A superior court judge Thursday dismissed nearly all of United Illuminating’s claims that state regulators acted unfairly in denying most of the company’s 2023 request to increase electricity rates for its customers in Connecticut.
The case was an appeal of the Public Utilities Regulatory Authority’s final decision in UI’s most recent rate case, in which the authority’s three commissioners unanimously approved a roughly $23 million increase in the utility’s annual revenues — far below the company’s request for a $131 million increase over three years.
The utility quickly appealed the decision, arguing regulators had departed from their established standards and damaged the company’s financial reputation.
But in his decision, posted late Thursday, New Britain Superior Court Judge Matthew J. Budzik wrote that PURA had provided “substantial evidence” for the large majority of its decisions in the case, while remanding two smaller matters back to the commissioners. (Those matters include minor costs the utility incurred for non-industry dues and a small penalty imposed by regulators due to their dissatisfaction with UI’s analysis behind its rate proposal.)
Budzik also used a footnote in his opinion to take a swipe at the complaint written by United Illuminating attorneys, which he said was “not a model of clarity” and made it difficult to weigh the company’s arguments.
“The complaint generally alleges facts and legal principles, but does not, in most cases, clearly link those alleged facts and legal principles to a clearly stated legal claim or cause of action,” Budzik wrote. “The absence of clearly stated legal claims hampers the court’s ability to consider UI’s claims.”
The company did not immediately offer a response to the judge’s decision on Friday.
The ruling was the latest legal victory for PURA in its efforts to apply greater scrutiny to the costs incurred by utilities and passed along to their customers.
Last year, the same superior court judge also largely sided with regulators in the Aquarion Water Company’s appeal of a PURA-ordered reduction of its water rates. That case is on appeal to the Connecticut Supreme Court, which heard oral arguments last Friday.
PURA Chairwoman Marissa Gillett has led efforts to transform the agency since she took over in 2019, including the adoption of a “performance-based regulation” model that ties the utility’s rates to their ability to obtain positive results on their investments and operating costs. While that model has yet to formally take effect, regulators have applied similar methods in their scrutiny of cases before them.
For example, in the 2023 rate case, UI had sought a 10.2% return on equity — a measure of the company’s profitability from the distribution network it oversees — but PURA only approved an 8.63% return after including penalties related to several performance and management issues regulators cited.
One of the penalties had to do with a promise the company made to conduct remediation of the abandoned English Station power plant site in New Haven as a condition of its merger with a Spanish-owned power company in 2015. Both regulators and Attorney General William Tong have accused the company of shirking its responsibility to clean up the property, hampering redevelopment opportunities.
Regulators also penalized United Illuminating over what they described a “troubling” pattern of customer service issues.
In an emailed statement Friday, Connecticut Consumer Counsel Claire Coleman said the judge’s ruling was a validation of the PURA’s new approach.
“While UI has attempted to minimize the shortcomings of their rate increase request, the ruling affirms that PURA’s decision was a fair result based on the evidence, or lack thereof, in the record,” said Coleman, who represents ratepayers in cases before the authority. “Despite what our utility company representatives would have you believe, ever-increasing distribution rate requests contribute to Connecticut’s high electric costs and need to be scrutinized under the full extent the law allows.”
A spokeswoman for PURA declined to comment on the judge’s ruling, citing the remand of some matters back to the commissioners.
Both the utilities and some lawmakers have pushed back on the tougher approach taken by regulators, in particular Gillett, arguing that it has limited the companies’ ability to borrow money to pay for infrastructure upgrades and other necessary expenses.
Earlier this week, UI Chief Executive Frank Reynolds issued a statement saying that the company’s actual returns last year, 3.55%, were much lower than the approved rate. As a result, he said, the utility has had to defer some investments and offer premiums to lenders to pay for critical projects.
“The facts are this: for regulated utilities, PURA sets our price, our revenues, and our costs, making it impossible for us to manage our way out of these dire straits,” Reynolds said. “Today’s report is indisputable evidence that those revenues, which make up less than a third of the residential bill, are entirely insufficient. Yet PURA has shown an incredible — and frankly, irresponsible — lack of urgency in correcting it.”
The company said last year that it plans to seek an adjustment to its rates starting in November, in order to provide an additional $105 million in operating revenues to support hundreds of infrastructure projects across its service area. PURA has yet to rule on that request.
United Illuminating serves roughly 345,000 customers in an area stretching from Fairfield to North Branford. It is the state’s second-largest electric utility, after Eversource.