Office of Consumer Counsel
At a Glance
MARY J. HEALEY, Consumer Counsel
Established - 1975
Statutory authority - CGS Sec. 16-2a
Central office - Ten Franklin Square,
New Britain, CT 06051
Number of employees - 14
Recurring operating expenses - $ 3,118,479
The Office of Consumer Counsel (“OCC”) speaks for Connecticut’s utility ratepayers. The OCC was created in 1975 as an independent voice for utility customers, and as an advocate, does not directly administer programs. The OCC supports the State of Connecticut’s Results-Based Accountability process by carefully identifying our constituency and recording the quantity, delivery and quality of the services we provide utility consumers across the state [see OCC’s Scorecard at www.ct.gov/occ, which tallies the effect of OCC’s advocacy for consumers in utility proceedings in all forums]. The OCC’s mission is to advocate for consumer interests in all matters which may affect Connecticut consumers with respect to public utility companies, electric suppliers and certified telecommunications providers. Particularly in legislative and regional forums, the OCC often collaborates with others to achieve beneficial policies for consumers, including by coordinating with fellow state agencies (such as the Department of Public Utility Control (“DPUC”) and the Office of the Attorney General (“OAG”) and at times with industry participants. Successful collaborative efforts in recent years include work to promote more reasonable outcomes in regional electric power markets, broadband deployment, and improved standards for utility customer service.
The OCC’s statutory responsibilities include appearing and participating in any regulatory or judicial proceedings, federal or state, in which the interests of Connecticut consumers may be involved, or in which matters affecting utility services rendered or to be rendered in this state may be involved. The OCC is mandated by law to be a party to each contested case before the DPUC and shall participate in such proceedings to the extent it deems necessary. The OCC may appeal from a decision, order or authorization in any such state regulatory proceeding. In addition to representing ratepayer interests before the DPUC, the OCC participates actively in proceedings before the Federal Energy Regulatory Commission (“FERC”), the Federal Communications Commission (“FCC”), state and federal courts, and promotes the interests of ratepayers at the Connecticut legislature.
OCC contributes to heightened public awareness of problems and issues faced by utility consumers in Connecticut, such as difficulties receiving timely, effective service and paying for high utility costs, through appearances in public forums such as DPUC hearings, court cases, and presenting legislative testimony; publishing a newsletter, maintaining current consumer-interest information on its website, serving as members on boards and committees and through public speaking. The activities of the OCC benefit the utility ratepayers of Connecticut and contribute to the creation of beneficial, forward-looking policies and laws.
Over $500 million dollars in direct savings to Connecticut ratepayers was achieved this year through OCC’s continuing advocacy in the diverse forums in which it has appeared for 35 years. The OCC was involved with three major rate cases along with a host of other issues affecting Connecticut ratepayers, including energy planning, development of energy infrastructure and quality of customer service.
OCC held the line for ratepayers by continuing to advocate for reasonable rates in three rate dockets this year:
· On June 30, 2010, the Department of Public Utility Control (“DPUC”) approved a rate increase for The Connecticut Light & Power Company’s (“CL&P”) distribution business of $63.4 million effective July 1, 2010, and an incremental $38.5 million effective July 1, 2011. The Company’s rate application that was filed on January 8, 2010 sought rate increases of $133.4 million for the rate year commencing July 1, 2010 and an incremental $44.2 million for the rate year commencing July 1, 2011.
CL&P timed the rate changes to correspond with the expiring Rate Reduction bonds that are funded by the Competitive Transition Assessment (“CTA”) which were scheduled to expire on January 1, 2011. The CTA charge yielded approximately $210 million annually. As an alternative to increasing rates on July 1, 2010, CL&P proposed to defer recovery of one-half of the 2010 increase until January 1, 2011 at which time would implement a one-time $210 million increase in distribution rates over an 18-month period (January 1, 2011 – June 30, 2012).
The DPUC approved CL&P’s alternative rate scenario such that rates approved will not go into effect until the CTA declines on January 1, 2011. Then, the two-year increase in revenue requirements (from July 1, 2010 – June 30, 2012) will be collected evenly and in a level manner over the following 18 months. As a result, CL&P’s distribution rates therefore will increase by $111.1 million on January 1, 2011. This is an increase to distribution rates of 14.2% and an increase of approximately 2.9% of total rates.
