Substitute House Bill No. 5047

Public Act No. 00-17

An Act Concerning Review Of Public Utilities.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (g) of section 16-19 of the general statutes is repealed and the following is substituted in lieu thereof:

(g) The department shall hold either a special public hearing or combine an investigation with an ongoing four-year review conducted in accordance with section 16-19a, as amended by this act, or with a general rate hearing conducted in accordance with subsection (a) of this section on the need for an interim rate decrease (1) when a public service company has, for six consecutive months, earned a return on equity which exceeds the return authorized by the department by at least one percentage point, (2) if it finds that any change in municipal, state or federal tax law creates a significant increase in a company's rate of return, or (3) if it finds that a public service company may be collecting rates which are more than just, reasonable and adequate, as determined by the department, provided the department shall require appropriate notice of hearing to the company and its customers who would be affected by an interim rate decrease in such form as the department deems reasonable. [At such hearing, the] The company shall be required to demonstrate to the satisfaction of the department that earning such a return on equity or collecting rates which are more than just, reasonable and adequate is directly beneficial to its customers. At the completion of [such hearing] the proceeding, the department may order an interim rate decrease if it finds that such return on equity or rates exceed a reasonable rate of return or are more than just, reasonable and adequate as determined by the department. Any such interim rate decrease shall be subject to a customer surcharge if the interim rates collected by the company are less than the rates finally approved by the department or fixed at the conclusion of any appeal taken as a result of any finding by the department. Such surcharge shall be assessed against customers in such amounts and by such procedure as ordered by the department.

Sec. 2. Section 16-19a of the general statutes is repealed and the following is substituted in lieu thereof:

(a) (1) The Department of Public Utility Control shall, at intervals of not more than four years from the last previous general rate hearing of each gas, electric and electric distribution company having more than seventy-five thousand customers, conduct a complete review and investigation of the financial and operating records of each such company and hold a public hearing to determine whether the rates of each such company are unreasonably discriminatory or more or less than just, reasonable and adequate, or that the service furnished by such company is inadequate to or in excess of public necessity and convenience or that the rates do not conform to the principles and guidelines set forth in section 16-19e. In making such determination, the department shall consider the gross and net earnings of such company since its last previous general rate hearing, its retained earnings, its actual and proposed capital expenditures, its advertising expenses, the dividends paid to its stockholders, the rate of return paid on its preferred stock, bonds, debentures and other obligations, its credit rating, and such other financial and operating information as the department may deem pertinent.

(2) The department may conduct a general rate hearing in accordance with subsection (a) of section 16-19, as amended by this act, in lieu of the periodic review and investigation proceedings required under subdivision (1) of this subsection.

(b) In the proceeding required under subdivision (1) of subsection (a) of this section, the department may approve performance-based incentives to encourage a gas or electric company to operate efficiently and provide high quality service at fair and reasonable prices. Notwithstanding subsection (a) of this section, if the department approves such performance-based incentives for a particular company, the department shall include in such approval a framework for periodic monitoring and review of the company's performance in regard to criteria specified by the department, which shall include, but not be limited to, the company's return on equity, reliability and quality of service. The department's periodic monitoring and review shall be used in lieu of the periodic review and investigation proceedings required under subdivision (1) of subsection (a) of this section. If the department determines in the periodic monitoring and review that a more extensive review of company performance is necessary, the department may institute a further proceeding in accordance with the purposes of this chapter, including a complete review and investigation described in subdivision (1) of subsection (a) of this section.