STATE OF CONNECTICUT

PUBLIC UTILITIES REGULATORY AUTHORITY

PURA INVESTIGATION INTO : DOCKET NO. 17-12-03RE04

DISTRIBUTION SYSTEM PLANNING :
OF THE ELECTRIC DISTRIBUTION :
COMPANIES – ZERO EMISSION :
VEHICLES :
:
PURA INVESTIGATION INTO : DOCKET NO. 21-09-17
MEDIUM AND HEAVY-DUTY :
ELECTRIC VEHICLE CHARGING : April 16, 2024
:
:

MOTION FOR MODIFICATION AND CLARIFICATION

ON EV PROGRAM COST RECOVERY

I. INTRODUCTION

Pursuant to Conn. Gen. Stat. §§ 16-9,1 16-11 and 16-244i, the Connecticut Light and Power

Company d/b/a Eversource Energy (“Eversource” or the “Company”) submits this motion to the

Public Utilities Regulatory Authority (“PURA”) to request modification and clarification on cost

recovery related to Eversource’s support of electric vehicle (“EV”) programs administered by

PURA, including the light-duty EV (“LD-EV”) charging program initiated in Docket No. 17-12-

03RE042 and the medium and heavy-duty electric vehicle (“MHD-EV”) program under

consideration in Docket No. 21-09-17.3 In this motion, Eversource requests a modification of

PURA’s rate treatment for the LD-EV Program in order to establish a secure, timely and

predictable framework for the reimbursement of costs for both the LD-EV and MHD-EV programs

1
Conn. Gen. Stat. § 16-9 states that “Said authority may, at any time, for cause shown, upon hearing had after
notice to all parties in interest, rescind, reverse or alter any decision, order or authorization by it made.”
2
Docket No. 17-12-03RE04, PURA Investigation into Distribution System Planning of the Electric
Distribution Companies – Zero Emission Vehicles, July 14, 2021.
3
Docket No. 21-09-17, PURA Investigation into Medium and Heavy-Duty Electric Vehicle Charging.
(together, the “EV Programs”), through the alignment of program spending with a rate treatment

that provides timely and adequate recovery. Eversource also requests that PURA identify the legal

standard by which PURA will review and approve that recovery. Specifically, Eversource requests

that PURA authorize recovery of EV program costs on a contemporaneous basis through the

annual revenue adjustment mechanism (“RAM”), including carrying charges on all deferred costs

at the weighted average cost of capital (“WACC”) from the time of cost incurrence, and for

articulation by PURA of the standard PURA shall apply to determine that such costs are eligible

for recovery.4

As explained below, this motion is necessitated by PURA’s final decision, dated March

15, 2023, in Docket No. 22-07-01, Application of Aquarion Water Company of Connecticut to

Amend its Rate Schedules (“Docket No. 22-07-01”) (“Aquarion Rate Decision”); PURA’s final

decision on August 25, 2023, in Docket No. 22-08-08, Application of The United Illuminating

Company to Amend its Rate Schedules (“Docket No. 22-08-08) (“UI Rate Decision”), and

arguments made by PURA to the Connecticut Superior Court in PURA’s Supplemental Brief

submitted on March 22, 2024, in Aquarion Water Company of Connecticut v. Connecticut Public

Utilities Regulatory Authority, Docket HHB-CV-23-6078177S (“PURA’s Supplemental Brief”).

Due to these punitive rate decisions and statements by PURA to the Superior Court, Eversource is

concerned that continued utilization of limited capital resources in support of the EV Programs is

4
PURA has previously concluded that it has the authority to authorize an EDC to recover in a RAM reconciling
rate the cost of a state-mandated program even if there is no statute that expressly authorizes recovery of such cost in
a RAM rate component. For example, in Docket No. 17-12-03RE03 PURA implemented an energy storage program
under Section 2 of Public Act 21-53. Section 2 of P.A. 21-53 is silent on which specific rate mechanism will be used
to reimburse public service companies for their program costs. See, e.g., Docket No. 17-12-03RE03, PURA
Investigation Into Distribution System Planning Of The Electric Distribution Companies – Electric Storage, July 28,
2021 Decision at Pg. 49 (authorizing recovery of the costs to implement a state-mandated energy storage program in
the reconciling NBFMCC rate.) Section 3 of P.A. 21-53 contains specific text authorizing cost recovery in a RAM
rate, but Section 3 of that Act pertains to a separate energy storage procurement program administered by DEEP; not
PURA. (Id. at fn. 8, stating “Section 3 of PA 21-53 gives DEEP the authority to procure energy storage projects apart
from the Program authorized herein.”)

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inadvisable, whereas the Company’s available capital resources are necessary to sustain the safety

and reliability of the electric distribution system.