Even with the distribution rate increase and new Revenue Reduction Bonds (“RRB”) issuance, as well as new CTA charges because of overall net reductions to the CTA and the generation service charge that will also take effect on January 1, CL&P’s overall rates will decrease on January 1, 2011 by approximately 2.5%.
Major areas of adjustment made by the DPUC to the Company’s application include: rejecting CL&P’s proposed decoupling and pension tracker mechanisms; maintaining the allowed return on equity of 9.40%; reducing expenses by over $40 million associated with payroll, office rent, depreciation and income taxes.
During the proceeding, OCC had advocated a rate increase of $6.9 million above current rates effective July 1, 2010 and an additional $40.6 million effective July 1, 2011.
· On January 6, 2010 the Connecticut Water Company (“CWC”) filed a request for a rate increase with the DPUC. CWC requested an increase of approximately $16,282,655 or 26.4% over present rates in rate year 1 (RY1), an incremental $1,399,826 or 2.3% in rate year 2 (RY2), and an incremental $1,399,401 or 2.3% in rate year 3 (RY3). OCC was an active party to the proceeding, and advocated for a reduced rate increase of $4 million above current rates.
CWC’s application was the first of its kind in the state’s water utility industry in several respects. CWC sought a three-year rate plan with three years of rate increases as well as a number of new and novel ratemaking mechanisms that have not been adopted before by the Department for regulated water utilities. These included a decoupling mechanism called the WCAM that operates in the form of a sales adjustment clause; a base load revenue projection method used to project pro forma consumption revenues; and a return on equity level (11.3%) which would have been the highest allowed by the Department for a major utility in over a decade.
On July 14, 2010, the DPUC approved a rate increase for CWC of $8 million. With the help of OCC’s advocacy, DPUC rejected the Company’s proposed multi-year rate plan and WCAM/decoupling mechanism, reduced CWC’s ROE to 9.75%, and adjusted CWC’s capital structure to reflect the Company’s continued use of short-term debt and the imbalance between total capitalization and rate base. Other areas of adjustment suggested by OCC and made by the DPUC included rejection of CWC’s proposed base load revenue methodology and reduction of expenses associated with payroll, purchased water, chemicals and purchased power.
· On March 15, 2010 the Aquarion Water Company of Connecticut filed a rate application with the DPUC seeking a multi-year rate plan that sought to increase rates by $23.5 million effective September 2010, and incremental annual increases of $3.9 million and $3.8 million effective September 2011 and 2012. OCC advocated for a single year rate increase of $9.14 million. OCC recommended a return on equity level of 9.25% based on a capital structured comprised of 50% equity and 50% debt; recommended rejection of the base load revenue projection method and ECO decoupling mechanism proposed by the Company.
In a Draft decision issued on August 20, 2010, the DPUC tentatively approved a one-year rate increase of $14.3 million. Written exceptions are due August 27, 2010 and oral arguments are scheduled for September 3, 2010. A final decision is slated for September 8, 2010.
OCC participated actively in major state energy planning and infrastructure development efforts, which include:
· OCC was party to the Siting Council Docket No. 370, which considered the Greater Springfield Reliability Project (“GSRP”). GSRP, to be constructed mostly in Massachusetts, is one of several transmission projects that may be presented to the Siting Council in the next few years. OCC maintained that CL&P (the project sponsor) had not shown an actual need for GSRP, since non-transmission alternatives (e.g., local generation) had not been given full consideration. OCC also argued that GSRP (if approved) should not be placed underground, given the extraordinary cost of such a line. The Siting Council, while concluding that GSRP is needed, has required it to be constructed as an aerial line.
OCC again participated actively in the most recent integrated resource planning (“IRP”) proceeding before the DPUC. The Legislature re-established integrated resource planning in Connecticut in 2007. The goal was, among other things, to ensure that Connecticut will procure electricity infrastructure and resources, when needed, such that we will have reliable electric service and an improvement to our electricity rate situation, while also acting in an environmentally responsible way. Comprehensive and informative plans were filed, as required, by CL&P and UI (jointly), as well as by the Connecticut Energy Advisory Board (“CEAB”). Lengthy DPUC hearings were held for several days in June. OCC ultimately recommended that the DPUC avoid procuring new electricity resources at present and to see how the situation looks in 2012, when we will do the next IRP proceeding.
