Yankee Gas on Tuesday asked state utility regulators to approve a rate increase beginning a year from now that could raise home heating costs for residential customers by as much as 43 percent, or more than $46 a month for an average home.
In a filing with the state Public Utility Regulatory Authority, Yankee, an Eversource subsidiary, said it needs to collect an additional $209 million, a 29 percent increase in revenue, to cover losses created by distribution costs.
Yankee said the proposed increase, which is unlikely to emerge intact from regulatory review, would run from Nov. 1, 2025 to Oct. 31, 2029. The company has 222,800 residential customers, 28,000 commercial customers, and 1,500 industrial customers across 85 towns in Connecticut.
Rates for commercial and industrial customers would increase from 14 to 42 percent, depending on their service, the company said.Yankee last asked to raise rates six years ago.
State Attorney General William Tong immediately attacked the proposed rate hike.
“Read the room, Eversource,” Tong said. “Connecticut families are fed up with sky high energy costs and can’t afford this massive increase. This is yet another tone-deaf slap in the face from our out-of-touch public utilities. You don’t have to be a lawyer to see some basic obvious overreach in this filing.”
Two CT gas companies want you to pay more to heat your home. What you need to know.
Yankee’s request for a rate hike comes at a time of growing hostility between regulators and the state’s electric, gas and water utilities, which are owned mostly by Eversource and Avangrid. Over the last year, PURA has not only denied rate increases, but cut rates to levels below what the companies were charging more than five and even 10 years ago.
At a regulatory hearing two weeks ago, Southern Connecticut Gas and Connecticut Natural accused the PURA chairman of bias for a pending draft decision that would not only deny proposed rate increases by both companies, but reduce what the companies now charge by about $75 million, to levels below what they were authorized in 2017 and 2018, when they were last before the authority for rate approval. The bias claims was strongly disputed.
Critics such as Tong and the state Office of Consumer Counsel complain the utilities have been allowed through lax regulatory control to overcharge.
The utilities respond that their inability to raise rates will hurt their reliability. And they complain that what Wall Street utility analysts are referring to as Connecticut’s “negative regulatory environment” is preventing them from recovering what they invest in their distribution systems through rates, resulting in credit downgrades that make borrowing money to finance operations more difficult and costly.
In its request to raise rates, Yankee took the unusual step of including what it calls a “Regulatory Risk Premium” in a list of “facts” that it says support its rate increase application. The company said it has an expert who can testify that a risk premium “is now necessary for Connecticut utilities and the risks that Yankee faces as a result of the Connecticut Regulatory Environment.”
Tong criticized the risk premium.
“They’re asking for profits that are completely out of whack with other public utilities, including tacking on a non-starter ‘regulatory risk premium’ to account for the fact that our public utilities don’t like oversight and accountability,” Tong said. “I’m going to comb through every page of this application and will be there at every single step of these proceedings to fight for Connecticut families.”
If the rate increase were approved as proposed, something that appears highly unlikely in the current regulatory climate, Yankee said the added costs to customers could shrink by as much as 5 percent monthly through the application of certain credits.
“The increase is driven by the substantial investments we’ve made — and must continue to make — in the natural gas distribution system to ensure customers have safe, reliable service year-round, and especially during the winter heating months,” an Eversource spokesman said. “Recent PURA precedent has led to regulatory outcomes that result in higher costs for customers over shorter periods of time. To avoid that, we’re presenting a proactive approach that directly addresses the costs needed to ensure the safety and reliability of the natural gas system while proposing a new performance based regulatory plan that sets rates over multiple years.”
Yankee said in its regulatory filing that its distribution system is operating at a deficit for several factors, including millions of dollars of investment in distribution since its last rate case, increased operating and maintenance costs, increased depreciation rates and its inability to recover costs previously authorized by regulators.
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