Connecticut General Statutes
Chapter 277 - Department of Energy and Environmental Protection. Public Utilities Regulatory Authority. Office of Consumer Counsel. Miscellaneous Provisions
Section 16-19b. - Purchased gas adjustment clauses, energy adjustment clauses and transmission rate adjustment clauses.

(a) No adjustment clause of any kind whatsoever shall be authorized by the Public Utilities Regulatory Authority if such a clause operates automatically to permit charges, assessments or amendments to existing rate schedules to be made which have not been first approved by the authority.

(b) If the authority finds that the changed price of purchased gas required for distribution by a gas company substantially threatens the ability of the company to earn a reasonable rate of return, or will cause the company to have an excessive rate of return, the authority shall, after investigation and public hearing, approve a suitable purchased gas adjustment clause to be superimposed upon the existing rate schedule of the company. The authority shall design any such purchased gas adjustment clause to allow the gas company to charge or to reimburse the consumer only for the changes in the cost of purchased gas which occur when the actual price of purchased gas differs from the price reflected in the base rates of the company. The authority may establish an efficiency factor in the purchased gas adjustment clause of each gas company, which may provide for less than one hundred per cent recovery of the gross earnings tax imposed by section 12-264 on the revenues from such purchased gas. A purchased gas adjustment clause approved pursuant to this section shall apply to all gas companies similarly affected by the costs which form the basis for the adjustment clause.
(c) If the authority, after notice and hearing, determines that the adoption of an energy adjustment clause would protect the interests of ratepayers of an electric distribution company, ensure economy and efficiency in energy production and purchase by the electric distribution company and achieve the objectives set forth in subsection (a) of section 16-19 and in section 16-19e better than would the continued operation of a fuel adjustment clause and a generation utilization adjustment clause, the authority shall approve an energy adjustment clause to be superimposed upon the existing rate schedule of the electric distribution company. The authority shall design any such energy adjustment clause to reflect cost-efficient energy resource procurement and to recover the costs of energy that are proper for rate-making purposes and for which the authority has not authorized recovery through base rates. These costs, reflecting prudent and efficient management and operations, may include, but are not limited to, the costs of oil, gas, coal, nuclear fuel, wood or other fuels, and energy transactions with other utilities, nonutility generators or power pools, all or part of the cost of conservation and load management, and the gross earnings tax imposed by section 12-264 on the revenues from the energy sources subject to the energy adjustment clause. The authority shall design the energy adjustment clause to provide for recovery of energy costs prudently incurred by an electric distribution company in accordance with section 16-19e. Notwithstanding the provisions of section 16-19, the authority shall change an energy adjustment clause in accordance with the provisions of subsections (e) and (h) of this section. An energy adjustment clause approved pursuant to this section shall apply to all electric distribution companies similarly affected by the costs which form the basis for the adjustment clause.
(d) The Public Utilities Regulatory Authority shall adjust the retail rate charged by each electric distribution company for electric transmission services periodically to recover all transmission costs prudently incurred by each electric distribution company. The Public Utilities Regulatory Authority, after notice and hearing, shall design the retail transmission rate to provide for recovery of all Federal Energy Regulatory Commission approved transmission costs, rates, tariffs and charges and of other transmission costs prudently incurred by an electric distribution company in accordance with section 16-19e. Notwithstanding the provisions of section 16-19, the authority shall adjust the retail transmission rate in accordance with the provisions of subsections (e) and (h) of this section. A transmission rate adjustment clause approved pursuant to this section shall apply to all electric distribution companies similarly affected by transmission costs. The Public Utilities Regulatory Authority's authority to review the prudence of costs shall not apply to any matter over which any agency, department or instrumentality of the federal government has exclusive jurisdiction, or has jurisdiction concurrent with that of the state and has exercised such jurisdiction to the exclusion of regulation of such matter by the state.
