CT Construction Digest Tuesday February 6, 2024
Bordonaro: Public fights between PURA, utility companies reflect challenges of industry regulation
What type of relationship should exist between a regulator and the regulated?
It’s an age-old question that local, state and federal governments often struggle with.
It’s no different in Connecticut, where ongoing fights between the Public Utilities Regulatory Authority (PURA) and the state’s two large utility companies, Eversource and United Illuminating (UI), have taken center stage.
Most reasonable people would agree some tension ought to exist between an industry regulator and the companies it oversees.
But the PURA-Eversource/UI squabbles go well beyond that, and could hinder future investment in the state’s electric infrastructure and clean energy efforts.
Executives of both companies have said as much.
The contentious regulatory environment, in some ways, mirrors what’s happening at the federal level with the Federal Trade Commission, which is responsible for consumer protection and enforcing antitrust law. The FTC has taken on a more combative posture under the leadership of Lina Khan, who took office in 2021 promising to stiffen antitrust enforcement.
Before becoming the FTC chair, Khan was perhaps best known for penning a paper at Yale Law School that accused e-commerce giant Amazon of anti-competitive practices.
Since taking office, however, she’s run into several setbacks in high-profile antitrust lawsuits against Facebook parent Meta and Microsoft.
The courts will also play a key role in deciding Connecticut’s utilites-regulatory squabbles, which center on PURA’s stricter scrutiny of electric, gas and water utility rate increase requests. The heightened oversight is occurring as the state moves to a new performance-based ratemaking framework that was mandated by the legislature in 2020, and is a hallmark of PURA Chairman Marissa Gillett’s tenure.
Performance-based ratemaking sets rates based on how well a utility meets certain goals, taking into consideration outcomes and value to customers as opposed to just the cost of service and a reasonable return on investment, which is how the industry largely operated in the past.
PURA has inflamed both Eversource and UI by rejecting — in some cases by wide margins — rate increase requests made by both companies.
For example, in response to Eversource-owned Aquarion Water Co.’s first rate increase request in 10 years, PURA last March not only rejected the water company’s request, but decreased its annual revenue requirement by $2 million from the current level — about a 1% reduction.
PURA approved an annual revenue requirement of $195.5 million for Aquarion, which serves 208,000 customers in 59 cities and towns, primarily in western Connecticut. That revenue requirement is expected to deliver a return on equity of 8.7%, significantly less than the utility enjoyed in prior years.
Aquarion originally applied for a roughly $37 million increase in distribution revenues and a 10.35% return on equity.
Aquarion appealed PURA’s decision in New Britain Superior Court, and a temporary stay was granted.
Separately, UI, an electric company that serves more than 341,000 Connecticut customers, applied for a rate increase totaling $131 million for a three-year period that runs through Aug. 31, 2026. PURA on Aug. 25 approved a $23 million increase and 9.1% return on equity, lower than the requested 10.2% return.
Following the decision, UI filed an appeal in New Britain Superior Court seeking tens of millions of dollars it claims were unfairly and illegally cut by PURA.
Both utilities have accused PURA of unlawful and arbitrary decision-making.
Financial analysts have also raised alarm bells about Connecticut’s regulatory environment, and Eversource has seen its stock price struggle over the past year. That could negatively impact the company’s ability to raise capital for future grid infrastructure and other projects.
Or, it could force the company to borrow at higher rates, making infrastructure investments more expensive for Connecticut ratepayers.
Stricter enforcement
For her part, Gillett, who studied bioengineering and is an attorney, has argued she’s following longstanding regulatory standards, but enforcing them more strictly.
Her office recently provided HBJ with a compelling example of the need for stricter scrutiny.
Between 2018 and 2022, UI collected more than $55 million from customers to fund more than 200 employee positions that the company left vacant, PURA said.
“The number of employees for which the company received money, but did not employ, ranged from 153 to 211 over this period, or between 19% and 27% of the total number of authorized employees,” according to PURA.
UI said it redirected funds for those unfulfilled positions “to other costs necessary to provide customers with safe and reliable service.”
These are complicated matters to sort out.
Gillett hasn’t been shy about how she sees her role.
“The governor … brought me in to be a disruptor,” Gillett told the Hartford Business Journal last May. “... If there is discomfort with the fact that I’ve kind of thrown the doors wide open here and invited in different perspectives, I would embrace that critique because that was intentional.”
