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August 13, 2024

Rate shock: PURA decision left $265M hole customers are paying back through ‘public benefits charge’

A sample Eversource utility bill.
By Andrew Larson

There’s a new culprit for the rate shock that occurred for many customers when they received their electric bills in July.

The “public benefits charge” on customers’ bills ballooned in July, causing consumers to pay as much as 30% more for their electricity, according to media reports.

The public benefits charge includes the cost of numerous state-mandated programs, including assistance subsidies for low-income customers, energy efficiency and renewable energy.

But another reason for the surge in public benefits costs is the little-known Non-Bypassable Federally Mandated Congestion Charge (NBFMCC). 

According to an Aug. 7 report from the Office of Legislative Research, $265 million was under collected on the federally mandated charge in 2023. 

Now, ratepayers are filling the gap. The undercollection has resulted in an average additional $48 per month charge for residential customers, according to Eversource.

The increase occurred because PURA reduced the estimated cost of the charge to zero last year, instead of using forecasts to estimate the cost as it had done previously, according to Eversource rate case filings.

The charge is collected on electricity bills to “cover certain costs approved by the Federal Energy Regulatory Commission and related costs approved by the Public Utility Regulatory Authority to reduce federally mandated congestion charges and pay for reliability ‘must run’ contracts,” according to state statutes. The charge includes funds for a long-term power purchase agreement with Millstone, a nuclear power plant in Waterford.

Annual NBFMCC costs fluctuate based on natural gas and electric supply prices, which are a function of the competitive market.

Eversource reported an over collection on the federally mandated charge in 2022, which resulted in a roughly $91 million surplus being credited to customers’ bills.

When Eversource brought to PURA’s attention that not budgeting anything for NBFMCC would result in a shortfall, PURA in August 2023 increased the projected cost to $37 million toward the under-recovery – 14% of the $270 million cost estimated by Eversource at the time, filings show.

In a recent rate adjustment, PURA increased public benefit rates to fill the balance of NBFMCC funds.

Eversource said it hopes to engage with PURA with the goal of keeping rates stable for customers.

“Providing stable and predictable rates for customers is something we will continue to propose and advocate for during regulatory proceedings,” the company said in a statement.

A spokesperson for PURA said that, as a quasi-judicial agency, the authority cannot offer comments on matters before it, or speculate on matters that may come before it.  

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