March 6, 2008
DPUC COMMISSIONERS AND RATE-SETTING AUTHORITY
By: Kevin E. McCarthy, Principal Analyst
You asked for information on the backgrounds on the commissioners of the Department of Public Utility Control (DPUC). You also wanted to know about the scope of the DPUC's authority to regulate utility rates. Specifically, you wanted to know whether DPUC could reject a request of an electric company to increase its rates, and what the company's options would be if this were to occur.
The DPUC has five commissioners. Three are lawyers, three are former legislators, and two are former legislative staffers. Information about the commissioners is available at www.state.ct.us/dpuc/commbio.htm.
DPUC's scope of authority over rates varies by industry. DPUC must follow the procedures specified in CGS § 16-19 and the principles established in CGS § 16-19e in regulating utilities under its jurisdiction. Among other things, these laws require DPUC to ensure that utility rates are “just, reasonable and adequate” and establish ratemaking principles.
DPUC can reject a utility's proposed rate increase if it finds that it does not meet the statutory standards. A utility can seek to modify the DPUC's draft decision, ask it to reconsider its final decision, or appeal the final decision to the courts.
BACKGROUND OF DPUC COMMISSIONERS
Donald Downes (chairperson)
Downes, an attorney, was first appointed a DPUC commissioner on July 1, 1997. He is currently in his third term, which runs from July 1, 2005 to June 30, 2009. Prior to his appointment to the DPUC, Downes held a variety of positions in state and federal government. He served as Deputy Secretary for the Office of Policy and Management (OPM) from 1995 to 1997. He was also Under Secretary of Intergovernmental Policy and Under Secretary for Management and Performance Evaluation at OPM. From 1987 to 1995, he was chief of staff of the House Republican Caucus. From 1982 to 1987, he was the district director for former congresswoman Nancy Johnson. Downes began his career in public service in 1979, as House Minority Counsel in the Connecticut General Assembly.
Downes was born in Hartford and educated in Glastonbury public schools. He received a Bachelor of Arts degree from George Washington University in Washington, D.C. in 1971 and his Juris Doctorate from the University of Connecticut School of Law in 1975.
John Betkoski III (vice-chairperson)
Betkoski was initially appointed a commissioner on July 1, 1997. His current term expires June 30, 2009.
Before joining DPUC, he served as a state representative for the 105th District (Ansonia, Beacon Falls, and Seymour) from 1987 to 1997, and was House chairman of the Commerce Committee from 1993 to 1997.
Betkoski was the Waterbury Salvation Army's Director of Human Services from 1989 to 1997. He held various administrative positions in human services agencies from 1974 to 1989. He served on the Beacon Falls Board of Selectmen from 1981 to 1987 and its Board of Finance from 1979 to 1981.
Betkoski was born in Waterbury and raised in Beacon Falls. He received his B.A. from Sacred Heart University, and his MS and his Sixth Year Diploma in Advanced Studies in Administration and Supervision from Southern Connecticut State University.
Ann C. George
George was first appointed on July 1, 2003. She was reappointed to a second four-year term starting on July 1, 2007. Prior to her service at DPUC, George served as the governor's special counsel on energy, chief legal counsel and deputy legal counsel. She also served as Legislative Attorney for the Department of Children and Families and the Connecticut State Senate Republican Office.
George received a Bachelor of Arts degree from the University of Maryland at College Park and a Juris Doctor degree from Georgetown University Law Center in Washington, D.C.
Anthony J. Palermino
Palermino is in his second term as commissioner, which expires June 30, 2011. Before joining DPUC, Palermino had a private law practice in Hartford (since 1980) and ran a consulting firm, PAL Associates, LLC, (since 1991). Palermino has held a variety of positions in state and municipal service. These include state representative for the 5th District (Hartford and Wethersfield), 1983 to 1990; co-chair of the legislature's Bonding Subcommittee from 1987 to 1990; Special Counsel to the Connecticut General Assembly, 1990; Chair of the Building Committee of the Connecticut Convention Center Authority, 1996 to 1998; member of the Connecticut Commission on Hospitals and Health Care, 1980 to 1981; and City of Hartford Special Counsel, 1975 to 1976.
