2014 Press Release
December 1, 2014
PURA Issues Draft Decision on CL&P Rate Request
Proposed Increase Reduced by $100M
The Public Utilities Regulatory Authority (PURA) today released a draft decision reducing by more than $100M the amount that The Connecticut Light and Power Company originally sought to increase electric distribution rates to all classes of customers.
CL&P's June 9, 2014 application for a rate increase proposed additional revenue of $231.582M and a 10.2% return on equity. On September 22, 2014, the request was revised to $221.098 million. PURA's draft ruling released this afternoon would allow recovery of $130.172M, including some previously approved costs associated with 2011 and 2012 major storms, while reducing the requested ROE to 9.17%. The base allowed ROE was further decreased to 9.02% for a one-year period to reflect a penalty for CL&P's performance in preparing for and restoring service from Tropical Storm Irene in 2011 and the major snowstorm that occurred in October 2011.
CL&P had proposed increasing the monthly service charge - the amount that most residential customers must pay regardless of consumption - from the current $16 to $25.50. Today's draft would allow an increase in that fixed rate to $19.50 monthly.
Parties to the PURA proceedings – Docket No. 14-05-06, Application of The Connecticut Light and Power Company to Amend Rate Schedules – will now have the opportunity to file comment and/or make oral arguments on the draft decision.
The PURA ruling states that the revenue levels approved are just and reasonable, and should provide CL&P sufficient funds to engage in significant capital improvements to upgrade its distribution system and continue to modernize its systems, processes and workforce. Today's draft decision also states that the approved level of revenues will provide CL&P with sufficient revenue to maintain and operate an electric distribution system and provide a safe, adequate and reliable service to its 1.2 million Connecticut customers, while providing it an opportunity to earn a reasonable profit.
The draft ruling approves a $253M capital spending budget, finding that this level of spending is necessary for safety, reliability and maintenance of the franchise. The ruling also includes system resiliency spending in rates, which is expected to reduce the severity and frequency of outages to customers in future weather related events, and authorizes the initiation of new resiliency programs, subject to PURA review and approval of spending levels in a future proceeding.
Other major changes to revenue increases CL&P requested include reductions in cash working capital, depreciation expenses, and operations and maintenance expenses. Overall, an average residential customer using 700 kWh of electricity would see an increase of approximately $7.12 per month.
The schedule provides participants the opportunity to file written exceptions on the draft no later than December 8th. The case schedule calls for Oral Arguments to be held on December 12, and the matter is set for a final vote before PURA's commissioners on December 17th.