Southern CT Gas Ruling May Benefit Consumers

HARTFORD — State regulators plan to order Southern Connecticut Gas Corp to issue credits to customers to compensate for collecting $15.1 million in excessive profits.

The state Department of Public Utility Control issued a draft decision October 14 that said the Orange-based utility exceeded its ten percent maximum allowable profit level, just as its sister company, Connecticut Natural Gas, did earlier this year.

A July 15 earnings report revealed the company actually earned 13.66 percent for a year, the state said.

Regulators emphasize that overearnings should not be confused with overcharging. Market conditions, paying down debts, and cutting expenses can also affect profits.

Attorney General Richard Blumenthal praised the preliminary decision that could grant his request to immediately reduce Southern Connecticut Gas Company rates by $15 million, relieving consumers who unjustly overpaid for gas service.

Governor M. Jodi Rell said in a statement that the savings will be particularly welcome for consumers who use natural gas to heat their homes.

“With winter approaching quickly and heating expenses rising by the week, I applaud the decision to return to rate-payers any excess earnings by Southern Connecticut Gas Co.,” Gov Rell said in a statement. “The DPUC must continue to be vigilant about the earnings of regulated utilities.”

This decision, if adopted, will return to consumers 100 percent of Southern’s overearnings. The DPUC recently rolled back Connecticut Natural Gas (CNG) rates, which Mr Blumenthal also fought for, after that company collected similar overearnings.

State law requires that the DPUC hold a hearing on the need for an interim rate decrease any time that a public service company has for six consecutive months earned a return on equity that exceeds the DPUC’s authorized levels by at least one percentage point.

“Southern should return 100 percent of its unjust overearnings — immediately — as a result of this decision,” Mr Blumenthal said. “Our fight has won this welcome draft DPUC decision to reduce rates for Southern’s consumers, just as it did for Connecticut Natural Gas ratepayers. Sacrificing overearnings is a small price to pay in tough economic times, as consumers and small businesses are forced to make major sacrifices.

“We will continue to fight for consumers — urging adoption of this draft DPUC decision, and fighting future rate increases that Southern outrageously announced it will seek, even as it enjoyed overearnings,” the attorney general added.

The DPUC will make a final decision on ordering consumer credits later this month. The average credits would be $2.48 to $9.32 months for SCG customers.

Southern Connecticut Gas has about 165,000 customers in 22 communities, mostly along the shoreline.