July 8, 2008

State Rejects UI Move To Raise Rates

By Lynn Doan, The Hartford Courant, Conn.

Jul. 8--State regulators on Monday rejected a request made by United Illuminating to meet with consumer groups and government officials and seek negotiated increases in electric rates to make up for lost sales and uncollectible payments.

The state Department of Public Utility Control told UI in May that it would consider rate increases if they were part of an agreement with the state Office of Consumer Counsel and other consumer interest groups. The company told the DPUC last month that it had reached an agreement with Connecticut Industrial Energy Consumers, the largest organization representing its commercial industrial customers, but that the consumer counsel had dropped out of the discussions.

Under the agreement with the organization, UI would have agreed not to increase delivery rates on Jan. 1, 2009, when they were expected to rise, to prevent a "near-term impact" on customers. But other rate increases were expected to follow.

The DPUC denied UI's request to have more groups and government officials weigh in on the settlement because the consumer counsel was not part of the discussion. Instead, the agency said, UI will have to go through the traditional process -- an official rate filing, subject to a public hearing -- if it wants to increase rates.

At least 25 UI customers filed letters with the DPUC in opposition to rate increases.

The state attorney general and consumer counsel applauded the DPUC's ruling Monday.

"This decision is a victory for consumers and businesses struggling to cope with skyrocketing gasoline and power prices," Attorney General Richard Blumenthal said. "At a time when ratepayers are tightening their belts, UI must do the same."

Consumer Counsel Mary Healey said the DPUC's ruling prevented UI from increasing rates "in a manner that was without the full transparency and regulatory scrutiny of the public hearing process of a full rate case."

UI will file for a rate increase in the next month, said James P. Torgerson, president of UIL Holdings Inc., UI's parent company.

"We are very disappointed because a settlement would have been in the best interest of customers and would have resulted in rates lower than what they were scheduled to be as of Jan. 1, 2009," Torgerson said.

The company has said it needs higher rates that reflect a substantial drop in sales, particularly among its industrial customers, and a large increase in capital spending.

Also, due to higher generation charges and "degrading economic conditions," the company said, UI's uncollectible expenses will reach $18.7 million by the end of the year -- $13.2 million more than it had originally projected.

Contact Lynn Doan at [email protected]


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