PURA trims back Aquarion's proposed rate hike
Connecticut's Public Utilities Regulatory Authority (PURA) today ruled on the Aquarion Water Company of Connecticut’s rate increase proposal, trimming almost $13 million off the requested $26.9 million increase.
PURA’s ruling scales back proposed inflation-related expenses, increases Aquarion’s sales forecasts and cuts requested acquisition and pension costs, according to the state authority. The ruling also makes cuts in proposed director and officer liability insurance costs, disallows ratepayer recovery of charitable contributions, and halves Aquarion’s proposed employee bonus plan expenses. The PURA lowered to 9.63% Aquarion's request for an allowed return on equity of 10.6%.
Regulators rejected Aquarion's three-year rate proposal, instead approving an 8.6% overall increase ($13,915,886), which includes a 2% infrastructure surcharge previously approved as an add-on to customer bills. The approved rate design moves Aquarion’s company-wide rates closer to statewide equalization and will become effective following regulatory review of an October compliance filing.
In its March 28 rate filing, Aquarion proposed spreading the increase over a three-year period, according to PURA. Aquarion supported its 17% increase request by noting substantial recent investment in infrastructure improvements and utility plant, as well as depreciation expense increases related to those capital investments. According to Aquarion, declining end user consumption and cost increases outside its control also precipitated the rate filing.
The public comment hearings PURA held regarding the proposed increase were well attended. Many of Aquarion's customers testified against the rate proposal, and more than 500 customers wrote to PURA, almost unanimously opposed to Aquarion's rate request.
PURA deferred ruling on the impact new IRS tax regulations may have on Aquarion’s rate structure, pending the outcome of a separate proceeding. Aquarion will maintain a regulatory liability account for tax benefits resulting from any election made under the IRS rule change for federal tax filings for years beginning 2012.
Aquarion is a subsidiary of Aquarion Water Company, the largest investor-owned water company in Connecticut and in New England. It provides water services through 79 systems to more than 185,000 customers in 47 towns and cities throughout Connecticut. For the fiscal year ending December 31, 2012, Aquarion had operating revenues of $156.8 million and net utility plant of $769 million. As with its predecessor company, the former Bridgeport Hydraulic Company, Aquarion has been acquiring smaller water companies in Connecticut since 1984. Aquarion has recently purchased 57 separate systems, adding more than 10,000 customers in Connecticut.