Gillett has even ruffled the feathers of her two fellow PURA commissioners, John Betkoski III and Michael Caron, who, at times, have clashed with the chairman.
Gov. Ned Lamont, who appointed Gillett, has been considering adding two additional commissioners to PURA’s three-member decision-making body, which he has legal authority to do.
Complex questions
To be clear, I’m not taking sides on the rate cases, or the merits of performance-based ratemaking. It’s well beyond my pay grade to determine what investments and expenses borne by utilities ought to be reimbursed by ratepayers, under the law.
Regulators of any industry should closely scrutinize rate increase requests to ensure they’re valid.
There’s a lot at stake, including the future reliability of Connecticut’s electric grid and the cost of energy in the state, which is already among the highest in the country.
Will a tougher stance on rate approvals lower energy bills? Perhaps, but it doesn’t mean regulators can bend the law to achieve that end.
Also, blaming high electricity costs solely on utility companies is wrong-minded. The reality is, utilities are only responsible for distributing energy in the state, not generating it. That structure was established by the General Assembly in 1998, when it deregulated the electric industry and forced utilities to sell off their power plants and other generation assets.
There are many reasons Connecticut electric ratepayers see higher bills than the rest of the nation, including efforts by policymakers to transition the state’s electric supply away from natural gas and oil to clean energy sources like solar and wind.
Going green is expensive, and it’s ratepayers who ultimately pay the bill.
For now, all eyes will be on New Britain Superior Court to see how it rules in the ongoing rate cases. The court’s decisions could significantly impact PURA and the agency’s future ratemaking process.
After Fairfield, Bridgeport residents decry UI 'monopole' project, the structures may move north
FAIRFIELD — The looming steel poles at the center of a controversial United Illuminating proposal could move north of the railroad tracks, away from a location some say threatened nearly 20 acres of private property between Fairfield and Bridgeport.
In a non-binding "straw poll," the Connecticut Siting Council, which oversees power line projects, voted in favor of the relocation Thursday as an alternative to UI's application to hang its transmission lines from the steel structures known as monopoles standing up to 145 feet tall between Fairfield and Bridgeport along the south side of the state's railroad corridor.
Their recommended move 84 feet north to the opposite side of the tracks would avoid more private property, wetlands and bodies of water and reduce radiation levels, according to a draft report by the Siting Council.
UI announced the project in early 2022 as a push toward more reliable service and modern infrastructure in the form of monopoles standing up to three times as high as the "catenary structures," shorter supportive columns that hold the power lines, according to its application.
"I don’t want to overlook the fact that the proposed project is largely set in (an) urban environment, and it doesn't have the right of way capabilities that, say, neighboring utilities might have that have existing suburban and rural rights of way that might be in somewhat remote wooded areas," said Robert Silvestri, a member of the council, before the vote.
The Siting Council is due to deliver its official decision on the project next month, but its vote is the first indication of the body's thinking on the hotly contested monopoles through a year of regulatory proceedings. The issue has gained traction in Fairfield and then Bridgeport over the past five months as local residents and businesses have teamed up to seek out lawyers and make a case against UI, slamming the permanent damage the project would do to the visual landscape, ecosystem and economy.
UI would gain permanent access to 19.25 acres of private property under its original plans through easements — contractual permission to use someone else's land. That number would drop to eight acres, not including temporary easements for construction, as part of the Siting Council's alternative plan to push monopoles further north, according to its report. The permanent easements have in the past restricted homeowners from developing their property and opened their land up to potential construction zones.
UI would clear half an acre more of trees if the monopoles stood further north, the report states.
The council voted in favor of the alternative to UI's plan by 4-1-1 tally, with one vote in opposition and one abstention. Fairfield's First Selectman Bill Gerber said watching council members vote without a single one in favor of UI's original proposal for monopoles on the south side of the tracks was "extremely gratifying," but questions remain about how the potential change of plans could alter the effects of the project.
"Although this option may alleviate several important concerns, we have questions about the potential impact to the north side of the tracks," he said in an email. "People on the north side of the tracks who may now be impacted must be given the opportunity to register as intervenors. We still firmly believe that undergrounding is the best solution."
The idea of UI burying the transmission lines underground has drawn support in Fairfield over the past several months, serving as a focal point at a Southport protest in November. Protesters have said burying the lines would eliminate much of the concerns about the monopoles, but Silvestri said doing so would be too costly and interfere with "congested areas" in town.
