UI Files Letter of Intent for Rate Request
Orange, CT – In an effort to build on its success in reducing outages and protecting customers from the effects of severe weather, United Illuminating today filed a “Letter of Intent” alerting the Connecticut Public Utilities Regulatory Authority (PURA) to its plan to initiate a rate request this year.
UI, a subsidiary of AVANGRID, Inc., will propose a new, three-year rate plan that would increase annual rates by $46 million in 2017, $52 million in 2018 and $43 million in 2019. This request will support infrastructure replacement, system modernization and vegetation management efforts that will help UI to maintain excellent reliability and protect its system against storms.
For customers' benefit, UI is proposing phasing in the increase over three years in roughly equal installments. Under this proposal, a typical monthly residential electric bill would increase by about 5 percent in each year of the plan, starting Jan. 1, 2017. UI last filed a rate request in February 2013 and is still operating under the old rate plan.
“In recent years, we’ve made progress toward reducing the frequency and length of customers’ power outages. We’ve also taken significant measures to protect our electric system from the effects of severe weather,” said John J. Prete, president and CEO of Connecticut and Massachusetts operations at Avangrid Networks. “As we continue to modernize our infrastructure, harden our delivery system and adopt state-of-the-art technologies, this new rate plan will help us maintain the safe, reliable service that our customers have come to expect from us.”
UI spent $92 million in 2014 and 2015 to replace aging infrastructure and manage vegetation in order to provide a safe, reliable system. These and other efforts have helped reduce the frequency of power outages. In the four-year period ending in 2015, a customer could expect one outage approximately every two years, down about 20 percent from a decade before. The company has also focused on vegetation management to protect customers from the effects of extreme weather. During past storms, trees within 8 feet of overhead lines were responsible for about two-thirds of tree-related outages.
If approved, the new rates would take effect in January 2017. For a typical residential customer, the cumulative total increase would amount to less than $1 a day in the plan’s final year. The proposed rate plan would increase a typical 700-kwh monthly residential bill of $162 by about $9 in each of the plan’s three years. Projections are subject to change based on UI’s final proposal.
UI now has 30 to 60 days to file a formal application with PURA. In that document, UI will provide details about the proposed rate plan, and why it is necessary. Once the application is submitted, PURA will initiate a full review process that will include public hearings, as well as formal proceedings in which UI will be asked to provide information to support its request. A decision is normally issued within 180 days after the application is submitted.
The request will pertain only to the distribution portion of customer rates, reflecting UI’s cost to operate and maintain the system of lines, poles and other equipment that carries electric service to homes and businesses.
UI’s Standard Service generation rate, which reflects the cost of the energy itself, is set separately and adjusted twice annually by PURA. That generation rate will fall by about 25 percent on July 1, from 10.74 cents to 8.02 cents per kilowatt hour. Generation accounts for about 40 percent of a typical residential electricity bill, and customers may also choose to purchase generation service from alternate suppliers at market prices.
Michael A. West, Jr.