(e) No proposed purchased gas adjustment, energy adjustment charge or credit or transmission rate shall become effective until the Public Utilities Regulatory Authority has approved such charges or credits. The authority may hold a hearing on such charges, provided the authority shall hold a hearing on such charges at the request of the electric distribution or gas company, interested persons or members of the public. Any such hearing shall be open to the public and, if held, shall be convened within ten days of the filing of an application by an electric distribution or gas company. Notice of such application and any hearing shall be published at least five days prior to such hearing, which may include publication in a newspaper of general circulation in the area served by such company. The authority shall receive and consider comments of interested persons and members of the public at such a hearing, which shall not be considered a contested case for purposes of title 4, this title or any regulation adopted thereunder. Any approval or denial of the authority pursuant to this subsection shall not be deemed an order, authorization or decision of the authority for purposes of section 16-35. After notice and hearing, the authority shall adopt regulations, in accordance with chapter 54, which shall include the requirements of the filing to support the requested charge or credit. Notwithstanding the provisions of this section, in the event that the authority has not rendered an approval or denial concerning any such application within fifteen days of the day the authority received the application, the proposed charges or credits (1) shall become effective at the option of the company pending the authority's finding with respect to such charges, or (2) in the discretion of the authority, may become effective upon the filing by the company with the authority of an assurance. Such assurance may include a bond with surety, and shall satisfy the authority of the company's ability and willingness to refund to its customers any such amounts as the company may collect from them in excess of the charges approved by the authority in its finding.
(f) Each company subject to a purchased gas adjustment clause or an energy adjustment clause shall disclose in its customer bills the per unit rate of the charges or credits made under the clause and the actual amount thereof in dollars and cents.
(g) The authority shall not suspend or discontinue a purchased gas adjustment clause or an energy adjustment clause which it has approved except (1) after general rate hearings for the companies affected by the clause, and (2) upon a finding by the Public Utilities Regulatory Authority that the market prices of purchased gas or the costs of energy have stabilized and are likely to remain stable.
(h) The Public Utilities Regulatory Authority shall continually monitor and oversee the application of the purchased gas adjustment clause, the energy adjustment clause, and the transmission rate adjustment clause. The authority shall hold a public hearing thereon whenever the authority deems it necessary or upon application of the Office of Consumer Counsel, but no less frequently than annually, and undertake such other proceeding thereon to determine whether charges or credits made under such clauses reflect the actual prices paid for purchased gas or energy and the actual transmission costs and are computed in accordance with the applicable clause. If the authority finds that such charges or credits do not reflect the actual prices paid for purchased gas or energy, and the actual transmission costs or are not computed in accordance with the applicable clause, it shall recompute such charges or credits and shall direct the company to take such action as may be required to insure that such charges or credits properly reflect the actual prices paid for purchased gas or energy and the actual transmission costs and are computed in accordance with the applicable clause for the applicable period.
(i) The authority shall establish procedures conforming to the requirements of this section after notice and opportunity for a public hearing.
(j) Any purchased gas adjustment clause or energy adjustment clause approved by the authority may include a provision designed to allow the electric distribution or gas company to charge or reimburse the customer for any under-recovery or over-recovery of overhead and fixed costs due solely to the deviation of actual retail sales of electricity or gas from projected retail sales of electricity or gas. The authority shall include such provision in any energy adjustment clause approved for an electric distribution company if it determines (1) that a significant cause of excess earnings by the electric distribution company is an increase in actual retail sales of electricity over projected retail sales of electricity as determined at the time of the electric distribution company's most recent rate amendment, and (2) that such provision is likely to benefit the customers of the electric distribution company.
(k) Notwithstanding the provisions of this section, upon the application of any gas company, the authority may modify, suspend or discontinue a purchased gas adjustment clause for one or more gas companies if the authority determines that as part of an overall performance-based rate plan, such modification, suspension or discontinuance will ensure safety and reliability, will provide substantial financial benefits to ratepayers at least equal to those provided to the gas company and will lower the rates below what they would be without such modification, suspension or discontinuance, as determined by the authority.
(P.A. 74-216, S. 4, 8; P.A. 75-486, S. 10, 69; P.A. 77-614, S. 162, 610; P.A. 78-370; P.A. 80-482, S. 57, 348; P.A. 82-150, S. 4; P.A. 83-97; P.A. 84-105; P.A. 85-233, S. 1, 2; P.A. 87-331, S. 2, 4; P.A. 90-221, S. 3, 15; P.A. 95-43, S. 1, 2; P.A. 00-221, S. 2; P.A. 05-210, S. 30; P.A. 06-196, S. 229; P.A. 11-80, S. 1; P.A. 13-119, S. 5; P.A. 14-134, S. 52–54; P.A. 17-35, S. 1.)
