Eversource wants to return $275M to electric customers. CT regulatory agency says not so fast.

Connecticut’s ongoing disagreement over utility regulation has taken an odd turn, with Eversource proposing to return $275 million to its electric customers as a credit on next year’s bills and regulators saying not so fast.

Should Eversource prevail, the monthly bill for a typical residential customer would drop by about $15 as high usage summer months approach. That would be in stark contrast to last summer, when record heat, high energy consumption and market volatility caused rates locally to spike as much as 400 percent.

In its annual review of Eversource rates, the Public Utility Regulatory Authority has proposed a smaller credit of $45 million, a figure that would result in far less savings on bills.

The different calculations of what customers are owed through credits turns on how much electric utilities are required to pay, under contracts negotiated by the state, for the power they distribute to millions of customers. The costliest contracts with the biggest effect on rates are long term agreements the state has negotiated with Millstone and Seabrook (New Hampshire) nuclear power stations.

The nuclear energy contracts were negotiated as a hedge against swings in the price of other kinds of energy, in particular that generated by natural gas.

The nuclear power deals drove last summer’s spike in electricity cost because the state contracts had required the utilities to buy high priced nuclear energy at a time when low, pandemic power use drove down the cost of natural gas. As energy markets equalized after the pandemic, natural gas increased in cost, making nuclear energy a relative bargain and resulting in the current talk of a customer credit.

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The different views on the credit owed to Eversource customers is based on different methods of forecasting utility rates, which has been a point of contention in a long, continuing and  and increasingly political feud between the state regulators and the utility industry.

What makes the latest disagreement, over credits, stand out is who is accusing the other of holding out on ratepayers. For months PURA’s political supporters in the legislature and in the administration of Gov. Ned Lamont have accused the utilities of sacrificing rate payer interests to those of stockholders.

A spokeswoman for PURA said the quasi-judicial authority cannot discuss pending matters, such as a credit for Eversource customers.

“This is a pending proceeding before PURA, and, as such, PURA is prohibited from commenting on or speculating about the interim decision, which is scheduled for a vote at the April 23rd regular meeting,” spokeswoman Taren O’Connor said. “The Authority will review the entire record, including the written comments due today, April 4th. Any reporting should clarify that draft decisions have no legal effect and do not represent the views of any particular commissioner.”

Eversource spokeswoman Jamie Ratliff said the utility has asked PURA to be allowed “ to return an additional $275 million to customers, as a result of state-mandated power purchase agreements including those with the Millstone and Seabrook nuclear power plants, instead of the current $45 million that the Public Utilities Regulatory Authority (PURA) has tentatively approved to begin in May.”

“This comes at a time when customers can benefit the most, as energy bills typically go up significantly in the summer months due to increased electric usage,” Ratliff said. “The wholesale energy market is incredibly volatile, but this year, appears to be moving in a direction that’ll give money back to customers. This is customer money that should rightfully be returned to them as soon as possible.”

A filing with PURA Friday indicates that there has been ongoing discussion about the amount of an Eversource rebate and the disagreement lies in part in the argument by utilities that they should be able to make decisions on financial forecasts as well as past spending.

Eversource initially proposed a $209 million credit but revised the number up to $275 in a filing Friday afternoon. The filing said PURA dropped the figure to $45 million based on a “known and measurable adjustment.”

“This is not sufficient for customers given current market information,” Eversource said in the filing. “PURA should provide customers with the benefit of the PPA (power purchase agreement) actual and forecasted market information that are now known to exist so that there is rate relief heading into the hottest peak season months and customers will have cost savings on a real time basis, rather than holding back for PURA’s later recognition.”

Questions about a customer credit are taking place as the General Assembly prepares to vote on Lamont’s nomination of PURA Chairman Marissa Gillett to a second term. Her confirmation appeared to be in jeopardy earlier this year, until Lamont and the legislature’s Democratic leadership struck a deal that guaranteed her reappointment to an expanded and restructured authority.

That deal has fallen apart and there were signs of opposition this week from House Democrats and Republicans. House Republican leader Vincent Candelora of North Branford said he sees political bias in the question of customer credits based on nuclear energy costs.

“I think she doesn’t want to show that the nuclear contract could actually provide savings,” Candelora said. “Because the only narrative that the Democrats and the conservation groups have is to point to why nuclear is bad and why it has cost us a lot of money on our bills.”