Sec. 16-19. Amendment of rate schedule; investigations and findings by department; hearings; deferral of municipal rate increases; refunds; notice of application for rate amendment, interim rate amend - Connecticut Statutes

      Sec. 16-19. Amendment of rate schedule; investigations and findings by department; hearings; deferral of municipal rate increases; refunds; notice of application for rate amendment, interim rate amendment and reopening of rate proceeding. (a) No public service company may charge rates in excess of those previously approved by the authority or the Department of Public Utility Control except that any rate approved by the Public Utilities Commission or the authority shall be permitted until amended by the authority or the department, that rates not approved by the authority or the department may be charged pursuant to subsection (b) of this section, and that the hearing requirements with respect to adjustment clauses are as set forth in section 16-19b. Each public service company shall file any proposed amendment of its existing rates with the department in such form and in accordance with such reasonable regulations as the department may prescribe. Each electric, electric distribution, gas or telephone company filing a proposed amendment shall also file with the department an estimate of the effects of the amendment, for various levels of consumption, on the household budgets of high and moderate income customers and customers having household incomes not more than one hundred fifty per cent of the federal poverty level. Each electric and electric distribution company shall also file such an estimate for space heating customers. Each water company, except a water company that provides water to its customers less than six consecutive months in a calendar year, filing a proposed amendment, shall also file with the department a plan for promoting water conservation by customers in such form and in accordance with a memorandum of understanding entered into by the department pursuant to section 4-67e. Each public service company shall notify each customer who would be affected by the proposed amendment, by mail, at least one week prior to the public hearing thereon, that an amendment has been or will be requested. Such notice shall also indicate (1) the Department of Public Utility Control telephone number for obtaining information concerning the schedule for public hearings on the proposed amendment and (2) whether the proposed amendment would, in the company's best estimate, increase any rate or charge by twenty per cent or more, and, if so, describe in general terms any such rate or charge and the amount of the proposed increase, provided no such company shall be required to provide more than one form of the notice to each class of its customers. In the case of a proposed amendment to the rates of any public service company, the department shall hold a public hearing thereon, except as permitted with respect to interim rate amendments by subsection (d) and subsection (g) of this section, and shall make such investigation of such proposed amendment of rates as is necessary to determine whether such rates conform to the principles and guidelines set forth in section 16-19e, or 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. The department, if in its opinion such action appears necessary or suitable in the public interest may, and, upon written petition or complaint of the state, under direction of the Governor, shall, make the aforesaid investigation of any such proposed amendment which does not involve an alteration in rates. If the department finds any proposed amendment of rates to not conform to the principles and guidelines set forth in section 16-19e, or to be unreasonably discriminatory or more or less than just, reasonable and adequate to enable such company to provide properly for the public convenience, necessity and welfare, or the service to be inadequate or excessive, it shall determine and prescribe, as appropriate, an adequate service to be furnished or just and reasonable maximum rates and charges to be made by such company. In the case of a proposed amendment filed by an electric, electric distribution, gas or telephone company, the department shall also adjust the estimate filed under this subsection of the effects of the amendment on the household budgets of the company's customers, in accordance with the rates and charges approved by the department. The department shall issue a final decision on each rate filing within one hundred fifty days from the proposed effective date thereof, provided it may, before the end of such period and upon notifying all parties and intervenors to the proceedings, extend the period by thirty days.

      (b) If the department has not made its finding respecting an amendment of any rate within one hundred fifty days from the proposed effective date of such amendment thereof, or within one hundred eighty days if the department extends the period in accordance with the provisions of subsection (a) of this section, such amendment may become effective pending the department's finding with respect to such amendment upon the filing by the company with the department of assurance satisfactory to the department, which may include a bond with surety, of the company's ability and willingness to refund to its customers with interest such amounts as the company may collect from them in excess of the rates fixed by the department in its finding or fixed at the conclusion of any appeal taken as a result of a finding by the department.

      (c) Upon conclusion of its investigation of the reasonableness of any proposed increase of rates, the department shall order the company to refund to its customers with interest any amounts the company may have collected from them during the period that any amendment permitted by subsection (b) of this section was in force, which amounts the department may find to have been in excess of the rates fixed by the department in its finding or fixed at the conclusion of any appeal taken as a result of a finding by the department. Any such refund ordered by the department shall be paid by the company, under direction of the department, to its customers in such amounts as are determined by the department.