By this Motion for Modification and Clarification, Eversource seeks to resolve the

ambiguity and risk that PURA has created through its two rate decisions; its Supplemental Brief

to the Superior Court; and other decisions and public statements. To date, the Company has

expended tens of millions of dollars to pay out customer incentives and to otherwise execute on

PURA’s regulatory construct for the deployment of electric vehicle infrastructure through the LD-

EV Program, as originally authorized in Docket 17-12-03RE04. Looking forward, as additional

dollars are added to the Company’s account, the combined effect of PURA’s rate decisions and

public statements regarding PURA’s alleged discretion to deny recovery of even prudently

incurred costs, jeopardizes continuing deferrals created for the purpose of funding non-distribution

initiatives such as the EV programs, thereby discouraging further funding of the program.

As it stands, Eversource has already paid out to customers nearly $40 million of program

incentives and has committed another $22 million to customers seeking to participate in the LD-

EV program. These amounts are accounted for as deferred assets, and represent dollars spent today

by Eversource on the promise of a future review by PURA and ultimately, reimbursement by its

customers. This promise of future recovery – for increasing amounts – is called into question by

PURA’s regulatory decisions and arguments before the courts. Eversource is a committed

supporter of EV adoption and the Eversource Team works tirelessly every day to support

Connecticut’s ambitious clean energy initiatives. However, Eversource simply cannot continue to

utilize its limited capital resources in support of these incremental, non-reliability-based programs,

particularly if there is a perceived increase in the level of risk caused by PURA’s ongoing actions

to discourage further investment by utilities.

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 Authorizing cost recovery through the RAM will provide a secure and reliable path to

provide revenue in support of Eversource’s funding of these programs for the benefit of customers

and to further the State of Connecticut’s clean energy goals. If PURA declines to modify the rate

treatment formerly established Docket No. 17-12-03RE04 for the LD-EV program, or to provide

timely and adequate cost recovery for both the LD-EV and MHD-EV programs, as requested in

this Motion, it will be necessary for Eversource to limit deployment of available cash resources to

utility operations and core capital programs that are critically needed to maintain safe and reliable

electric distribution service. Eversource cannot put vital capital resources at risk over a number of

years, in material amounts exceeding current levels, while PURA has consistently asserted that it

is not bound by law to allow recovery of prudently incurred costs through customer rates, nor to

review costs in accordance with an objective, discernible legal standard.

Accordingly, Eversource is currently preparing to suspend funding of the EV Programs as

of May 22, 2024, pending a decision by PURA establishing a secure, timely and predictable

recovery path forward for EV program expenditures through the RAM, along with an objective

standard applicable to PURA’s cost review.

II. DISCUSSION

A. The Aquarion Rate Decision Created Substantial Risk for Recovery of Deferred
Costs, Emphasized by PURA’s Supplemental Brief to the Superior Court.

At the time that Aquarion filed its rate case, on August 29, 2022, the principal drivers of

Aquarion’s $35.3 million revenue deficiency were: (1) the cost of completed capital projects

placed into service for the benefit of customers since the test year for its prior, 2013 base-rate

proceeding, but not yet included in base rates for recovery ($266 million); and (2) increased

operating expenses caused by a range of factors including, but not limited to, inflation and the cost

of compliance with evolving regulatory requirements for clean water resources. Aquarion’s 2022

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Rate Application included testimony and exhibits demonstrating that, over the past decade,

Aquarion had successfully met the longstanding objectives of state policy encouraging the

Company to acquire and integrate 19 small water systems; to invest substantial capital into the

replacement of aging water infrastructure and improvement of ancillary water facilities to assure

an adequate quantity and quality of clean water for customers; and to undertake conservation and

efficiency initiatives to control operating costs and promote environmental objectives.

Following a 200-day review process, PURA issued a Proposed Decision on February 16,

2023, rendering a series of determinations purporting to negate the entire $35.3 million rate request

and, instead, reducing base revenues by approximately ($379,365). On February 24, 2023, Aquarion

submitted Written Exceptions challenging the numerous unreasonable and unwarranted decisions

embedded in the Proposed Decision, which by its terms would reduce existing rates ten years after

those rates were last set. Aquarion’s Written Exceptions provided a clear and concise explanation

of several math errors encompassed in the Proposed Decision and asked PURA to correct these

errors, which it did not.

On March 15, 2023, PURA issued the Aquarion Rate Decision. PURA’s decision

established an approved annual revenue requirement effecting a decrease in base revenues of

($1,969,517) instead of ($379,365), implying that Aquarion’s actual cost of providing water

service in 2023 was lower than the cost of providing water service in 2013 by approximately $2

million, which it was not. (Aquarion Rate Decision at 1, 146.) Aquarion’s requested increase in

base rates of $35.3 million was entirely eliminated by PURA through a series of negative

adjustments and arbitrary disallowances that were unaccompanied by an analysis of applicable law

or a fair and unbiased review of the evidentiary record, resulting in an aggregate impact that has

been extraordinarily damaging to Aquarion.