Despite the series of improvements, the height range of the monopoles under the alternative plan remains unclear. Silvestri said he'd prefer UI build monopoles "as short as possible," and the Siting Council's draft report states the relocated lines "would include structures" roughly 20 to 25 feet taller than the existing ones. Siting Council staff said the 84-foot move would not "appreciably reduce the indirect visual impacts" that the project would create south of the railroad tracks.
Gerber said the town urges the Siting Council against raising any monopoles beyond the height of the existing ones on the north side of the tracks and avoid easements that could cross into "any sensitive areas." Quat Nguyen, the sole member of the council who voted to deny the project, said UI presented an insufficient record of "cost effectiveness and cost alternatives" that the council is required to have to properly assess overhead transmission lines.
Under the Siting Council's alternative plan, UI would consolidate its transmission line running along the southern side of the tracks in the same position as the one running on the northern side. Its report states double-circuit monopoles north of the tracks would hold each of the two lines.
The draft report states 86 monopoles and eight bonnets already support the northern line, and UI would need to build larger monopoles and foundations to support the two together. The rebuild would cost about $104 million, which Silvestri sees as "reasonable," and extend between the Fairfield-Westport line and the substation near Ash Creek in the Black Rock neighborhood of Bridgeport.
UI's proposed project reaches further east than Black Rock, extending to Congress Street, so it's unclear how the Siting Council's alternative would affect the transmission lines between downtown Bridgeport and Black Rock.
Bridgeport spokesperson Tiadora Josef and Siting Council Executive Director Melanie Bachman did not return a request for comment.
The report states UI had rejected two options to either modify or replace the transmission line north of the tracks with a double-circuit configuration because the current structures and foundations lacked the size and space to support it. But the ultimate say lies with the Siting Council.
Jim Cole, the vice president of projects at UI, said company officials appreciate the Siting Council's draft report and work to ensure UI's project is one of "integrity." He said UI has worked to fund projects that can balance consumer demands for a stronger electrical grid, necessary upgrades to infrastructure more than 60 years old and minimal disruption to the surrounding community and environment.
"We appreciate the opportunity to engage constructively with the CSC, and as we await the final decision, we look forward to further opportunities to discuss the benefits of this project by working individually with our towns, businesses, and residential customers in the coming weeks and months," he said in an email.
Pushing the monopoles further north would steer clear of 154 square feet of 100-year flood zone space and 231 feet of 500-year flood zone space that would have previously been impacted south of the tracks, according to the draft report. The year tied to the respective flood zone refers to the likelihood of a severe flood reaching that area. The report states five monopoles would still be located in the 100-year flood zone, and 10 would stand in the 500-year flood zone.
Siting Council members also introduced a series of conditions for approval for the project, some of which would move monopoles off the BJ's Wholesale Club property, clear nesting space for falcons and ospreys and ensure the protection of blueback herring and other "state-listed species."
Shelton P&Z rejects plan to add 28 more condos at River Road complex
SHELTON — Plans to nearly double a condominium development off River Road have been shot down by the Shelton Planning and Zoning Commission.
The panel, at its Jan. 31 meeting rejected Daybreak Ridge, LLC’s request to approve a Planned Development District at 84 River Road to allow construction of an additional 28 units.
Daybreak Ridge, LLC, is presently constructing 36 condominiums — dubbed Daybreak Ridge — at the site. The developers’ application for the zone change of the 12.39-acre parcel to a Planned Development District would have nearly doubled the project's size.
The in its resolution, the commission noted that “there was no Commission support for the increase in development density and intensity” at the location.
Commissioners also expressed their opinion that the single, existing, non-conforming restaurant across the street from the site does not justify PDD eligibility of the site, the resolution stated.
The resolution also noted how commissioners voiced concern about the potential for increased traffic caused by this increase in development size on an already busy River Road.
The commissioners also were concerned about the difficult topography and grades, negative impacts on abutting properties and the increase in density from 36 to 64 dwelling units, saying these issues “are not desirable and do not support the proposal.”
The developers’ representatives sought a PDD for the site, saying it was a transition location between commercial — specifically the restaurant on River Road — and residential.
But commissioners decided that the site is not positioned in a transitional area and “the current 36-unit proposal provides adequate transition from the solitary non-residential restaurant use to the adjacent residential development without the subject proposal.”