History: P.A. 75-486 replaced public utilities commission with public utilities control authority and essentially rewrote provisions, expanding and clarifying them greatly; P.A. 77-614 replaced authority with division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 78-370 amended Subsec. (a) to exclude gross earnings tax from consideration as part of cost of fossil fuel or purchased gas; P.A. 80-482 made division an independent department and deleted reference to abolished department of business regulation; P.A. 82-150 deleted obsolete provisions in Subsec. (h) continuing adjustment clauses in effect prior to December 1, 1975, until superseded and repealed Subsec. (i) prohibiting adjustments from August 1, 1975, to December 1, 1975, unless approved after administrative proceeding, the procedure for which was set out in detail; P.A. 83-97 added Subsec. (i), authorizing provision re under-recovery or over- recovery of overhead and fixed costs; P.A. 84-105 amended Subsec. (a) to delete provision prohibiting gross earnings tax from being included in cost of purchased gas and added Subdiv. (2), authorizing establishment of efficiency factor in purchased gas adjustment clause; P.A. 85-233 added Subsec. (j) re inclusion of a provision on fossil fuel adjustment clause re cogeneration technology, renewable fuel resources or solid waste; P.A. 87-331 amended Subsec. (i) by adding requirements for annual public hearing and mandatory inclusion of provision re over-recovery of overhead and fixed costs in fossil fuel adjustment clause approved for electric companies; P.A. 90-221 deleted provision in Subsec. (i) requiring the department to hold an annual public hearing as to whether the department should include in the fossil fuel adjustment clause a provision concerning the deviation of actual retail sales to electricity or gas from the actual retail sales; P.A. 95-43 divided Subsec. (a) into Subsecs. (a) and (b), deleted provisions re fossil fuel adjustment clause, added new Subsec. (c) and references re energy adjustment clause, relettered Subsecs. (c) to (f) as (d) to (g), amended new Subsec. (d) by adding references to credits and changing the required content of regulations from monthly filings with the department and the office of the Governor to “the requirements of the filing to support the requested charge or credit” and deleted provision re explanation if no decision in five-day period, amended Subsec. (g) by extending frequency of hearings from every three to every six months, deleted former Subsec. (g) re rate of return and former Subsec. (j) re recovery of costs from customers and added new Subsec. (j) re clauses in effect July 1, 1995, effective July 1, 1995; P.A. 00-221 added Subsec. (k) re modification, suspension or discontinuance of purchased gas adjustment clause; P.A. 05-210 made technical changes in Subsec. (c), added new Subsec. (d) re adjustment of retail rate to recover prudently incurred transmission costs, redesignated existing Subsecs. (d) to (k), inclusive, as Subsecs. (e) to (l), inclusive, amended Subsec. (e) to add “or transmission rate”, and amended Subsec. (h) to allow the department to monitor and oversee the transmission rate adjustment clause and to add “and the actual transmission costs”, effective July 6, 2005; P.A. 06-196 made a technical change in Subsec. (d), effective June 7, 2006; pursuant to P.A. 11-80, “Department of Public Utility Control” and “department” were changed editorially by the Revisors to “Public Utilities Regulatory Authority” and “authority”, respectively, effective July 1, 2011; P.A. 13-119 amended Subsec. (h) to add requirement that the authority hold a public hearing upon application of Office of Consumer Counsel and to change frequency of a public hearing from every 6 months to annually; P.A. 14-134 amended Subsecs. (c), (e) and (j) by replacing references to electric company with references to electric distribution company, deleted former Subsec. (k) re approved fossil fuel or generation utilization clause for an electric company and redesignated existing Subsec. (l) as Subsec. (k), effective June 6, 2014; P.A. 17-35 amended Subsec. (e) by replacing provision re administrative proceeding with provision re hearing on charges, replacing “within five days of the day the administrative proceeding shall have been convened” with “within fifteen days of the day the authority received the application” and made technical and conforming changes.
Cited. 183 C. 128; 216 C. 627.
Cited. 40 CS 520.
Subsec. (c):
Statute creates a relative rather than an intrinsic standard and legislature intended that the phrase “better than would the continued operation of a fuel adjustment clause and a generation utilization adjustment clause” modify each of the three preceding clauses, including the first clause relating to protecting ratepayer interests; prudently incurred costs attributable to management decisions may be recovered through interim rate adjustments. 246 C. 18.