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 For example, among many other arbitrary disallowances, PURA denied recovery of

approximately $1.5 million in conservation expenses deferred in accordance with PURA’s

decision in Docket No. 13-08-16, PURA Investigation of Water and Energy Conservation Programs

Eligible for Costs Recovery during General Rate Cases, July 6, 2016 (“Conservation Decision”). In

this decision, PURA authorized deferred “regulatory asset” treatment for any new expenses the

Company may incur to limit the consumption of water, provided that the Company “implements [such

programs] and demonstrates that the expenses for such programs were reasonable and prudent.”

(Conservation Decision at 2-3). The Conservation Decision was implemented pursuant to Public Act

13-78, Section 2. Section 2 of Public Act 13-78 expressly authorized Aquarion to recover its

“reasonable and prudent” conservation program expenses. Although expressly authorized by statutory

law for recovery upon a showing that such costs were “reasonable and prudent,” PURA failed to apply

that legal standard in denying recovery of 50 percent of the deferred amount and, in addition, argued

to the Superior Court on appeal that PURA is not required to give any credit to the Aquarion witness

testifying on the reasonableness of the cost, in any event.5

On several issues on appeal in Docket No. 22-07-01, PURA was unable to even provide a

defense, for example, conceding that it had erred in its mathematical computation for state and

federal income tax, which would have eliminated the rate reduction had it been corrected in the

final Aquarion Rate Decision. This mathematical error was shown in detail in Aquarion’s Written

Exceptions, submitted to PURA on February 24, 2023 in Docket No. 22-07-01 (pages 15-17). Yet,

PURA failed to correct this error in its final decision, instead waiting until its brief on appeal to

admit error, thereby eliminating the entire $2 million rate reduction that PURA attempted to

5
See, Brief of the Connecticut Public Utilities Regulatory Authority, November 9, 2023, pages 39-40,
Aquarion Water Company of Connecticut v. Connecticut Public Utilities Regulatory Authority, Docket HHB-CV-23-
6078177S.

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institute on March 15, 2023, in Docket No. 22-07-01, which would have succeeded absent the stay

granted by the Superior Court on May 25, 2023. This type of sheer unwillingness to acknowledge

a mistake that would have caused an unwarranted $2 million rate reduction until it came time to

argue that mistake to the trial court, despite the real harm to the Company and its customers who

would have received a rate reduction and then a rate increase when the mistake was later corrected,

exemplifies the utter absence of integrity in the current regulatory environment.6

As the Company’s appeal to the higher court is pending, the Company is left with PURA’s

statement to the court of its perceived ratemaking power -- discussed in PURA’s Supplemental

Brief to the Trial Court, submitted March 22, 2024. In that brief, PURA put forth several assertions

that convey an intent to continue to render rate decisions on an arbitrary, unreasonable and

unpredictable basis, including the following:

The requirement that the level and structure of rates must reflect prudent and
efficient management of the franchise operation does not mean that PURA can only
adjust a rate application if it first conducts a prudence test on every cost item.

PURA Supplemental Brief at 3.

With respect to prudence, GenConn’s key holding is that even if a cost can be
considered prudent, PURA has the authority to conclude that it may not be properly
recovered from consumers.

Id. at 5.

Indeed, Plaintiff’s contentions regarding prudence are simply an attempt to

improperly shift its statutory burden onto PURA. As PURA’s brief explained,
Conn. Gen. Stat. § 16-22 un-mistakably requires that “[a]t any hearing involving a
rate … the burden of proving that said rate under consideration is just and reasonable
… shall be on the public service company.” § 16-22.

Id. at 6.

6
As the necessary first step in the legal appeal process, Aquarion appealed PURA’s final decision in that
proceeding to the Superior Court, New Britain, in Docket HHB-CV-23-6078177S, decided by order of the Trial Court,
issued on March 25, 2024. The Trial Court dismissed nine of the Company’s twelve claims and the Company has
appealed this decision to the Connecticut Appellate Court, pending a requested transfer to the Connecticut Supreme
Court. Eversource plans to see this process through to its final resolution.

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 If a utility has the burden under Conn. Gen. Stat. § 16-22 to demonstrate that its proposed

rates are “just and reasonable,” and PURA has unfettered discretion to ignore the applicable legal

standard – imposed by statute and federal constitutional law – as well as any testimony of the

utility’s witness testifying as to the reasonableness of cost incurrence, then it is virtually impossible

for a utility to meet its burden, or to know – years in advance – that funds expended in furtherance

of an EV program are secure and will be reviewed in accordance with an applicable legal standard

or a full and fair consideration of the record evidence.