Palermino was born in Hartford. He received a Bachelor of Arts degree, magna cum laude, from the College of the Holy Cross in 1972 and a Juris Doctor degree, cum laude, from the University of Connecticut School of Law School in 1975.
James T. Fleming
Fleming was appointed to the DPUC on September 7, 2007. He previously served as Commissioner of the Department of Public Works from September 2003 to September 2007, and was Commissioner of the Department of Consumer Protection from 1999 to 2003. He has extensive experience in legislative and administrative government service and the private sector. For 18 years, Fleming served in the Connecticut General Assembly and was majority leader of the State Senate, holding numerous committee leadership positions. He also has taught Government at Northwestern Connecticut Community College. In the private sector, Fleming held key communications positions for ABB/Combustion Engineering of Windsor for 20 years.
He is a graduate of the Eisenhower College of the Rochester Institute of Technology and earned his masters at Trinity College. He attended the Executive Education Program at the John F. Kennedy School of Government.
SCOPE OF DPUC AUTHORITY OVER RATES
DPUC's scope of authority over rates varies by industry. For example, its jurisdiction over cable TV rates is significantly limited by federal law, as discussed in OLR report 2008-R-0093. In addition, DPUC generally only has jurisdiction over the rates charged by utilities operating at the retail level. It does not have jurisdiction over the rates charged by companies operating in the wholesale electric and gas industries. These companies are instead regulated by the Federal Energy Regulatory Commission.
DPUC must follow the procedures specified in CGS § 16-19 and the principles established in CGS § 16-19e in regulating utilities under its jurisdiction. Under CGS § 16-19, DPUC must determine whether the rates proposed by a utility are “just, reasonable and adequate” and whether the service it is providing is adequate to the “public convenience and necessity.” In addition, CGS § 16-19e requires DPUC to set rates to be just enough to allow utilities to cover their operating and capital costs, attract needed capital, and maintain their financial integrity, while at the same time providing adequate protection for public interests. DPUC is also bound by federal case law, which among other things bars states from setting rates so low that they result in a confiscation of the utility's property.
REJECTING A PROPOSED RATE CHANGE
Under CGS § 16-19, DPUC must conduct an investigation of a proposed rate change to determine whether it meets the statutory standards. If it finds that the proposed rates are more or less than “just, reasonable and adequate” or that they are inconsistent with the principles of CGS § 16-19e, DPUC must prescribe rates that meet these standards.
As described in OLR report 2007-R-0218, DPUC at times grants utilities a smaller rate increase than they had sought. In at least two cases in the past ten years (Connecticut Natural Gas in 2000 and Aquarion Water Company in 2004), DPUC has ordered utilities to reduce their rates rather than increase them.
UTILITY OPTIONS IF DPUC DENIES A RATE INCREASE
Utilities have several options if DPUC denies a proposed rate increase or grants an increase that is smaller than the one sought. DPUC issues a draft decision in rate cases. The draft decision must be in writing and include the findings of fact and conclusions of law on each issue in the case. Utilities and other participants in the case can file exceptions and DPUC can modify its decision to address their arguments. DPUC typically issues a final decision in a case shortly after it issues the draft decision.
Under the Uniform Administrative Procedure Act, a party in a contested case can ask the agency to reconsider its final decision within 15 days after the decision is mailed or delivered. It can ask for a reconsideration for good cause, which can include (1) an error in fact or law or (2) the discovery of new evidence that materially affects the merits of the case and was not presented in the case for good reason.
Whether or not a utility has sought reconsideration, a person who has been aggrieved by a final agency decision (e.g., a utility denied a proposed rate increase) can appeal to the Superior Court. The court cannot substitute its judgment as to the weigh the evidence presented in the case. It can only overturn an agency's decision under limited circumstances. These include situations where (1) there was a violation of statutory or constitutional law, (2) an agency acted without statutory authority, or (3) the agency was arbitrary, capricious, or abused its discretion. If a utility believes that DPUC violated federal law in its final decision, it can appeal to federal court.