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Excerpts from Connecticut’s Public Utilities Regulatory Authority (PURA) EOE Staff’s Brief:

“Pursuant to General Statutes § 16-2450(m) “all customer contracts with electric suppliers, for rates effective on and after January 1, 2024, shall be at or below the standard service rates for the duration of the contracts.” This second phase of the proceeding is to “investigate appropriate limitations with which customer contracts b between financial hardship customers and electric suppliers are to comply.” NOP, p. 1. 

During this proceeding certain issues were revealed in discovery which require further consideration and will be discussed below.”

1. {***} “Incidental Residential Accounts 

An Incidental Residential Account (IRA) is an account that is assigned to an EDC residential tariff but is comingled among other accounts receiving generation supply from a third-party electric supplier under a business contract. Decision, Jul. 26, 2023, Docket No. 14-07-19RE07, PURA Investigation into Redesign of the Residential Electric Billing Format – Cost Allocation Among Suppliers for System Redesign and Associated Costs, pp. 7-8. Although one or more of the accounts is assigned to an EDC residential tariff, the Authority has historically treated IRAs differently from traditional residential accounts, to include a different treatment for the customer billing format requirements. See Id. 

A commingled residential account should be related to the business and held by the business. It was EOE’s understanding that an IRA would never receive a hardship designation; however, discovery in this proceeding has shown that understanding was incorrect. See Interrog Resps. OCC-002 (UI), OCC-005 (Eversource), and OCC-007 (UI). Typically, IRAs receive less protection than their traditional residential account counterparts, because it is believed that the related C&I account is sophisticated in its ability to contract with the suppliers. We now understand that very little is reviewed when determining if an account is an IRA. Direct Energy Services, LLC (Direct Energy) explained in its response to OCC-14 that its customers selected commercial rates, but that account had a residential rate classification with the Electric Distribution Company (EDC), triggering the IRA designation. The Connecticut Light and Power Company d/b/a Eversource Energy (Eversource), explained in its response to OCC-5 that suppliers include an IRA designation in its Electronic Data Interchange (EDI) transaction.1 

Regardless of how an IRA designation is applied, the question of whether or not an account designation designed for commercial customers should be allowed to receive the same benefits and protections as a hardship customer should be an easy one to answer. EOE believes the answer is no. Alternatively, it may be time to reevaluate the perceived benefits of an IRA and determine if this designation should continue to exist within Connecticut.2 One possible solution could be excluding residential accounts (e.g., IRAs) from future C&I contracts and require suppliers to separately contract with the residential consumer.” {***}

1. {***} Renewable Energy Certificates 

A renewable energy certificate (REC)-only product is an option that allows customers to purchase more RECs than those required by General Statutes § 16 1(a)(20), (21), and (38). See Decision, Oct. 21, 2020, Docket No. 16-12-29, PURA Development of Voluntary Renewable Options Program. These optional REC-only costs are passed on to the customers through their respective EDC bills; however, the costs are treated differently by each EDC. Eversource applies REC-only charges on a volumetric basis and lists these charges under the supply portion of the bill. Interrog. Resps. OCC-018 (Eversource) and OCC-020. This allows REC-only costs to be subject to the low-income discount rate (LIDR) credits. Id. UI applies REC-only charges as a miscellaneous charge which is not subject to the LIDR credits. Interrog. Resp. OCC-018 (UI). 

EOE sees several issues, or potential issues, connected with REC-only costs. The first issue relates to the applicability of REC-only charges being permitted for hardship customers in compliance with General Statutes § 16-245o(m). A REC-only supplier is an electric supplier. See, Final Decision Dated March 23, 2005 (Decision approving Sterling Planet, a REC-only supplier, as an electric supplier license.) Therefore, those costs should be included when assessing if a hardship customer is paying for supply that is greater than standard service. This means that a hardship customer on standard service with a REC-only contract would inherently exceed the standard service rate and therefore the REC-only costs should be dropped. Discovery in this proceeding suggests that this is not occurring. See Interrog. Resp. OCC-006. Specific to Eversource, various hardship accounts were dropped to standard service, but the EDC continues to allow the accounts to have a REC-only supplier. Id. The only, unlikely, scenario where a REC-only cost could be permitted would be a situation where a hardship customer has both a supplier rate and REC-only charges that, when combined, are at or below standard service. 

In addition to the statutory permissibility of the REC-only charges for residential hardship customers, the Authority should also evaluate if the LIDR discounting of these costs is appropriate. If REC-only charges continue to be permissible for hardship customers, those charges should not be passed on to other ratepayers through the LIDR discount or through the Matching Payment Program. 3 Further, customers receive a LIDR discount because of a financial need; therefore, even if those charges are not passed on to other ratepayers, one should question if these should be permitted at all.” {***}

1. {***} Supplier Contracts

“In order to continue to serve Connecticut Residential customers, suppliers must update their contracts to comply with the statute. Ideally, suppliers would add a clause to all residential contracts stating that during the term of the contract their fixed rate may be reduced to the standard service rate should the customer receive a hardship designation, and the customer’s contracted rate is greater than standard service. Upon such time that the contracted rate is lower than standard service and/or the customer no longer maintains their financial hardship designation, the contracted rate will be charged.56 

Although the contracts that were provided in response to OCC-26 do not specifically include a similar clause, most include clauses that could support similar actions.” {***}

PURA Staff Brief  (01/09/2025)
18-06-02RE02
Investigation Of Appropriate Limitations On All Customer Contracts With Electric Suppliers