Eversource urges PURA to authorize $100 million storm "replenishment" on May 1 to smooth future rate swings

Eversource Energy asked Connecticut's Public Utilities Regulatory Authority on March 11 to approve a temporary "storm replenishment" factor in the company's Rate Adjustment Mechanism (RAM) to collect roughly $100 million from customers on May 1, 2026, as a way to smooth expected future increases tied to storm-related deferrals and purchase power contract costs.

In an opening presentation, Douglas Horton, Eversource's senior vice president for regulatory and strategic financial planning, said RAM rates are in an unusually volatile cycle and that May 1 would produce a large reduction for customers (company filings estimated roughly $650 million based on last year's experience, potentially about $760 million with updated PPA figures). Horton urged that collecting a measured replenishment now would reduce carrying charges and flatten the magnitude of increases he said are likely to appear in the next rate case or securitization proceedings.

Why the company wants a replenishment now

Horton framed the proposal as a timing choice: customers face a large reduction this May because prior RAM rates were set above recent actual costs, but known and newly incurred storm liabilities (which Eversource described as a multi-hundred-million-dollar balance) will require recovery later unless some portion is accelerated. The company argued that modest near-term customer contributions to a storm reserve would (a) reduce the total carrying charges customers ultimately pay, (b) lower future year bill whiplash and (c) leave customers with a sizable rate reduction on May 1 even after any replenishment is applied.

What the proposal would look like and where it would appear on bills

Eversource's witnesses described two implementation options: (1) include the replenishment as part of local delivery on bills as a separate, visible non-bypassable line item; or (2) include it within an existing RAM component. Company testimony said the firm prefers a separate local-delivery line item for transparency but also acknowledged it could be implemented within the non-bypassable RAM component (NBFMCC) using an energy (kWh) allocator and volumetric rate design. Company witnesses repeatedly said the measure would be reconciled and would not permanently increase net income; if PURA later disallowed any of the underlying storm costs, customers would be credited in reconciliation.

Questions from PURA staff and intervenors

Authority staff and intervenors pressed Eversource on multiple fronts: how the $100 million example was sized, whether the replenishment should be collected in May or delayed to a later change (e.g., September or in a rate case), which customer classes would pay (energy vs. demand allocators), and whether PURA has authority to add a new line item to customer bills. Staff also sought detail on billing and accounting mechanics for reconciling the charge if costs are later disallowed. Eversource said it would file supplements with detailed calculations, examples from other jurisdictions (Massachusetts and New Hampshire were cited), and a legal brief on whether PURA may add a line item.

Company witnesses stressed reconciliation and prudency review

Eversource repeatedly told the panel that any dollars collected ahead of a full prudency review would be treated as reconciling amounts; if PURA later finds costs imprudent or disallows all or part of the storm balances, customers would be made whole. The company also emphasized that a replenishment is intended as an interim tool, not as a permanent new base rate item: the firm said it expects the next rate case and parallel securitization and storm prudency reviews to reset how storm costs are treated.

Allocation, rate design and customer impacts

Parties pushed on allocation and design: distribution cost studies typically show storm-related distribution costs are demand-related, which leads to demand-oriented rate design for large non-residential customers. Eversource's RAM proposal, however, envisions implementing the replenishment through the NBFMCC or a separate line item using an energy allocator and volumetric cents-per-kWh charge for May 1 to simplify implementation and keep transparency for residential bills. Company witnesses acknowledged that allocator choice affects which classes carry a larger share of the charge and said PURA could adopt a different allocator or a phase-in if desired. Several commissioners expressed discomfort with the optics of collecting money now that could be held and used later if the collection looked like a slush fund; witnesses emphasized transparency, reconciliation and temporary status to address those concerns.

Related technical issues surfaced

The hearing also covered other RAM drivers: Eversource reported updated analyses showing a growing net benefit from PPAs in 2026 (LMPS changes), discussed the large NBFMCC over- and under-recoveries produced by timing lags, and summarized how prior adjustments (the two-step PPA interim process) have improved but not eliminated volatility. Parties asked for and the company agreed to file supplements on (1) the legal basis for adding a new bill line item, (2) a detailed breakdown of the NCQF/on-bill credits by program, (3) the carrying-charge calculation for state bond proceeds, and (4) examples and precedents from other jurisdictions.

What happens next

PURA set a schedule for supplemental filings and for the interim decision timetable. Eversource and parties will file written supplements (including the company's legal brief on a new line item) and updated LMPrelated projections as permitted; the Authority will consider those materials before issuing an interim decision. The company emphasized that the replenishment, as presented, is temporary and reconciling, and that PURA retains full discretion to disallow or adjust amounts after prudency review.

Why this matters to customers and policymakers

The hearing highlighted the tension in RAM design: reconciling mechanisms reduce regulatory lag but can produce steep year-to-year swings tied to supply and storm costs. Eversource's replenishment request is an attempt to convert some future, concentrated storm-recovery exposure into a smoother visible payment now in exchange for reducing carrying charges and future volatility. PURA and stakeholders must weigh trade-offs: accept a visible near-term contribution to avoid higher carrying costs and potential larger future spikes, or preserve maximal near-term bill relief and face larger future adjustments.

Ending note

The Authority's staff and consumer and industrial intervenors said they will review the company's supplements and legal brief carefully. PURA permitted the supplements to be filed and set procedural dates for the interim decision; it signaled it would consider allocation, reconciliation and statutory authority issues in deciding whether to approve any replenishment and under what terms.