Moreover, PURA’s statements to the Trial Court convey a complete disregard and

misunderstanding of the legal framework supporting cost recovery by a regulated utility. In

particular, these arguments assert that utilities have a burden under Conn. Gen. Stat. § 16-22 to

prove that a rate under consideration is “just and reasonable,” but then denies that there is any particular

legal standard that applies to one cost or another that the utility would have notice of, prior to a rate

proceeding. Instead, PURA asserts that it is bound only by a requirement to make sure that its ultimate

“decision-making process was conducted pursuant to the appropriate process and that the outcome of

the process reflects reasoned decisionmaking, which is a reasoned application of relevant statutory

provisions and standards to the substantial evidence on the administrative record.” (PURA

Supplemental Brief at 6). This perspective on the legal requirements applicable to PURA creates a

result where there is considerable doubt and uncertainty as to whether increasing deferral amounts

beyond current levels would cause that investment to be at risk and as to whether appropriate legal

standards will be applied to the recovery of future costs, instead of just any “relevant” standard that

PURA selects at the time of its decisionmaking -- if PURA even applies a standard, which it may not

as demonstrated in the Aquarion and UI rate cases.

As a result, the Aquarion Rate Decision, the UI Rate Decision and PURA’s erroneous legal

propositions in its Supplemental Brief are destructive to the integrity of the utility ratemaking

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process, which needs clarity, certainty and a clear legal framework upon which utility investment

can rest. PURA’s legal perspective indicates such a pervasive disregard for applicable

constitutional standards, statutory requirements, fundamental due process and factual accuracy as

to call into question the safety of incremental investment in Connecticut, whether for EV or any

other purpose. As Eversource has repeatedly warned, the failure to fulfill legal norms has only

one effect, which is to undermine the integrity of the regulatory process, risking the confidence of

the utility and its investors and, most importantly, the long-term interests of customers and the

State of Connecticut. Accordingly, Eversource is not in a position to dedicate continuing capital

resources to support increasing investment unrelated to the preservation of safe and reliable power

to distribution customers. For additional investment to occur, PURA must modify its rate

treatment and assure a secure, timely and predictable path for PURA’s review and approval of cost

recovery in the future, including a clear and objective legal standard for PURA’s review.

B. PURA’s UI Rate Decision Creates Substantial Risk to Future Recovery of Deferred

Assets.

In the UI Rate Decision, PURA disallowed a substantial amount of UI’s deferred assets

related to environmental remediation, as well as a long-term plan to re-optimize its central

headquarters and other items. PURA also disallowed carrying costs on deferred balances. With

respect to LD-EV costs, PURA initially proposed to similarly disallow UI’s recovery of costs

under the LD-EV Charging Program, initially deciding in its Draft Decision issued in Docket No.

22-08-08, that cost recovery was denied – with prejudice – for UI’s regulatory asset for the LD-

EV Charging Program. The Draft Decision stated that UI “missed its opportunity” to recover

$334,166 in program expenditures through August 31, 2022 because the Authority “previously

directed [UI] to seek recovery of any accrued LD EV Program-related regulatory asset costs in its

next base rate case proceeding (i.e., the instant case).” (Draft Decision at 47). There was no review

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of the costs and no finding that the costs were unnecessary or imprudent. (Id. at 47-48). It is also

not uncommon for there to be a substantial period of time between the incursion of a deferred cost

and approval for recovery of the deferred cost. Office of Consumer Counsel v. Department of

Public Utility Control, 279 Conn. 584, 585-586 (2006) (agency allowed the utility to establish a

deferral in 1993 and approved recovery of the regulatory asset in 2004).

Moreover, in Docket No. 17-12-03RE04, PURA established a cost recovery framework

that included allowance of carrying charges on these costs. Specifically, the Authority stated:

“[t]he carrying charges assessed to the regulatory asset shall be no more than the Company’s last

approved weighted average cost of capital.” (Docket No. 17-12-03RE04, at 45). In that decision,

PURA stated its expectation that costs would be deferred, carrying charges would be assessed, and

that the rate for carrying charges would be the electric distribution company’s last approved

weighted average cost of capital. (Id.).

In the UI Rate Decision, PURA modified its findings on the potential for future recovery

of the deferred asset but left unclear whether UI will ultimately be authorized to recover its deferred

costs for the LD-EV Charging Program.7 PURA restated that UI’s “opportunity to recover” the

deferred costs was in the rate case application. However, PURA then stated:

Nevertheless, the Authority finds that costs associated with the implementation of
a new Program, such as the EV Charging Program, are necessary to ensure both the
initial and the continued success of the program. Accordingly, the Authority will
allow UI to seek recovery of any LD EV Program costs that should have been
submitted for recovery in this proceeding in its next base rate case proceeding.
Additionally, UI shall continue to defer any eligible Program costs incurred after
the Company’s Application filing to the regulatory asset and shall seek recovery
for the regulatory asset in its next base rate case proceeding. For clarity, however,

7
The UI Rate Decision, at 47, denied UI’s request to include prospective EV Charging Program capital
expense.

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 the Authority reminds the Company that it is not pre-approving any LD EV
Program costs herein.8

