CONNECTICUT LIGHT AND POWER COMPANY v. DEPARTMENT OF PUBLIC UTILITY CONTROL et al.; SC 18641
UNITED ILLUMINATING COMPANY v. DEPARTMENT OF PUBLIC UTILITY CONTROL et al.; SC 18642
Judicial District of New Britain
Utilities; Whether Electric Utility Companies are Statutorily Entitled to Incentive Payments for Procuring Electricity for Less than the Regional Average Price. Pursuant to General Statutes § 16-244c (b) (4) (B), electric utility companies are entitled to receive an annual incentive payment for each of the years from 2004 through 2006 if they procure electricity at an "actual average full requirements service contract" price (actual average contract price) in a given year that is less than the "actual regional average firm full requirements service contract" price (regional average contract price) for that year. In 2005, Connecticut Light & Power (CL&P) and United Illuminating Company (UI) petitioned the DPUC for such incentive payments. In their petitions, the companies requested that the regional average contract price be calculated by utilizing retail rates and proxy groups of New England electric distribution companies. The DPUC agreed that because no regional average contract price existed in New England, it would be necessary to construct such a rate. It further observed, however, that although retail rates for New England companies were available, § 16-244c (b) (4) (B) required that the comparison be between the actual average contract price and the regional average contract price, not the retail rate. Therefore, the DPUC opined that certain adjustments had to be made to the retail rates of the proxy groups to arrive at an adjusted regional retail rate that could be used in place of the regional average contract price. After making such adjustments, the DPUC applied a "margin of error adjustment," which included a 75% "confidence level" component, to those figures. As to CL&P and UI, the DPUC included in their adjusted retail rates compensation they received for providing "transitional standard offer" services under subsection (A) of § 16-244c (b) (4). The DPUC then compared the respective rates and determined that the adjusted regional retail rates for both the CL&P and UI proxy groups were lower than the adjusted retail rates for both companies. Accordingly, the department concluded that CL&P and UI did not qualify for incentive payments. The companies appealed to the Superior Court. Noting that the text of subsection (A) of § 16-244c (b) (4) clearly implies that any compensation paid thereunder should not diminish the company's right to the incentives under subsection (B), the trial court concluded that the DPUC improperly included compensation paid for transitional standard offer services to the companies' adjusted retail rate. Further, the court determined that the DPUC's application of the 75% confidence level component was based on its erroneous conclusion that § 16-244c (b) (4) (A) required a "high degree of certainty" that the incentive payments be earned. The court explained that the statute only requires that the companies' supply price be "less than" the regional average price. Accordingly, the court sustained the companies' appeals. On appeal to the Supreme Court, the DPUC claims, inter alia, that the trial court improperly failed to defer to its construction and implementation of a statute involving very complex and technical regulatory and policy considerations.