The trouble at PURA and the two energy companies it oversees began – ages ago, it now seems – with the elevation of Marissa Gillett to the chairpersonship of Connecticut’s Public Utilities Regulation Authority.
Connecticut
Commentary has previously weighed in on the controversy: PURA Pulls The Plug on November 20, 2019; The High Cost of Energy, Three Strikes and You’re Out? on December 21, 2024; PURA Head Butts the
Economic Marketplace on January 3, 2025; Lamont Surprised at Suit
Brought Against PURA on February 3, 2025; and Lamont’s Pillow Talk on February 22, 2025:
The
melodrama full of pratfalls continues to unfold awkwardly.
It
should come as no surprise that Gillett has changed the nature and practice of
the state agency. She has targeted two of Connecticut’s energy facilitators – Eversource
and Avangrid -- as having in the past overcharged the state for services
rendered. Thanks to the Democrat controlled General Assembly, Connecticut is no
longer a serious energy producer. The state edged its way out of the energy
producing business years ago.
“Utility
companies, CTMirror noted in January 2023, “are not responsible for the price
spikes [in the cost of energy]. As electric distribution companies, their job
are to get the power to homes and businesses. The cost of the actual power is
collected by Eversource and Avangrid on behalf of the generator, which gets all
the money.” Any attempt to pin the tail on the utility donkey pulling the cart
carrying the produce rather than those producing the product -- in this case
energy – would seem to be misplaced.
When
Gillett attempted, by instituting price controls on Eversource and Avangrid, to
reduce the costs to customers incurred by Connecticut’s two energy donkeys, the
companies pointed out that they needed a sufficient boost in profits to pay for
operating cost increases. They tried but failed to emphasize sufficiently that
the introduction of price controls by politically oriented chief executives –
see the Nixon administration on the disastrous failure of wage and price controls – rarely control prices and often ends in calamitous
business flight and or business impoverishment.
Gillett
was chosen to head PURA by Governor Ned Lamont because he needed in that
position a price regulator who would be serious about reducing Connecticut’s
high energy costs on behalf of energy consumers – and solicitous politicians --
rather than company stockholders. In similar instances, Lamont has shown
himself to be no friend of excessive business regulations -- because
regulations are hidden tax increases by another name.
When
rating agencies examined the Gillett’s regulatory impositions, they lowered the
ratings on the over-regulated businesses. And lower ratings makes borrowing to
enhance business activities more expensive. Lamont and other Gillett supporters
amusingly asserted the rating agencies were colluding with the two energy
distributors, a highly improbable claim. Bottom line: The lower ratings, based
on what ratings agencies refer to as the state’s highly “negative regulatory environment,”
increased the operating costs of the two energy distributors.
Their
backs against the wall, the two energy distributors sued PURA and Gillett. The
plaintiffs argued in their suit, “To conceal the fact that she [Gillett] alone
impermissibly has been deciding substantive regulatory questions [unilaterally]
she has arranged to issue the decisions above the signature of PURA’s executive
secretary,” a practice that, it is alleged in the suit, “violates regulatory
law establishing PURA as an impartial, multi-commissioner and quasi-judicial
authority, as well as the utilities’ due process rights by denying them, for at
least five years, their right to appeal decisions made by a single commissioner
to a panel of three commissioners… Unfortunately, certain actors have
undertaken a number of unlawful procedures that have the effect of reducing
what the Legislature intentionally designed as a multi-member agency to the
province of one commissioner. Such a fundamental abuse of authority violates
the statutory framework that the Legislature created to ensure reasonable and
functional regulatory oversight of public service companies such as the
plaintiffs.”
Well
now, the hullabaloo in the media and the court were not good for business in
Connecticut. A rapprochement
followed. Lamont and associates agreed they would follow the letter of the PURA
law by expanding the PURA commission to its statutorily prescribed numbers. No
longer would Gillett solely determine price controls on energy distributors,
somewhat of a pyrrhic victory for the distributors since a majority of the
committee would be appointed by Lamont and Gillett supporters in the General
Assembly.
Enter
State Sen. John Fonfara. The
reaction of Lamont and Gillett supporters to the possible presence of Fonfara
on the PURA regulatory board is somewhat hysterical. Might the presence of
Fonfara on the board further dilute Gillett’s heavy handed and autocratic
authority?
At
least one legislator is promoting a bill that would grant to Gillett
legislative authority to make such unilateral decisions as she already has
made, a Hail Mary move that seems to acknowledge the legitimacy of the suit
against PURA. The bill being offered plainly acknowledges that Gillett never
had been invested with the power and authority she had unilaterally exercised
against the energy distributors.
Energy
providers in Connecticut have been forced into litigation for two reasons: 1)
the price reductions imposed unilaterally by Gillett have increased the
operating costs of the energy providers, and both companies have, in addition,
been downgraded by major financial rating agencies. 2) The downgrades
discourage investments in the companies and increase the interest payments
attached to the borrowing of money to finance operating costs.
Possibly
with the acquiescence of Lamont, Gillett supporters in the Democrat dominated
General Assembly now favor a bill that should be titled the “No Fonfara Need
Apply Here” bill.
The
section of the bill that seems to apply to Fonfara, who has decades of experience
dealing with energy questions as a state senator, reads: “No person who is an
executive of a company or other entity that has received a notice of violation
from the authority or an equivalent agency, or who has been an executive or
principal of a company or other entity that has engaged in litigation with the
authority or an equivalent agency, shall be eligible to serve as utility
commissioner.”
The
bill is tied up in litigation. This is, after all, Connecticut.
State
Representative Matt Blumenthal, a chip off his daddy’s block, implausibly denied
that the language in the bill was aimed at Fonfara, and in the process gave the
game away. Matt is the son of U.S. Senator Dick Blumenthal, who was for two
decades Connecticut’s Attorney General and who has managed to define himself in
the U.S. Senate as the principal consumer protection agent in Congress.
Said
Blumenthal the lesser with a straight poker face, “This bill is not addressed
to any particular person and I would reject any characterization that it is. It
is trying to think holistically about what the future of PURA should look like
and how it can and should represent the people of Connecticut and frankly
address the outrageous cost of electricity in the state of Connecticut, and
energy more generally.”
In
its most recent coverage, the Hartford Courant notes – “CT utility plans to slash capital spending, says it will
impact customers.”
Frank
Reynolds, United Illuminating’s president and CEO, is quoted in the story to
this effect: “The financial uncertainty brought on by Connecticut’s unstable
regulatory environment is forcing us to implement a bare-bones investment plan
while deferring proactive system upgrades, which will lead to more frequent
outages, slower response times, and higher costs for our customers. Until we
receive the necessary support from state regulators, more cuts will likely need
to be made, demonstrating what happens when utilities are prohibited from
collecting the revenue needed to support reliability and sustainability for our
valued customers.”
The
Courant reporter made attempts to contact Gillett for a response, but no luck:
“PURA did not respond to inquiries.”
One
can almost hear increasingly cynical energy users – all of us – whispering
behind their hands, “Sure, sure, let’s revisit the pretense of reducing energy
costs in, say, two years.”
Comments