State of Connecticut Office of Consumer Counsel necpuc 2005


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State of Connecticut Office of Consumer Counsel

  • NECPUC 2005


Who We Are

  • Independent ratepayer advocate for Connecticut’s utility consumers

  • In existence since 1975

  • Staff of 12 which includes: Attorneys, Financial and Administrative staff



What We Do

  • Actively involved in regulatory work in the Water, Electric, Natural Gas, Telecommunications and Cable Industries

  • The scale of our work ranges from a 50 customer water utility to The Connecticut Light & Power Company, which serves approximately 1.2 million customers

  • Types of Water related dockets that we are involved in include rate increase requests and land sales



Our Role In Regulation

  • Lowest cost for consumers while providing quality service that meets health and safety standards

  • The OCC’s role is not to take positions that put the Utility in a situation where it cannot perform its public service obligation

    • Can create conflicts with ratepayers who want bare bones rates
      • Jewett City Water Company, OCC advocated a 90% rate increase due to the installation of a filtration plant


Regarding Land Sales

  • Recent Developments

    • Many environmental groups have emerged in the Utility area to promote open space (Connecticut Fund for the Environment, Nature Conservancy and Woodlands Coalition)
      • Some groups have proposed a surcharge on water bills for future land acquisition (legislation failed)
        • Presents new issues from a consumer advocate standpoint as all customers would be asked to fund land acquisition
        • Must make sure the needs of all customers are heard, not just special interest groups


Land Sales, Cont.

  • Thoughts On Surcharge

    • Under a proposed surcharge mechanism, details need to be worked out
      • Fund management
      • Smaller Utilities will not generate significant funds
      • Need for customer input
        • Possible system by system referendum on this approach
      • Gauge the need for this approach and how it fits with local municipality open space plans


Land Sales, Cont.

  • Next Steps For The Surcharge

    • Endangered Lands Coalition has asked the Connecticut Water Planning Council to fully investigate the surcharge approach
    • Expect significant stakeholder involvement in this process
    • Likely back to the Legislature in next years session


Land Sales and The Consumer

  • The Typical Consumer

    • Usually very little individual consumer involvement in land sales
    • OCC wants to insure that maximum benefit accrues to the ratepayer
    • Recent decisions have assured that consumers share in a fair allocation of land sale gains through a defined offset to ratebase


Land Sales, Cont.

  • Getting The Message To The Consumer

    • Current land sale methodology
      • The typical consumer cares about the bottom line
      • In addition to open space benefits the economic benefits of land sales need to be conveyed
        • With the Aquarion land sale customers received approximately $1,000,000 in annual benefits


Rate Increases

  • Customers are most vocal about water rate increases than any other type of utility rate increase

    • Largest turnout at public hearings
    • Some have unrealistic expectations
      • water “should be free” philosophy
      • linking the rate increase to salary or social security increases
  • Customers do not always have a clear understanding of why rate increases are needed



How to Get The Point Across To Consumers

  • Education is key

    • More upfront communication would lead to a greater understanding of the need for a rate increase
      • Informational Town meetings
      • More detailed mailing of rate increase request, not just boilerplate notice of increase
      • Need to explain ratemaking process
      • Some have the perception that utilities are trying to recapture expenses in one rate case
        • Capital additions depreciated over several years
  • Elements of rate increase should be identified

      • i.e. new plant accounts for 50% of rate increase
      • New health requirements imposed on the Utility


How to Get The Point Across To Consumers

  • Have staff ready to present overview of rate case components at the public hearing

    • Not required but a good public relations tool
    • Take questions and tailor answers to the customers level of understanding(depreciation can be confusing)
  • Focus should be on health, quality and safety aspects of water

    • Let them know what they are paying for that affects them personally
      • Increased fire protection, correction of discoloration, reduction in main breaks


Utility Approaches That Do Not Work

  • Cost comparisons (cable TV, Coffee) do not seem to impress ratepayers

  • Highlighting the length of time between rate cases is not a free pass



Outside The Normal Rate Case

  • The OCC also has other avenues whereby it can work with Utilities to facilitate rate increases

    • Settlements
      • Avoid prolonged litigation
      • Saves ratepayers money through reduced rate expenses (legal, accounting, etc.)
    • Streamlined rate cases
      • Simplified “fill in the blank” format tied to line items in the annual report
      • Currently available to class C water utilities (up to $100k in annual revenues)
      • Possible future expansion to Class B utilities (up to $500k in revenues)


Questions?




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