PURA approves smart meter plan for Eversource, but future unclear

After five years of negotiations, the Public Utilities Regulatory Authority (PURA) today signed off on a plan for Eversource to install smart meters for its 1.3 million customers. It’s a massive project that will take about five years and cost at least $855 million. It’s unknown whether PURA’s plan is acceptable to the company, and Eversource officials are remaining tight-lipped about it check him.

According to PURA documents, smart meters are necessary for the state to meet its energy goals. The meters allow ratepayers to monitor their energy consumption down to the individual device, optimize their energy consumption and automatically notify the energy supplier in the event of an outage. They are seen as a way for both ratepayers and utilities to save money, but the project to replace every meter in their area is a major undertaking.

Eversource is already busy installing smart meters in Massachusetts, but disagreements with PURA in Connecticut have delayed the start of the major project. Essentially, Eversource wanted to ensure that they could recoup their costs from ratepayers by setting up a special “rate reimbursement mechanism,” meaning that the cost of installing the smart meters would be added to the public utility fee.

How that rate recovery mechanism would work has been the subject of disagreement between PURA and Eversource, highlighting a general lack of trust between Connecticut’s largest utility and the small regulator that oversees it. PURA and Eversource have feuded in the recent past over PURA’s decision to delay Eversource’s requested 2023 rate increase to 2024, which ultimately resulted in a massive increase in benefits for ratepayers, angering the public and sparking political finger-pointing at the Capitol .

In this case, PURA wanted to impose caps on Eversource’s costs and conduct a “prudential review” upon completion of the project. That meant Eversource would cover all installation costs and PURA would then review the costs to determine what they could reimburse. That prospect led Eversource and its investors to take on a lot of risk in a regulatory environment that they believed was hurting investment opportunities.

“The company stated that conducting a precautionary review at the end of AMI implementation would be unacceptable because Eversource believes the agency is implementing precautionary standards that are “changing, moving, and unclear,” according to the proposed final decision PURA. “However, the Company recognizes and acknowledges that conducting a precautionary review at the end of the deployment rather than annually is reasonable and is done in other jurisdictions in which Eversource operates. But in Connecticut, the company “does not trust” PURA to meet its legal obligation to conduct a prudential review of the company’s actions.”

“Eversource is in the position it is in now can not “We are funding this program under the optimal delivery plan without a solid regulatory basis for investment recovery due to negative investor sentiment,” Eversource Assistant General Counsel Vincent P. Pace wrote in its July 24 filing. “Given the current regulatory environment in Connecticut, the Company cannot attract capital funding for this program without establishing a cost tracking mechanism that operates outside of the base distribution rates to demonstrate timely and adequate cost recovery to investors and rating agencies.”

Eversource sought annual precautionary reviews and rate adjustments through a special mechanism for the cost of meter installation, essentially spreading the cost to ratepayers over time through the public benefit levy. According to Eversource’s filings, the Peek fee for the average residential customer would be about $7.31 per month.

According to PURA’s Stephen Capozzi, the decision made by the authority is largely based on Eversource’s requests, “with the addition of certain protections to ensure that ratepayers are protected from paying more than is warranted,” and that the fee recovery mechanism called becomes the AMI rate – is “exceptional” and based on “special circumstances.”

“The cost reimbursement mechanism … allows Eversource to recover incremental AMI operations and maintenance costs and capital costs concurrently with the company bearing those costs,” Capozzi said. “Setting cost recovery in this way provides the company with regulatory certainty for adoption, but also reduces the risk the company faces when conducting business under traditional tariff principles. To offset this risk shift, the Authority has implemented certain limits on reimbursement to ensure ratepayer protections are in place.”

These protections include, but are not limited to, an overall cap on reimbursable costs, a limit on the time frame in which Eversource is eligible for reimbursement of such costs, a prohibition on the Company from charging interest on shortfalls, and a limitation on the reimbursement period to the five-year project period.

In its July 24 filing, the Office of the Consumer Counsel said it supported establishing a dedicated rate recovery mechanism for smart meter deployments in the state, writing that it would “provide Eversource with sufficient certainty to move forward with AMI deployment.” while ensuring Eversource leverages AMI in a way that benefits ratepayers.”

It is currently unknown whether Eversource will undertake the project given these limitations. PURA has largely supported the idea of ​​installing smart meters in the past, but there were also concerns that PURA had relied heavily on Utilidata, a technology company that could potentially benefit from the project, to develop its AMI framework – concerns that PURA fears being fired.

The social security tax-driven increase in summer electricity rates continues to have political implications in Connecticut, where residents pay some of the highest electricity rates in the continental United States. Gov. Ned Lamont held off on committing to an offshore wind deal with Massachusetts and Rhode Island because of concerns about electricity rates, and Republicans in the General Assembly continued to insist that energy costs were too high.

PURA’s procedures are under increasing scrutiny from the public and lawmakers. Some, like utilities, argue that they employ a strict and inconsistent regulator, while others argue that they are not doing enough to protect ratepayers.

PURA’s final decision indicated that Eversource would have to submit a final AMI deployment plan. The commissioners voted unanimously in favor of the decision.