PURA also denied the recovery of carrying costs on the deferred costs until they are

“deemed prudent” in a future rate case, contravening its prior decision in Docket No. 17-12-

03RE04. On this point, PURA stated:

Also, for the avoidance of doubt, the Authority clarifies the following language
included in the EV Decision stating that “carrying charges assessed to the
regulatory asset shall be no more than the Company’s last approved weighted
average cost of capital.” EV Decision, p. 45. The identified language affirms the
Authority’s planned use of past precedent in applying carrying charges to the
regulatory asset only once it is submitted for recovery and deemed prudent; the
language does not permit the allowance of carrying charges to accrue prior to
submission. Notably, the Authority used “assessed” to indicate the application of
the carrying charge rate at the time the deferred expenses are submitted for recovery
instead of “accrue” as was used in the January 23, 2019 Decision in Docket No. 18-
01-15, which expressly allowed carrying charges on deferred revenues prior to a
prudency determination. See Decision, Jan. 23, 2019, Docket No. 18-01-15, p. 11
(“Such regulatory liability shall accrue carrying costs calculated at UI’s WACC.”
emphasis added).9

Thus, PURA’s decision to disallow a deferral that was not even presented for review in the

case, on the basis that somehow there was an obligation to present that amount, while only months

before PURA had denied Aquarion’s request to return to customers the deferred balance of Excess

Accumulated Deferred Income Tax, deducting that amount from rate base and then subjecting the

regulatory liability balance to Aquarion’s WACC carrying cost, creates complete, utter uncertainty

and arbitrariness in the ratemaking process. (Aquarion Rate Decision, at 106-107). As a result,

PURA’s vacillating and punitive findings on the recovery of deferred assets and the assessment of

carrying costs to deferred assets eliminate the stable, valid legal framework upon which ongoing,

incremental utility investment must rest.

8
UI Rate Decision, at 49 (emphasis added).
9
UI Rate Decision, at 49-50 (emphasis added).

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 C. PURA’s Treatment of Deferred Assets is Inconsistent with Accounting Standards.

In the UI Rate Decision, PURA acknowledged that deferred expenses and regulatory assets

are governed by Generally Accepted Accounting Principles (GAAP) established by the Financial

Accounting Standards Board (FASB) for accounting purposes and the statutory framework under

Conn. Gen. Stat. §§ 16-19, 16-19e, et al., established by the General Assembly for ratemaking

purposes.”10 PURA portrayed that it was endeavoring “to clarify the treatment of deferred

expenses and regulatory assets as they relate to ratemaking,” but instead misstated the accounting

standards. Thus, PURA’s statements on deferred asset accounting in the UI Rate Decision are

flawed, representing findings that were not noticed, tested or discussed in that proceeding and

provide no valid framework for application to deferred balances, such as those associated with the

EV Programs.

Specifically, in the UI Rate Decision, PURA attempts to distinguish a regulatory asset

under ASC 980 (ASC 980-340-25-1 (a)(b)) which is “recognized by the utility based on its

judgment in applying GAAP accounting standards, which consider, among other things, the

actions of the regulator.”11 PURA contends that the GAAP regulatory asset deferral is “deferred

accounting,” while a regulatory asset subject to “a Conn. Gen. Stat 16-19 rate proceeding,” where

recovery has been granted is defined by PURA is a “regulatory asset,”12 which is not correct.

PURA then concludes that “[w]ithin this framework, carrying charges are not permissible on

deferred expenses without explicit prior Authority approval,” and that “carrying charges are

permissible on ratemaking regulatory assets during the recovery period. When a deferred expense

is deemed prudent, under GAAP the utility can conclude that it is a ratemaking regulatory asset

10
UI Rate Decision, at 26.
11
Id. at 26-28.
12
Id.

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that is amortized over a reasonable period of time. At the time the Authority establishes a

recoverable regulatory asset, the Authority may include a return calculation, or carrying charges,

to compensate the Company for the time it will take to fully recover the regulatory asset from

ratepayers (i.e., the amortization period).”13

PURA’s reasoning for not permitting carrying costs prior to a prudency review are: (1) in

PURA’s estimation a “carrying cost” does not meet the definition of an “incurred cost” under ASC

980 and therefore cannot be deferred under GAAP; and (2) the deferral of carrying charges is

inconsistent with general ratemaking principles and would be extraordinary relief upon

extraordinary relief. Neither of these propositions are accurate. Without any record evidence,

PURA found in the UI Rate Decision, that:

