UI has more rate increases in the works

HARTFORD >> United Illuminating Co. customers, already frustrated by a proposed distribution rate increase working its way through the state regulatory system, now have another hike looming in the distance.

UI recently made public a $49.9 million proposal that is part of a plan to accelerate efforts to toughen the utility’s distribution network against storms. If approved by the state’s Public Utilities Regulatory Authority, UI would spend that amount over four years to protect its grid.

The Orange company was asked to submit the plan to accelerate the work by Connecticut utility regulators and political leaders as part of an agreement to not oppose the acquisition of UI and its sister natural gas utilities by Spanish energy giant Iberdrola.

UI will seek to recover the costs of the project from ratepayers, but not until two years after all of the facets of the four-point plan are complete,

Spokesman Ed Crowder said the company hasn’t developed a time-line for the project. UI will finance the project upfront and pay for the financing, which is expected to be about $5 million and in addition to the actual construction costs.

Normally, the utility would seek to recover financing costs as part of a requested rate increase.

“At UI, we’re proud of our strong record of providing safe and reliable service to our customers, but we also know that some parts of our grid could still be vulnerable to extreme weather and flooding,” said Joseph Thomas, UI’s vice president for electric system operations.

“This plan identifies several projects we can undertake over the next four years to shore up those vulnerabilities and significantly reduce the likelihood thousands of customers will experience prolonged outages,” Thomas said.

UI already has submitted the plan to PURA. The plan to accelerate the improvements to UI’s distribution network is separate from a $100 million rate hike request the utility filed this summer and hopes to begin recovering from ratepayers over three years starting in 2017.

Release of the plan to the public came just hours before PURA held a public hearing on that $100 million rate increase in Bridgeport Sept. 8. A second hearing was scheduled for New Haven’s Hall of Records.

One of the founders of Fight The Hike, a grass-roots group created to oppose previous increases, called UI’s latest proposal “absurd.”

“I think they are out of their minds,” said Frank Panzarella of New Haven, who founded tthe group with his wife, Paula. “It’s absolutely absurd for them to expect ratepayers to pay for this; it’s just unrealistic given the state of Connecticut’s economy and how much people are suffering already. UI should have been making these improvements all along.”

Panzarella said the cost of the upgrades should be covered by Iberdrola, which closed on its $3 billion acquisition of UI’s corporate parent, UIL Holdings, in December 2015.

“Iberdrola should be a responsible company and pay for this,” Panzarella said. “I’m sure they are making plenty of money.”

Elin Swanson Katz, Connecticut’s consumer counsel who represents the state’s utility customers in rate increase hearings, said she is determined to make sure the company receives “what it needs and only what it needs.”

“It feels like they could do a better job of prioritizing, that they are asking for everything at once,” Katz said. “You can make anything sound like a priority, but I want them to prioritize like homeowners do when they make repairs to their homes. I’m very cognizant that consumers are being asked to pay a lot over the next five years and are already paying high rates.”

The proposed system upgrade calls for:

• Relocating the Pequonnock Substation in Bridgeport at a cost of $31 million. The substation serves about 8,000 UI customers and has been identified as at significant risk for damage from coastal flooding during storms. The project would coordinate with the relocation of the transmission portion of the substation by moving distribution components to higher ground, reducing the risk of a potentially a system failure due to flooding that could leave customers without power for long periods.

• Increasing redundancy in the distribution network at a cost of $7.6 million. Adding nine circuit ties between remote areas of the local electric distribution system would allow for faster restoration of power. UI’s electric grid is designed so that parts of one circuit can be switched to another circuit when there is an outage.

• Increase the pace of replacement of portions of UI distribution grid that operate at less than 13.8 kilovolts, which would cost $6.3 million. This would increase the pace of upgrading to the lower-voltage lines, transformers and related equipment and provide additional back-up opportunities that would eliminate potential single points of system failure during storms.

• Rebuilding and separating feeder cables at three UI substations, which is expected to cost $5 million. The goal is to reduce the likelihood that bad weather or other issues could cause multiple feeders to fail. Each of the three locations serves up to 3,100 customers.

The proposed improvements build upon those started after Tropical Storm Irene in 2011 and Super Storm Sandy in 2012. Utility officials say UI invested $15 million to provide short-term protection of coastal substations against flooding and began implementing a new, state-approved program to create a wider buffer between overhead lines and encroaching vegetation.

UI is also automating its storm-response operations, so that company officials overseeing power restoration can have a more detailed picture of damage, allowing them to use repair crews more efficiently and provide better information to customers.

Samuel Carmody, a spokesman for state Attorney General George Jepsen, has said the state agency would not comment on UI’s plans.

Richard Sobolewski, supervisor of financial analysis for the state’s utilities for Connecticut’s Office of Consumer Counsel, said the plan to accelerate system upgrades was submitted to PURA in July and a draft decision is scheduled in the case on Sept. 26. A final decision from PURA is scheduled for Oct. 5, Sobolewski said.

UI’s proposal contains some elements that are beneficial to UI’s 328,00 ratepayers, he said.

For example, most electric utility rate cases are based on projections of what a utility will need in the future, Sobolewski said.

“This way, we’re not paying for it until the work is done,” he said. “It’s more precise way of doing things.”

Call Luther Turmelle at 203-680-9388.