      (d) Nothing in this section shall be construed to prevent the department from approving an interim rate increase, if the department finds that such an interim rate increase is necessary to prevent substantial and material deterioration of the financial condition of a public service company, to prevent substantial deterioration of the adequacy and reliability of service to its customers or to conform to the applicable principles and guidelines set forth in section 16-19e, provided the department shall first hold a special public hearing on the need for such interim rate increase and the company, at least one week prior to such hearing, notifies each customer who would be affected by the interim rate increase that such an increase is being requested. The company shall include the notice in a mailing of customer bills, unless such a mailing would not provide timely notice, in which case the department shall authorize an alternative manner of providing such notice. Any such interim rate increase shall only be permitted if the public service company submits an assurance satisfactory to the department, which may include a bond with surety, of the company's ability and willingness to refund to its customers with interest such amounts as the company may collect from such interim rates in excess of the rates approved by the department in accordance with subsection (a) of this section. The department shall order a refund in an amount equal to the excess, if any, of the amount collected pursuant to the interim rates over the amount which would have been collected pursuant to the rates finally approved by the department in accordance with subsection (a) of this section or fixed at the conclusion of any appeal taken as a result of any finding by the department. Such refund ordered by the department shall be paid by the company to its customers in such amounts and by such procedure as ordered by the department.

      (e) If the department finds that the imposition of any increase in rates would create a hardship for a municipality, because such increase is not reflected in its then current budget, or cannot be included in the budget of its fiscal year which begins less than five months after the effective date of such increase, the department may defer the applicability of such increase with respect to services furnished to such municipality until the fiscal year of such municipality beginning not less than five months following the effective date of such increase; provided the revenues lost to the public service company through such deferral shall be paid to the public service company by the municipality in its first fiscal year following the period of such deferral.

      (f) Any public service company, as defined in section 16-1, filing an application with the Department of Public Utility Control to reopen a rate proceeding under this section, which application proposes to increase the company's revenues or any rate or charge of the company by five per cent or more, shall, not later than one week prior to the hearing under the reopened proceeding, notify each customer who would be affected thereby that such an application is being filed. Such notice shall indicate the rate increases proposed in the application. The company shall include the notice in a mailing of customer bills, unless such a mailing would not provide timely notice to customers of the reopening of the proceeding, in which case the department shall authorize an alternative manner of providing such notice.

      (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 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. 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 the proceeding, the department 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 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.

      (h) The provisions of this section shall not apply to the regulation of a telecommunications service which is a competitive service, as defined in section 16-247a, or to a telecommunications service to which an approved plan for an alternative form of regulation applies, pursuant to section 16-247k.

      (1949 Rev., S. 5409; 1969, P.A. 217; 1972, P.A. 192, S. 1; P.A. 74-216, S. 2, 8; P.A. 75-486, S. 8, 69; P.A. 77-121; 77-614, S. 162, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 55, 348; P.A. 83-190, S. 1-3; P.A. 84-113, S. 1, 2, 4; 84-342, S. 9, 13; 84-546, S. 49, 173; P.A. 85-33, S. 1; P.A. 87-202, S. 1; 87-331, S. 1, 4; P.A. 89-327, S. 5, 7; P.A. 94-83, S. 12, 16; 94-242, S. 2, 9; P.A. 98-28, S. 89, 117; P.A. 00-17, S. 1; P.A. 01-49, S. 4.)