First, under ASC 980-340-25-1, an accounting regulatory asset is limited to “an

incurred costs that would otherwise be charged to expense.” Importantly, FASB
distinguishes between “incurred cost” and “allowable costs. See ASC 980-10-20.
Incurred cost is “a cost arising from cash paid out or obligation to pay for an
acquired asset or service, a loss from any cause that has been sustained and must
be paid for.” By contrast, an allowable cost is “all costs for which revenue is
intended to provide recovery” and can “include interest costs and amounts provided
for earnings on shareholders’ investments.” Carrying charges are not assets,
services, or losses that must be “paid for”; therefore, they are not “incurred costs
that would otherwise be charged to expense.” As such, an accounting regulatory
asset recognized by the Company under GAAP is limited to the specific expenses
that were paid for by the utility and authorized for deferred accounting. Any other
costs, including carrying charges, are allowable costs subject to the Authority’s
determination of recovery in a rate proceeding.14

In this passage, PURA is ignoring the fact that – under GAAP – a debt-based carrying cost,

such as carrying charges at the prime rate is, in fact, an incurred cost. The collection lag created

by delaying recovery of significant unforeseen prudently incurred costs of service results in

increased borrowing needs, which are financed with the issuance of debt. The interest expense

13
Id.
14
Id. at 28.

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associated with funding the Company’s operations with additional debt is a “service” that is “paid

for” by the utility and therefore meets the definition of an incurred cost under ASC 980. Thus, a

debt-based carrying cost is an incurred cost under GAAP.

PURA also did not utilize this same reasoning when concluding UI should be allowed

carrying costs for the amortization period approved in the rate case (Ex: Pension Deferral, COVID

Deferral, etc.). Under PURA’s rationale, the prudency determination and approval for recovery

would not make carrying costs an “incurred cost that would otherwise be charged to expense” as

it would not represent “assets, services, or losses that must be paid for.” PURA contends that ASC

980-340-25-1 allows only for the deferral of “incurred costs,” therefore, the subsequent approval

of carrying costs during the recovery period appears to be at odds with PURA’s previous

conclusion. Basically, PURA disallowed carrying costs applied prior to the prudence

determination, saying that GAAP was the reason on the theory that a carrying cost is not an

“incurred cost” under GAAP. However, the prudence conclusion would not change the conclusion

that the carrying costs are not incurred costs under GAAP, and so the prudence determination is

actually irrelevant to the definition of carrying costs. For these reasons, the conclusion that a

carrying cost does not meet the definition of an “incurred cost” under ASC 980 and therefore

cannot be deferred under GAAP, is entirely flawed and inaccurate.

The second reason PURA provided for not supporting the recovery of carrying costs of

UI’s previously deferred regulatory assets was:

[A]llowing carrying charges to accrue on deferred expenses that have not been
subject to scrutiny and prudence review is inconsistent with general ratemaking
principles. The regulatory asset is already an extraordinary form of relief for
utilities as it permits recovery of certain expenses beyond the base distribution
revenue requirement authorized at the time the expense was incurred. Stated
another way, regulatory assets allow recovery of expenses that otherwise would be
borne entirely by the utility. Therefore, expanding the deferred accounting beyond
the actual “incurred costs” prior to a full prudency review and determination of

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 recovery is applying extraordinary relief upon extraordinary relief. Moreover,
enabling the collection of carrying charges on deferred expenses prior to a prudency
review may incent a delay, perhaps indefinitely, in the presentation of costs to the
Authority for review.15

PURA asserts that the inclusion of carrying costs on regulatory deferrals not subject to the

“scrutiny or prudence review” of PURA is not consistent with general ratemaking principles. In

fact, it is common practice in Connecticut for carrying charges to be accrued on under/over

collected balances of deferral mechanisms included in the Rate Adjustment Mechanism

proceeding each year. These carrying costs are accrued throughout the year based on the

under/over recovered balance prior to a prudency review and final order from PURA. For all

deferrals, the utilities are funding customer obligations with debt and equity capital resources and

there is an actual cost that must be accounted for under both GAAP and ratemaking principles.

In Docket No. 17-12-03RE04, PURA stated that it would allow carrying charges on EV

Program costs, stating “[t]he carrying charges assessed to the regulatory asset shall be no more

than the Company’s last approved weighted average cost of capital.” (Docket No. 17-12-03RE04,

at 45). In the UI Rate Decision, PURA modified this approach, although the docket did not pertain

to Eversource; PURA’s intent to reevaluate the EV decision was not noticed; and UI was given no

opportunity to address this decision during the docket. As a result, this decision is further evidence

of the arbitrary nature of PURA’s ratemaking perspective.

D. Eversource Has Already Demonstrated the Need for Recovery through the RAM in
this Docket.

On June 9, 2021, PURA issued a Draft Decision in this docket, Docket No. 17-12-03RE04.

On June 25, 2021, Eversource submitted Written Exceptions outlining the reasons that PURA

should allow recovery through the RAM. Specifically, Eversource cited the following reasons:

15
UI Rate Decision, at 28.

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 (1) Treatment of cost recovery issue differs from the cost recovery method that PURA
established in the straw electric storage program design in Docket No. 17-
1203RE03, which authorized tracked recovery of prudently incurred costs through
the Company’s annual RAM proceeding.16

(2) The EV Program design will result in capital and operating expenditures that are
well in excess of routine course of business distribution expenditures. These
incremental program costs will not be offset by associated cost savings that accrue
to the Company, and additional revenues would not serve as a source of funding
for the program due to the operation of the Company’s full revenue decoupling
mechanism.