Accordingly, the resolution states there are no other conditions that would appear to grant eligibility to the subject site for development as a PDD.
“It was also concluded that the approved special exception was predicated on the representation of the applicant that the unused balance of the site would be protected from any further development by granting a perpetual conservation easement to the City of Shelton,” the resolution states.
This latest application for the River Road site had a rocky start.
The commission, at its August meeting, was to simply vote to accept and set up a public hearing on the application. That action is considered a formality, but even that vote met reluctance. After the reading of the legal notice on the plan and a short discussion, Commissioner Elaine Matto made the motion to accept, but no other commissioners seconded it.
Commissioners were told they must hear this application though.
The project then faced opposition from neighboring residents, who raised concerns about potential blasting, increased traffic and what they called the detrimental impacts of the growing density on site.
The commission initially granted a special exception for the project, allowing for 34 condo units in 2019. In September of 2021, after initial excavation and regrading of the site, the developer found that more usable space was created and returned to P&Z successfully seeking approval of an additional two units — bringing the total to 36, which was the maximum eligible number originally sought.
At the time of the approval in 2019, zoning consultant Anthony Panico said he received “good cooperation” from the developers, who agreed to several alterations to try and satisfy commissioners' concerns, especially the proximity of units to the rock face.
Attorney Dominick Thomas, representing the developers, has stated that his client can expand into the vacant upper area and get 28 more units with a PDD. In all, the developer is hoping to construct 64 condominium units, with the additional 28 located in four buildings at the rear of the property. Two buildings would each have eight condo units, the other two would have six units each.
In processing the request as required by statute, the commissioners often noted the property’s constraints, specifically the steep slopes, the rock, the watercourse and wetlands and negative impacts on neighbors.
Newtown orders independent study of 117-home plan that would ‘disturb virgin soil’ near Taunton Pond
NEWTOWN – The town’s environmental review board has taken the extra step of ordering a local builder to pay for an independent review of his wetland engineering plans to cluster 117 homes near Taunton Pond after a crowd of residents railed against the project.
“It’s a huge development,” said Newtown resident Mark D’Amico, one of 18 critics who voiced concerns about the proposed Castle Hill Village development during a two-and-a-half-hour public hearing. “There’s a very large potential for disruption of the wetlands and a potential impact to Taunton Lake.”
D’Amico and a majority of the residents who raised concerns about the development degrading water quality, exacerbating flooding and ruining animal habitats called on the town’s wetlands commission during a January public hearing to require a third-party peer review of the builder’s plans for the 136-acre site.
“We really have to be careful with this a natural resource that is a very special place to a lot of animals, and to a lot of humans,” Newtown resident Suzan Hurtuk told Newtown’s Inland Wetlands Commission during a Jan. 10 public hearing. “With the storms we’ve been having, it’s just so delicate. Please consider a third-party review. It’s not that I don’t trust you guys, it’s just a special place.”
Hurtuk was referring to a plan that Newtown developer George Trudell has been trying to execute on Castle Hill Road since 2013. His latest blueprints call for a “cluster-home community” of 117 single-family houses in eight styles, with a community center, conference rooms, a gymnasium, a pool, a playground and pickleball courts.
The beauty of Trudell’s plan, he says, is that by concentrating the development on 52 eastern-most acres of the site, he can protect 85 acres of woods on the last virgin shoreline of Taunton Pond with a perpetual conservation easement.
During the public hearing, Trudell’s lead engineer seemed to balk at the idea of paying for an engineering peer review before Newtown had given its own environmental review.
“There has been a lot of commentary about a third-party review, but I don’t think we’ve even received a second-party review from the town staff regarding engineering or anything related to the design itself,” Todd Ritchie said. “The only comments that we have responded to are comments that we’ve taken note of ourselves.”
Ritchie sought during the public hearing to reassure residents that the drainage from the eastern-most portion of the property where the homes would be clustered did not run southwest into Taunton Pond but rather due south.
“There is a ridge line (bisecting the property), so none of the drainage … is going into the lake,” Ritchie said. “It is going to the south.”
Old Castle Road resident Eric Thompson doubted that.
“What happens (with runoff) is a war between gravity and permeability, and what (the developer’s consultants) show on that map is only what happens to the surface water,” Thompson said. “I’m skeptical that doing this (development) at the top of the hill is going to keep from affecting the water in Taunton Pond. You’d have to prove that to me. I think that needs to be answered by somebody who doesn’t have a conflict of interest.”