The proceeding analyzed Connecticut’s present and foreseeable (10-year) needs for new power plants (conventional and renewable), new demand-side resources (energy efficiency and demand response), new transmission lines, and other resources. Since natural gas is a key fuel for Connecticut’s power generation fleet, the availability and expected prices for natural gas also impacted the discussion.
On the horizon for the next few IRP proceedings will be (a) how to deal with the pending retirement of several decades-old power plants that exist around the state; and (b) the difficult struggle to meet or further consider the renewable portfolio standard which requires that Connecticut has 20% renewable electricity by 2020.
A DPUC draft ruling is expected around August 25th, with a final decision to follow in September.
· OCC joined the DPUC and the Attorney General’s office in a complaint at FERC against certain power plants importing capacity into New England. The Connecticut public parties claim that the power plant owners took capacity payments under the FCM but bid the underlying electric energy into the New England electricity market in such a way that the bids were never likely to be accepted, i.e., that the power plants received tens of millions of dollars for doing nothing. A FERC ruling is expected in September. OCC and the Attorney General’s office also continued their advocacy at FERC and at the DC Circuit Court of Appeals in an effort to limit ISO New England’s budget, including what in our view are excessive salaries for the top executives of this non-profit organization that has no competitors. FERC was not interested in reviewing ISO’s budget in detail or giving significant attention to our claims, nor did the DC Circuit provide relief.
· Electric power plants receive compensation for their availability to serve customers through a New England market called the Forward Capacity Market (“FCM”). As part of the FCM, annual auctions are administered by ISO New England, the regional power grid operator, and plants offer to serve customers about 3 years in advance (i.e. a power plant bidding into an auction held this year would be declaring its availability three years from now). The structure and rules for the FCM were developed as part of a massive settlement of a Federal Energy Regulatory Commission (“FERC”) docket in 2006, in which OCC was an active participant as well as a signatory.
As part of the 2006 settlement, it was agreed that there would be a review of the FCM rules after a few auctions, and those discussions are occurring now. OCC and most other public parties in New England are satisfied with most of the current FCM rules, as the auctions have cleared at relatively low prices, electric reliability remains solid, and some needed power plants have been built despite the difficult financing environment. Notwithstanding these successes, many power plant owners are pressing for significant changes to the FCM rules to raise the prices. A FERC docket exists to consider competing proposals for revisions to the pricing rules, and OCC will be an active participant in this docket and related regional discussions.
In the legal arena this year:
· OCC joined the DPUC in defending DPUC’s rate case rulings for Southern Connecticut Gas Company (“SCG”) and Connecticut Natural Gas Corporation (“CNG”). The DPUC rejected SCG and CNG’s rate increase requests, and the two companies appealed to the Connecticut Superior Court. OCC wrote lengthy briefs in support of DPUC’s positions at the Superior Court and actively participated in oral argument. This advocacy was successful, as the Superior Court affirmed the DPUC’s rulings. The companies have now appealed to the Connecticut Supreme Court, where OCC will again participate actively in briefs and arguments in defense of the DPUC’s rulings.
OCC’s strong advocacy for quality of service continued this year and brought forth positive results:
· OCC opposed an effort in late 2009 by SCG and CNG to terminate dozens of workers in response to DPUC rate rulings that were lower than the companies expected. OCC, along with the AG’s office, successfully encouraged the DPUC to agree to examine the proposed terminations to be sure that they could be done consistently with public safety and worker safety. After a long and difficult DPUC proceeding, the DPUC imposed several significant compliance responsibilities on the companies but did not stay the companies’ hand in the terminations. However, the companies apparently reconsidered, and it is OCC’s understanding that few workers were actually terminated.
· In 2010, the DPUC found that AT&T has never met the 90% standard for the out of service repair metric, and thus continually and repeatedly failed to meet the out of service requirements since 2001. The DPUC noted that state statutes provide for a fine of not more than $10,000 for each offense and, in the case of a continued violation, each day thereof shall be deemed a separate offense. Accordingly, the DPUC assessed a civil penalty of $10,000 for each month of non-compliance for a total of nine years, plus other fines, totaling $1,120,000. The DPUC stated that it considered “these continual violations to be of a serious nature” and the OCC heartily agreed.
