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From Decision Summary: 

The Public Utilities Regulatory Authority (Authority or PURA) approves an annual revenue requirement, for ratemaking purposes, for the Connecticut Natural Gas Corporation (CNG or Company) in the amount of $417,502,324 for the rate year, December 1, 2024 – November 30, 2025 (Rate Year).  Notably, however, reflected in this amount is the fact that the Company will be required to return to ratepayers approximately $24 million of ratepayer money over the next three years; thus, the approved revenue requirement after such credits are extinguished is $423,824,405. The Company may recover an additional $103,733 in executive compensation, provided the Company achieves certain performance targets. The revenue requirement includes an allowed return on equity of 9.15%.

The Company currently has authorized revenues of $442,112,779, and proposed a 4.46% increase, or $19,702,986, for a total revenue requirement of $461,815,765. The Company’s proposal includes a 10.20% return on equity, which is above the currently allowed 9.30% return on equity.

Importantly, the Company has not had a fully adjudicated rate case since 2014. Its 2018 rate amendment application was resolved through a settlement agreement. Under the terms of that settlement agreement, the Company has continued to earn healthy returns, including several periods of sustained over-earning. As a result, in 2023, the Authority directed the Company to file a rate amendment application or be subject to a financial audit. That order precipitated this proceeding. Further, as noted above, the Company is in possession of $24 million of ratepayer money.

In this context, a reduction to the Company’s revenue requirement is not unexpected and was, in fact, advocated for by the Office of the Attorney General and the Office of Consumer Counsel. Importantly, the Authority is bound by certain legal standards and is limited to the factual record before it. For each expense, the Authority must find a preponderance of evidence that the expense will be incurred and that it is reasonable. Here, although the Company claims it is entitled to a higher revenue requirement, the Company’s management did not offer sufficient evidence to support such a higher number. 

In an apparent effort to distract from these shortcomings, the Company has and will likely continue to assert unprecedented claims of bias and impropriety against the Authority staff. However, the approved rate reduction is largely a mathematical function of the record in this proceeding, and, to the extent that record is deficient in demonstrating the Company’s legitimate operational costs, the onus for that deficiency falls squarely upon the Company’s leadership. 

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Decision (11/18/2024)
23-11-02 (05/12/2023)  
(Application Of Connecticut Natural Gas Corporation And The Southern Connecticut Gas Company To Amend Their Rate Schedule)