(3) The cost recovery treatment established by PURA does not allow the Company to
obtain timely recovery of costs incurred for new business activities and investments
under the Program. The timing and method of recovery would negatively impact
cash flows that the Company relies on to support safe and reliable electric service
for Connecticut customers, unreasonably drawing on the long-term debt and equity
financing that the Company requires to run its business.

(4) The deferral of costs that are typically recovered as annual expenses would increase
the total costs of the program for customers by adding a return component of
expense that would not otherwise occur.

(5) The progressive accumulation of EV Program expenses for multiple years in a

deferred balance could ultimately result in a more rapid escalation of rate impacts
in the years following launch of the EV Program than would occur if expenses were
recovered annually at least up until the completion of the next rate case.

For all of these reasons, Eversource urged PURA to provide timely and adequate recovery

of initial program costs incurred to launch the program, authorizing the recovery of both capital

and expense through a reconciling rate mechanism, subject to appropriate prudence review and

approval by PURA in the RAM docket.

E. PURA’s Procedural Order in Docket No. 21-09-17 Creates Further Risks to EV

Cost Recovery.

On October 11, 2023, PURA issued a Procedural Order and Request for Associated Draft

Tariffs in Docket No. 21-09-17 (“Procedural Order”), which directed each EDC to submit MHD-

16
Docket No 17-12-03RE03 January 5, 2021 Notice of Issuance of Straw Electric Storage Program Design
and Request for Comments at 15.

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EV charging proposals, “as directed in Sections VI.C, VII.A, VII.B, and VII.C of the Procedural

Order no later than January 10, 2024.” The Procedural Order included directives on cost recovery,

where PURA stated that “to the extent that administrative costs, inclusive of fleet advisory service

offerings, are not covered by incremental revenues, PURA directs the EDCs to track such expenses

incurred to be deferred to a regulatory asset, and that “[c]onsistent with the Authority’s practice,

carrying charges shall not accrue on the deferred expenses incurred by the EDCs until such costs

have been submitted for recovery and the authority has made a prudency determination.” PURA

further stated that “carrying charges assessed on the regulatory asset after a prudency review is

conducted shall be no more than the Company’s approved weighted average of cost of capital.”

On January 10, 2024, Eversource and UI submitted their response to the Procedural Order,

addressing each of the elements identified by PURA in the Procedural Order (“Eversource-UI

Response”). The EDCs expressed their strong support for the important goal identified by the

Lamont Administration to deploy electric vehicles on a statewide basis in Connecticut. However,

the EDCs expressed concern that the Procedural Order “does not present a meaningful or

innovative advancement toward that goal and, in fact, largely replicates the status quo.”17

Specifically, the EDCs stated that they have, and will continue to work in good faith and

constructively to help the State develop policy and programs to advance and support EV adoption.

To that end, the Eversource-UI Response “presented a suite of potential program offerings

designed to address certain barriers to MHD adoption that currently exist for the specific segments

PURA has identified as priority-use cases.”18 In addition, the EDCs identified their concerns with

17
Eversource-UI Response, at 4.
18
Eversource-UI Response at 5.

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two key issues raised in the Procedural Order, requiring reasonable modifications if MHD ZEV

electrification offerings are to move forward, one of which relates to cost recovery:

[T]he cost-recovery references stated in the Procedural Order are not reasonably or
thoughtfully calibrated to support the EDCs’ ability to make investments to meet
program objectives. To cure this defect, the EDCs are proposing a cost-recovery
framework that is consistent with Conn. Gen. Stat. § 16-19e and that would
eliminate barriers and enable adoption of MHD EV during this nascent stage of
fleet transition in Connecticut. As explained in this filing, the cost-recovery
framework identified by the EDCs will ensure that costs to support this initiative
will be transparent to customers and will be subject to timely review and scrutiny
by docket participants and PURA.

