THE CONNECTICUT LIGHT & POWER CO. v. PUBLIC UTILITIES REGULATORY AUTHORITY et al., SC 21123

Judicial District of New Britain

Administrative Appeal; Rate Setting Pursuant to General Statutes § 16-19e; Interpretation of Settlement Agreement; Whether Settlement Agreement Provides for Recovery of Storm Related Costs as "Core Capital Projects." In 2018, the plaintiff, The Connecticut Light and Power Company, doing business as Eversource Energy (Eversource), sought to amend its electric distribution rates. Around that same time, Eversource incurred costs related to storm damage. Eversource and the defendant, the Public Utilities Regulatory Authority (PURA), entered into a 2018 settlement agreement to resolve the rate case. That agreement provided that Eversource, after spending a certain amount on capital projects, could recover through its base electric rates the cost of improving certain infrastructure that was part of a "core capital program." The agreement further provided that Eversource could recover storm costs incurred after December 16, 2016, either during the next rate review or earlier, if Eversource initiated a separate contested case. Eversource initiated a contested case to recover those costs but failed to seek review of over $17 million in capital costs that it presumed would be recovered through the base rate adjustment under the 2018 settlement agreement. PURA disallowed those costs and rejected Eversource's claim after finding that the storm costs "did not constitute core capital additions" under the 2018 settlement agreement. In support of its argument that those costs were recoverable, Eversource relied on a footnote in the settlement agreement referencing certain expert testimony that Eversource claims supports its position that the storm costs can be recovered as part of the "core capital program." The trial court disagreed, dismissed Eversource's appeal in part, and remanded the matter to PURA. The court concluded that "PURA has the discretion" under General Statutes § 16-19e, which pertains to rate setting, "to resolve this matter as it has done" and, moreover, that "there is substantial evidence to sustain PURA's final decision." The court remanded the case to PURA with respect to the appropriate interest rate for certain charges, and Eversource appealed to the Appellate Court (223 Conn. App. 136). That court dismissed Eversource's appeal for lack of a final judgment, and, on remand, PURA issued a supplemental decision regarding the interest rate. Eversource withdrew the remaining count of its complaint, appealed again to the Appellate Court, and the Supreme Court transferred this appeal to itself pursuant to General Statutes § 51-199 (c). Eversource argues that PURA "ignore[ed] the plain language of the contractual terms" and "did not have discretion to violate the settlement agreement," which it maintains allows for the recovery of these storm related costs. Eversource contends that the parties specifically had anticipated the recovery of "storm related capital work" in the settlement agreement and that a proper interpretation of that agreement, which Eversource asserts is plain and unambiguous, leads to the same conclusion. Moreover, Eversource highlights that "PURA never found [that] any of the storm related capital projects [were] imprudent."