State of Connecticut Office of Consumer Counsel

1. State of ConnecticutOffice of Consumer Counsel NECPUC 2005

2. Who We Are • Independent ratepayer advocate for Connecticut’s utility consumers • In existence since 1975 • Staff of 12 which includes: Attorneys, Financial and Administrative staff

3. What We Do • Actively involved in regulatory work in the Water, Electric, Natural Gas, Telecommunications and Cable Industries • The scale of our work ranges from a 50 customer water utility to The Connecticut Light & Power Company, which serves approximately 1.2 million customers • Types of Water related dockets that we are involved in include rate increase requests and land sales

4. Our Role In Regulation • Lowest cost for consumers while providing quality service that meets health and safety standards • The OCC’s role is not to take positions that put the Utility in a situation where it cannot perform its public service obligation • Can create conflicts with ratepayers who want bare bones rates • Jewett City Water Company, OCC advocated a 90% rate increase due to the installation of a filtration plant

5. Regarding Land Sales • Recent Developments • Many environmental groups have emerged in the Utility area to promote open space (Connecticut Fund for the Environment, Nature Conservancy and Woodlands Coalition) • Some groups have proposed a surcharge on water bills for future land acquisition (legislation failed) • Presents new issues from a consumer advocate standpoint as all customers would be asked to fund land acquisition • Must make sure the needs of all customers are heard, not just special interest groups

6. Land Sales, Cont. • Thoughts On Surcharge • Under a proposed surcharge mechanism, details need to be worked out • Fund management • Smaller Utilities will not generate significant funds • Need for customer input • Possible system by system referendum on this approach • Gauge the need for this approach and how it fits with local municipality open space plans

7. Land Sales, Cont. • Next Steps For The Surcharge • Endangered Lands Coalition has asked the Connecticut Water Planning Council to fully investigate the surcharge approach • Expect significant stakeholder involvement in this process • Likely back to the Legislature in next years session

8. Land Sales and The Consumer • The Typical Consumer • Usually very little individual consumer involvement in land sales • OCC wants to insure that maximum benefit accrues to the ratepayer • Recent decisions have assured that consumers share in a fair allocation of land sale gains through a defined offset to ratebase

9. Land Sales, Cont. • Getting The Message To The Consumer • Current land sale methodology • The typical consumer cares about the bottom line • In addition to open space benefits the economic benefits of land sales need to be conveyed • With the Aquarion land sale customers received approximately $1,000,000 in annual benefits

10. Rate Increases • Customers are most vocal about water rate increases than any other type of utility rate increase • Largest turnout at public hearings • Some have unrealistic expectations • water “should be free” philosophy • linking the rate increase to salary or social security increases • Customers do not always have a clear understanding of why rate increases are needed

11. How to Get The Point Across To Consumers • Education is key • More upfront communication would lead to a greater understanding of the need for a rate increase • Informational Town meetings • More detailed mailing of rate increase request, not just boilerplate notice of increase • Need to explain ratemaking process • Some have the perception that utilities are trying to recapture expenses in one rate case • Capital additions depreciated over several years • Elements of rate increase should be identified • i.e. new plant accounts for 50% of rate increase • New health requirements imposed on the Utility

12. How to Get The Point Across To Consumers • Have staff ready to present overview of rate case components at the public hearing • Not required but a good public relations tool • Take questions and tailor answers to the customers level of understanding(depreciation can be confusing) • Focus should be on health, quality and safety aspects of water • Let them know what they are paying for that affects them personally • Increased fire protection, correction of discoloration, reduction in main breaks

13. Utility Approaches That Do Not Work • Cost comparisons (cable TV, Coffee) do not seem to impress ratepayers • Highlighting the length of time between rate cases is not a free pass

14. Outside The NormalRate Case • The OCC also has other avenues whereby it can work with Utilities to facilitate rate increases • Settlements • Avoid prolonged litigation • Saves ratepayers money through reduced rate expenses (legal, accounting, etc.) • Streamlined rate cases • Simplified “fill in the blank” format tied to line items in the annual report • Currently available to class C water utilities (up to $100k in annual revenues) • Possible future expansion to Class B utilities (up to $500k in revenues)

15. Questions?