The five members of Newtown’s wetlands commission agreed, voting to require Trudell to pay for the independent review, and voting to keep the public hearing open until results of the review are complete.
“I do agree with the public that we should have an independent peer review study,” said commission member Suzanne Guidera at the end of the lengthy public hearing. “This is a very dense project, and it may be allowed per zoning however it is going to have a significant impact on the wetlands.”
The public outcry and the advent of a third-party review is the latest news in a development that picked up momentum in the summer, when Newtown’s Board of Selectmen voted to discontinue a paper road from Colonial times that bisected Trudell’s 136-acre property. That government act allowed Trudell to join the two parcels and qualify for a zoning incentive to cluster homes as far as possible from the 125-acre Taunton Pond, in order to preserve land closest to the waterbody as a buffer.
Wetlands carry out natural flood control and water quality functions, among important ecological benefits to birds, amphibians and other wildlife.
“This land is virgin land that hasn’t been touched for many decades … and when you disturb virgin soils and you put in dense housing it causes major drainage issues,” said Aaron Nezvesky of Newtown, who said he grew up farming the land in question. “There are bald eagles on this property. I have physically seen them.”
Fellow Newtown resident Emily Kaufman agreed.
“In the last year bald eagles have been around hanging out in those areas,” Kaufman said during the public hearing. “I live right next to them. I can see them.”
The environmental review by Newtown’s Inland Wetlands Commission is only the start of the land use approval process and is limited to the development’s impact on water resources. A fuller review of the project’s impact on neighborhood character, including traffic, will come later with a public hearing before the Borough of Newtown Zoning Commission.
“I find the timing quite stark and interesting that we are dealing with what seems to be weekly floods in town and around the state,” said Newtown resident Dave Ackert during the public hearing. “I’m really concerned about the wetlands and their ability to handle the increased flood water runoff.”
Latest designs for Cheshire's new Norton School, with open central courtyard, await cost estimates
CHESHIRE — Current designs for the new Norton school show a two-story building with an open central courtyard, a media center and rooms for music, art and teacher planning. The lower level includes a section with a gym, cafeteria, nurse’s office and administrative offices. The school was given a "Woods and Trails" theme through discussions with stakeholder groups.
This latest round of designs will receive cost estimates from both architects and builders. Depending on the numbers, the Next Generation School Committee might have to find reductions, like it did when estimates for the first round of designs came back $10 million over budget for each of the two new schools planned, the new Norton and an as-of-yet unnamed elementary school in the north end of town.
Chair of the Next Generation School Building Committee Rich Gusenburg said the project narrative, of which there are 1,000 pages, is mainly used by the contractors to lay out aspects like how to build the foundation and where to run electricity. Four hundred pages of design documents were also completed.
“You're getting beyond just the basic layout of the building now to all the little nitty gritty pieces of, how are you going to actually build this thing,” Gusenburg said.
In the meantime the committee is discussing smaller items, like generator size. The north end school will be used as a warming center in the winter, whereas the new Norton will need just enough generator power to get through a school day in the event that the power goes out when students are already in class, Gusenburg said. Both schools will be powered by a hybrid geothermal system.
The projects are also going through the local review process. The Inland Watercourse and Wetlands Commission meeting on Tuesday was scheduled to include a public hearing portion, as the new Norton site — located at 414 North Brooksvale Road — is near several homes.
Gusenburg said that, per the team architects’ explanations, there is a culvert running along the northern side of the school property to a man-made wetlands area that was built for water drainage from the nearby homes.
“So you want to make sure that when we build the school that all the water that's draining from the school is going to drain properly to those areas, that you're not going to pick up sediment off of the driveways and things and put that into the wetlands," Gusenburg said.
He said there’s an area where water from the parking lot goes and is then swirled to make the sediment drop, and the clean water goes to the culvert and wetlands retention area. Someone will then need to periodically clear the sediment, likely every six or 12 months.
Gusenburg said they are making sure the designs don’t cause flooding to the nearby homes, and they will have trees blocking light from the school’s light poles to not disturb neighbors.
With wetlands approval, the project then goes to the Planning and Zoning Commission, the same path as the north end school, which was reviewed by Wetlands in January. Once the projects get local approval, they will need state approval.
Gusenburg estimates the projects will go out to bid at the end of summer for a groundbreaking in December.