In the Eversource-UI Response, the EDCs explained that the cost-recovery references

stated in the Procedural Order are not reasonably or thoughtfully calibrated to support the EDC’s

ability to make investments to meet program objectives. To cure this defect, the EDCs proposed

a cost-recovery framework that is consistent with Conn. Gen. Stat. § 16-19e and that would

eliminate barriers and enable adoption of MHD-EVs during this nascent stage of fleet transition in

Connecticut. The cost-recovery framework identified by the EDCs would ensure that costs to

support this initiative will be transparent to customers and will be subject to timely review and

scrutiny by docket participants and PURA.19

As Eversource and UI noted in their January 10, 2024 filing, customer incentives and

support are required in three main areas including: (1) make ready costs, including both customer

and utility make ready; (2) additional customer incentives to incentivize the adoption of EVs,

including overcoming initial capital outlays required of the customer to upgrade its vehicle fleet

19
Eversource-UI Response at 5. The other first key issue addressed by the EDCs is the Procedural Order’s
presumption that: (1) the increased revenue from the kilowatt hours generated by MHD EVs could be sufficient to
cover all or even some of the EDC’s distribution upgrade costs associated with the infrastructure needed to enable
MHD electrification; and (2) if applied as an incentive, the result would be sufficient to motivate a potential fleet to
electrify. Each of these presumptions are without a factual basis. Therefore, in their filing, the EDCs proposed an
improved incentive structure that more directly addresses and has a higher probability to overcome the barriers to
MHD electrification.

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to EV; and (3) administrative costs to develop and support the ongoing operation of the MHD-EV

program, including providing fleet advisory services, among other costs. Because these incentives

should be designed to provide an economic signal supplementary to market forces in order to incite

a particular action, it is not clear how the incentive would be financed without an incremental

funding source, nor how the revenues provided by the participating customer (which will be

reduced by the contemplated incentives) could be assumed to cover the costs of necessary

infrastructure upgrades, where, by design, the revenues will be discounted.

III. REQUEST FOR RELIEF

To date, Eversource has incurred considerable costs devoted to the development of the EV

Programs and these expenditures were incurred reasonably and in good faith to provide customers

with EV incentives. However, the extreme uncertainty that now exists in relation to PURA’s

treatment of increasing amounts of deferred costs, and the lack of a discernible, certain or objective

legal standard that will be applicable to recovery of relatively large-scale deferrals in the future,

prevents Eversource from continuing to devote its limited capital resources to support the EV

Programs without modification and clarification of the rate treatment originally established in

Docket No. 17-12-03RE04. PURA’s decision in Docket No. 17-12-03RE04 states that the EDCs

must petition for modifications to the program delineated in that decision.20 In addition, PURA’s

procedural schedule for Docket No. 21-09-17 indicates that PURA’s final decision is tentatively

scheduled for July 24, 2024, and is unclear whether or to what extent PURA may address the EDC

concerns on cost recovery for the MH-EV Program at that time.

20
Docket No. 17-12-03RE04, at 2, stating EDCs shall seek express written approval from PURA to change
program designs.

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 For these reasons, Eversource requests that PURA provide modification and clarification

that Eversource shall be permitted to obtain recovery of its overall, increasing EV Program costs

as follows:

• Authorize Eversource to defer all continuing EV Program costs, as those costs are
incurred in support of the EV Programs, with carrying costs at the weighted average
cost of capital accruing from the time of cost incurrence;

• Authorize Eversource to recover such deferred EV Program costs on an annual basis,

through the RAM docket; and

• Articulate the standard that PURA will apply in reviewing and approving deferred EV
Program costs for recovery.

Authorizing cost recovery through the RAM is the only option open at this point to reduce

regulatory uncertainty surrounding continuing cost incurrence for the EV Programs and will allow

these important programs to proceed for the benefit of customers and to achieve the State of

Connecticut’s clean energy goals. If PURA is unable to establish a secure, timely and predictable

rate treatment for these continuing (and increasing) program costs, then Eversource cannot expend

additional program funds that are potentially placed at risk as a result of PURA’s ratemaking

decisions, notwithstanding all of the good work performed by the dedicated and resourceful

Eversource EV team. In these circumstances, Eversource must focus its limited capital resources

on essential distribution capital programs and cannot support additional initiatives such as the EV

Programs. Moreover, Eversource is not able to extend its balance sheets indefinitely without more

clarity on the timing and nature of recovery, applicability of carrying charges (reflecting the costs

incurred by the EDCs in financing these expenditures prior to recovering them in rates), and the

magnitude and timing of potential expenditures.

Therefore, absent modification and clarification of the rate treatment previously established

in Docket No. 17-12-03RE04, Eversource will suspend its funding of the EV Programs on May

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22, 2024, pending a decision by PURA to establish a secure, timely, and predictable rate treatment

for going forward investment in the EV Programs.

RESPECTFULLY SUBMITTED,
THE CONNECTICUT LIGHT AND POWER
COMPANY dba EVERSOURCE ENERGY

By: Vincent P. Pace

Vincent Pace
Eversource Energy
P.O. Box 270
Hartford, CT 06410-0270
Phone: (860) 665-5426
Fax: (860) 665-5504

Its Attorney

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 CERTIFICATION

This is to certify that, on April 16, 2024, the foregoing document was filed with the Public
Utilities Regulatory Authority, and copies of the foregoing document were served upon each
person designated on the Authority’s official service list in this proceeding in accordance with
R.C.S.A. § 16-1-15.

Vincent P. Pace
Vincent P. Pace
Commissioner of the Superior Court

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