Decisions by CT utility regulators could ease major dispute over EV program. What to know.

The state’s electric vehicle charging program seemed to be moving back on track Tuesday after regulators approved a draft plan that would give the electric utilities required to subsidize it an opportunity to recover the millions of dollars they spend more quickly through annual rate adjustments.The on-and-off-again EV program became a flashpoint in an ongoing disagreement between the Public Utility Regulatory Authority and the state’s two electric companies. Both argue that their financial stability is threatened by regulatory rulings denying them recovery through electric rates of the hundreds of millions of dollars they spend on everything from storm damage repair to state-mandated clean energy programs, like EV chargers.The disagreements escalated last spring when, amid downgrades from credit rating agencies, Eversource and United Illuminating announced they were “pausing” their participation in the EV program unless given a timely opportunity to recover their costs of subsidizing the rebate program that encourages installation of home charging stations.In two proposed final decisions released Monday and Tuesday, PURA gave the utilities much of what they had been asking for: An opportunity to argue on an annual basis for a rate adjustment that, if approved by the regulators, would allow them to recoup program expenses.Eversource called the decisions a positive development, while United Illuminating seemed to hesitate.“The draft decision takes a step in the right direction to align the Lamont Administration’s and Connecticut’s carbon reduction goals with regulatory policies that make them achievable,” an Eversource spokesman said. “We are eager to continue maximizing the benefits of these programs for our customers to support them in purchasing more electric vehicles, leading to reduced carbon emissions.Spokesperson Sarah Fliotsos said UI is committed to “programs that are both state-mandated and essential to Connecticut’s clean energy transition” but would like greater assurance on cost recovery from regulators.“To do so, we must have regulatory assurance that we can recover the associated costs, as we must with all the investments we seek to make across our Connecticut electric and gas businesses. We look forward to providing additional information to PURA prior to the release of its Final Decision on this important matter,” she said.PURA has scheduled another hearing on the EV decision before it is finalized.Ill feeling between state regulators and two of New England’s largest utilities escalated last spring and continued into the summer.After PURA threatened to fine the utilities $10,000 for every day they paused, Gov. Ned Lamont, who has made electric vehicle conversion a high point on his clean energy agenda, set up a meeting between the regulators and the utilities to, in his words, “lower the temperature.”The draft decisions, which follow the meeting by a month, would treat reimbursement for EV expenses the same way PURA handles the other state-mandated, clean energy programs the utilities subsidize with borrowed funds. Before changes proposed in the draft decisions, the utilities were not permitted to recover their EV costs between prolonged rate hearings, which might not be scheduled for years.The utilities argued that they could save customers millions of dollars in carrying costs on the borrowed money by permitting annual rate adjustment proceedings.Typically, utilities borrow money to invest in projects as varied as infrastructure improvements and state decarbonization programs. Eversource and UI have complained that PURA, under Lamont appointee and chair Marissa Gillett, has not been allowing them fair recovery of their investments, triggering credit downgrades that make borrowing more difficult and costly.The stand-off between the utilities and Gillett, who is trying to enforce what she has called a more consumer-oriented regulatory regime, is being followed closely among the industry across the country.A spokeswoman for Gillett said that, as a quasi-judicial arbiter of utility rate issues, she is prohibited from discussing matters before her.Making the electric utilities responsible for funding clean energy programs was a public policy decision. Rather than paying private contractors to build out decarbonization programs with tax dollars, the Legislature has chosen to have the utilities carry out parts of the agenda and pass costs to their customers.In filings with PURA, Eversource and United Illuminating said they will have spent about $87 million on the EV rebate program from its inception in July 2021 to Dec. 31 of this year. Eversource, which has a larger service area and higher costs, said it has paid about $7 million in carrying costs on money it borrowed to fund the program and UI said its carrying costs are $1.06 million.The two draft decisions establish what is known as a rate adjustment mechanism in September that would allow the companies to recover their EV costs for the first time since the program was established. The companies would recover their costs through rates on an amortized basis over 20 months beginning in September.While the EV program has captured attention both as a much discussed element of the clean energy movement and the subject of a regulatory dispute in Connecticut, the money at stake in the dispute is relatively inconsequential in terms of utility borrowing and spending. Eversource is carrying more than $1 billion in storm repair costs for which it is awaiting regulatory recovery approval.What was a simmering dispute over what the utilities characterize of unfair rulings on cost recovery by  PURA since Gillett took over, became public when Eversource CEO Joseph Nolan raised the issue on a conference call with investors in May.Nolan told representatives of brokerages that Eversource was reducing capital expenditures in Connecticut by $500 million over the next five years because of a “negative” regulatory climate that prevents the company from recovering money it invests in the state. He said he was redirecting the money to projects in Massachusetts and New Hampshire.“You can have my assurance that we will not spend dollars until such time as we have a constructive regulatory environment that allows us to get fair treatment in the recovery of our dollars that we have spent on behalf of the customers in Connecticut to bring better service,” he said on a quarterly earnings call with utility analysts.Since then, major utility investors have complained personally to Lamont that PURA decisions have undercut Eversource’s financial stability.

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