House Bill No. 7105
Public Act No. 17-138
AN ACT CONCERNING WATER COMPANY RATE ADJUSTMENT MECHANISMS.
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 Subsection (g) of section 16-19 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):
(g) The authority shall hold either a special public hearing or combine an investigation with an ongoing four-year review conducted in accordance with section 16-19a 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] the rolling twelve-month period ending with the two most recent consecutive financial quarters, earned a return on equity which exceeds the return authorized by the authority 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 authority, provided the authority 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 authority deems reasonable. The company shall be required to demonstrate to the satisfaction of the authority 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 the proceeding, the authority may order an interim rate decrease if it finds that such return on equity or rates exceeds a reasonable rate of return or is more than just, reasonable and adequate as determined by the authority. 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 authority or fixed at the conclusion of any appeal taken as a result of any finding by the authority. Such surcharge shall be assessed against customers in such amounts and by such procedure as ordered by the authority.
Sec. 2. Subsection (i) of section 16-262w of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2017):
(i) The amount of the WICA [applied] charged between general rate case filings shall not exceed ten per cent of the water company's annual retail water revenues approved in its most recent rate filing, and shall not exceed five per cent of such revenues for any twelve-month period. The amount of the adjustment shall be reset to zero as of the effective date of new base rates approved pursuant to section 16-19, as amended by this act. [and shall be reset to zero if] If, after any adjustments pursuant to section 16-262y are made, the company exceeds the allowable rate of return by more than one hundred basis points for [any calendar year] the rolling twelve-month period ending with the two most recent consecutive financial quarters, the authority shall establish an earnings sharing mechanism that provides for any earnings that are more than one hundred basis points in excess of the allowed return on equity to be shared equally between ratepayers and shareholders.
Approved June 30, 2017