The background behind this issue is that in 2008, the OCC petitioned the DPUC to open a docket called Petition of the Office of Consumer Counsel for Enforcement of Quality of Service Standards for The Southern New England Telephone Company d/b/a AT&T Connecticut to determine whether AT&T was in compliance with the quality of service standards in state statutes and DPUC regulations. Specifically, the regulations require that 90% of all out of service repairs received by a company in any given 24-hour period be cleared within 24 hours.
The DPUC has opened a separate proceeding soon to commence in 2010 to amend the retail service quality standards that currently prevail in this market, noting that telecommunications services are largely competitive and changes may be warranted. The OCC will participate fully in that continuing regulatory investigation to ensure that providers of telecommunications services in the state provide high quality customer service and high quality technical service.
On the legislative front, OCC was actively engaged in the legislative process again this year and closely followed a number of legislative proposals that would have an impact on ratepayers. OCC testified at public hearings before the Energy & Technology Committee and provided technical information to legislators upon request to further their understanding of utility issues.
OCC continued its participation this year in utility-related organizations, committees and boards, where it serves as a respected voice for ratepayers among state, regional and national policymakers and industry professionals:
· Appointed by statute in 2005 as a member of the Low Income Energy Advisory Board (“LIEAB”), OCC participated once again this year, analyzing utility policies and procedures on arrearage forgiveness and working to ensure that community action agencies have the necessary procedures in place to process applications for energy assistance. OCC took part in LIEAB’s annual recommendations to the Office of Policy and Management (“OPM”) and the Department of Social Services (“DSS”) on energy issues which impact low-income ratepayers.
· The OCC continues to be a member of the Energy Conservation Board (“ECMB”), which oversees the Connecticut Energy Efficiency Fund (“CEEF”). During the 2009-2010 legislative session, legislators took a portion (28%) from this ratepayer fund to help close the gap in the state budget. The 28% reduction will not begin until the spring of 2012, which gives the ECMB time to make appropriate changes to the programs, plans and budgets.
The premier residential program “Home Energy Solutions” (“HES”) continues to have great demand as the program heads towards its goal of serving 20,000 customers for calendar year 2010. Additionally, starting in June, a residential pilot program for “on the bill financing” began, and preliminary data indicates customers ordering additional energy savings measures as the financing became available. Customers can borrow up to $6,999 for 2.9% and from $7,000 to $20,000 for zero percent. Although this is a pilot program, planning for its inclusion in programs for 2011 have begun in anticipation of continuing positive results which are indicated in the small sampling accumulated thus far.
Another change in residential programs came with a “name” combination in the utilities “low income” programs. Connecticut Light and Power’s “WRAP” program and United Illuminating’s “UI Helps” program will now proceed under the “HES” label. Additional information about the ECMB and CEEF may be found at: http://www.ctsavesenergy.org.
· The OCC is a member of the Board of the Connecticut Clean Energy Fund (“CCEF”). The Board is responsible for the states renewable portfolio (wind, solar, biomass, fuel cells, etc.), its development and job growth as well as the promotion of renewable resources in the state. The Town of Tolland recently became the 100th municipality to “go green” through the CCEF’s Clean Cities program. This program encourages municipalities to commit to purchasing at least 20% of its electricity from clean, renewable energy sources. The CCEF also recently announced the “Neighbor to Neighbor Energy Challenge” and won a $4.17 million grant from the U.S. Department of Energy. This program challenges residents to reduce their energy consumption and increase their use of renewables in competition with one another. Additional information on the CCEF may be found at: http://www.ctcleanenergy.com.
· OCC continues its active membership in the Connecticut Energy Advisory Board (“CEAB”). CEAB’s major initiatives for this year included reviewing and modifying 2010 the Integrated Resource Plan (“IRP”) submitted to CEAB by CL&P and UI. The IRP plan develops, with stakeholder input, the state’s energy and capacity resource assessment to procure energy resources in a cost-efficient and environmentally responsible manner. The CEAB Plan is then subject to review and approval by the DPUC. For more details on CEAB’s accomplishments this year, visit their website at: http://www.ctenergy.org.
