls for parties to file exceptions on PURA's draft decision no later than February 10, 2014. PURA will hear oral arguments from admitted parties on February 18, 2014, and is expected to finalize its ruling on February 19, 2014.