      History: 1969 act allowed suspension of effective date of increase for 150 days rather than 120 days; 1972 act added provisions re deferment of increase to municipalities if increase would cause budget difficulties; P.A. 74-216 added special provisions re rate increases for gas and electric companies; P.A. 75-486 replaced public utilities commission with public utilities control authority, clarified and rearranged provisions, allowed company to charge rates higher than those previously approved under certain circumstances and made interim rate provisions applicable to all public service companies rather than to gas and electric companies only; P.A. 77-121 required that companies notify customers of rate amendment request by mail before public hearing in Subsec. (a); P.A. 77-614 and P.A. 78-303 replaced authority with division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 80-482 made division an independent department and deleted reference to abolished department of business regulation; P.A. 83-190 amended Subsec. (a) to require notice of proposed amendment one week prior to hearing and indication whether amendment would increase any rate or charge by at least 20%, amended Subsec. (d) to establish notice requirement for proposed interim rate amendments and added Subsec. (f) to establish notice requirement for any application to reopen a rate proceeding, which application proposes to increase company's revenues or any rate or charge by at least 5%; P.A. 84-113 amended Subsecs. (a) and (b) to authorize department to extend deadline for issuing a final decision on a rate filing by 30 days, to 180 days; P.A. 84-342 amended Subsec. (a) to require filing of estimate of effects of amendment and adjustment of estimate by department; P.A. 84-546 confirmed action of the Revisors in adding P.A. 83-190, S. 1 as Subsec. (f); P.A. 85-33 amended Subsec. (a) to require each public service company to include, in notice of proposed amendment, department telephone number for information on hearing schedule; P.A. 87-202 amended Subsec. (a) to require water companies filing proposed rate amendments to submit water conservation plans; P.A. 87-331 added Subsec. (g) re interim rate decrease and Subsec. (h) re effects of Tax Reform Act of 1986; P.A. 89-327 amended Subsec. (a) requiring that water conservation plan be in accordance with the memorandum of understanding; P.A. 94-83 added new Subsec. (i) re applicability to telecommunications service which is competitive or to which an approved plan for an alternative form of regulation applies, effective July 1, 1994; P.A. 94-242 deleted former Subsec. (h) re review of the effects of the federal Tax Reform Act of 1986, necessitating relettering of new Subsec. (i) added by P.A. 94-83 as (h), effective June 2, 1994; P.A. 98-28 amended Subsec. (a) by adding electric distribution companies, effective July 1, 1998; P.A. 00-17 amended Subsec. (g) by authorizing the department to combine investigation with ongoing four-year review or with general rate hearing as an alternative to a special public hearing and by making conforming technical changes; P.A. 01-49 amended Subsec. (g) to make technical changes.

      See Sec. 16-11 re condition of plant, equipment and manner of operation of public service companies.

      See Sec. 16-19h re reopening of water company rate proceedings.

      See Sec. 16a-49 re conservation and load management program.

      This and next section compared. 91 C. 138. Nature of power to regulate rates; what considered in determining their reasonableness; discrimination. Id., 692. Power of commission to change rate fixed by contract between a utility and a municipality. 101 C. 158. Cited. 103 C. 206. Establishment of changed rate schedule is not conditioned upon prior approval by commission. 132 C. 497, 509. Power to direct suspension of rate schedule. Id., 510. Cited. 158 C. 626. Cited. 159 C. 327. Cited. 166 C. 328. Cited. 169 C. 344. Cited. 174 C. 258. Cited. 176 C. 191. Cited. 196 C. 451. Cited. 216 C. 627. Cited. 219 C. 121. Cited. 234 C. 624.

      Cited. 19 CS 359. Scope of commission's power in determining rate schedules. 21 CS 69. Fact that commission did not take into consideration tax-free nature of dividends paid to corporation owner of a public utility in setting rate schedule of such utility, held not to invalidate action of commission. Id. Rates could not be so low as to be confiscatory or so high as to exceed value of service to the consumer. What constitutes reasonable rate is primarily question of fact, depending largely on circumstances of particular case. 24 CS 441. Proposal filed must be amendment of existing rate schedule. 29 CS 379. Cited. 30 CS 149. Cited. 31 CS 65. Cited. 34 CS 172. Cited. 40 CS 520.

      Subsec. (a):

      Cited. 183 C. 128. Cited. 188 C. 90.

      Subsec. (g):

      Department's authority to order interim rate reduction is discretionary and statute does not require an interim rate reduction hearing to result in direct cash benefit to taxpayers. Department decision to allow power company to apply part of its projected over-earnings toward accelerated amortization of certain regulatory assets as part of interim rate decrease found to be within department's authority. 252 C. 115.