· The Consumer Counsel serves as President of the National Association of State Utility Consumer Advocates (“NASUCA”), and she and several members of the OCC staff are actively engaged with this national group of ratepayer advocates who appear and/or provide testimony before the FERC, the FCC and the U.S. Congress, providing the ratepayer perspective on energy policies of national import. As President, the Consumer Counsel has made headway in raising consumer concerns with issues like smart grid initiatives, as well as increasing the overall visibility of consumer advocates across the country.
· The OCC is an active participant with both the Independent System Operator of New England (“ISO-NE”) and the New England Power Pool (“NEPOOL”). The OCC sits on the NEPOOL Participants Committee (“NPC”), as well the ISO-NE/NEPOOL associated committees such as, the Demand Response Working Group, Budget and Finance, Transmission, and Marketing. The OCC advocates for a variety of Connecticut ratepayer concerns among these various groups and committees either in person, by teleconference or by proxy. The OCC is a member of the Consumers Liaison Group (“CLG”) which was formed in response to FERC Order 719. Consumer Counsel Mary Healey participated in the CLG’s participants meeting on May 6th with a presentation which included her role as NASUCA President, issues concerning Connecticut in particular, and general comments concerning both New England and Washington, D.C. Issues covered included smart metering, a Congressional proposal to create a new position of the federal Consumer advocate, renewable energy and energy efficiency. On July 6, 2010, ISO recorded a “yearly” peak of 27,150 MWs, the most since the all time peak of 28,130 MWs on August 2, 2006. In fact, four of the top five peaks were set in August of 2006, with this past July slipping in at number four. The next day, July 7, 2010 recorded a peak of 26,508 MWs, number nine on the top ten all time system MW peak list.
· The OCC has continued its focus on the issues presented by broadband access and usage rates in Connecticut, especially in light of the millions of dollars potentially available through the federal broadband stimulus funding program. The OCC now serves as “program manager” of the federally-funded broadband projects to develop a database of Internet availability across Connecticut and will spearhead the development of a 5-year strategic plan for improving the state’s use of Internet services. The federal grant totals $1.8 million, $1.3 for database development and $500,000 for the strategic plan.
The effort includes development of a Strategic Plan for statewide initiatives to collect and analyze detailed market data concerning use and demand for broadband service in order to identify implementation methods to remove barriers to the adoption of broadband service and information technology services, particularly by the creation of local technology planning teams by designated regions within the state in collaboration with broadband service providers and information technology companies.
The OCC is expected to receive nearly $400,000 in federal grant funding from a second round of funding for the purpose of creation of a position within the OCC dedicated to the American Resource Recovery Act broadband stimulus grant program, to be known as the “Broadband Policy and Programs Coordinator, State ARRA Broadband Stimulus Office.”
The OCC has been a central player in recent dynamic developments concerning the management and use of the public rights of way, a fundamental issue in the telecommunications world, and particularly in the future enhancement of broadband use by Connecticut residents and businesses. For instance, the OCC has been a member of an industry and regulator working group, including utility pole owners and third party attachers, including the state’s municipalities, charged by the DPUC with resolving common issues relating to the use and management of utility poles throughout the state. This group has finalized agreements on a host of critical issues pertaining to making access to utility poles fair and at reasonable prices. The OCC’s effort has also included strong advocacy in a CL&P rate case in which pole attachments were hotly contested by many of the working group parties. With its vital role in the state broadband future, the OCC has been vocal in its support of the premise that state government should take steps to improve utilization of existing infrastructure to ensure that network providers have easier access to poles, conduits, ducts and rights-of-way.
Information Reported as Required by State Statute
The Office of Consumer Counsel’s Affirmative Action Biennial Plan was approved by the Commission on Human Rights and Opportunities on April 14, 2010. OCC continues its strong commitment to the policies, principles and practices that promote equal employment opportunity in contracts, programs and agency policies, including affirmative action. The agency has developed and implemented hiring and contracting goals to maintain its diversified work force. All OCC policies and procedures are consistent with state and federal reporting procedures.