CT Construction Digest Wednesday March 27, 2024
Ajudge in a ruling issued Tuesday dismissed the majority of Aquarion Water Co.’s appeal of a rate cut ordered by the Public Utilities Regulatory Authority last year.
Superior Court Judge Matthew Budzik sided with PURA in dismissing nine of the 12 counts of Aquarion’s appeal. He remanded two counts to PURA, along with part of a third.
Budzik upheld PURA’s methodology in determining rate cases, saying that the agency has broad discretion. He dismissed Aquarion’s claim that the rate decision was “confiscatory.”
“The court concludes that the total effect of PURA’s rate decision is not confiscatory and that Aquarion has failed to meet its heavy burden of demonstrating otherwise,” Budzik wrote.
He added: “It bears repeating that PURA possesses broad regulatory authority and equally broad discretion in setting rates.”
The decision held that PURA's disallowance of $5.9 million for plant additions "was not improper because it was based on a new rule or procedure," as Aquarion had argued.
"PURA is permitted to make its own factual determinations and is not required to accept evidence presented by Aquarion," Budzik wrote in the 34-page decision.
Budzik also upheld PURA's calculation of Aquarion's return on equity and said PURA"s choice of how to calculate accumulated depreciation is “well within PURA's regulatory discretion."
The ruling also held that PURA correctly determined that, to be included as a pro forma adjustment to rate base, expenditures must be found to be prudent, and “used and useful."
Utilities have argued that they need to be able to recover costs of future capital investments. However, PURA says that utilities “may only earn a return on capital assets that are complete and servicing customers” – which the court decision affirmed.
Rate case
Last year, Aquarion requested total annual revenue of $236 million and a return on equity of 10.35%, which would have resulted in an increase to the average residential customer’s water bill of about 9%, or $61 per year.
In its decision on March 15, 2023, PURA reduced Aquarion’s annual revenue to $195.5 million and authorized a return on equity of 8.7% – significantly less than the utility enjoyed previously.
PURA’s decision was expected to decrease the average residential customer’s annual water bill by 11%, or about $67 per year.
Aquarion, which serves 208,000 customers in 59 cities and towns, is Connecticut’s largest water utility and primarily serves western Connecticut. It’s a subsidiary of Eversource Energy.
Public Utilities Regulatory Authority Chair Marissa Gillett, who began in her role in 2019, has adopted a tough stance on utilities. Her philosophy is that utility rate increases should be based on performance, including outcomes and value to customers.
But that philosophy has drawn criticism.
Last year, Aquarion’s rate cut spooked investors and prompted credit-rating service Moody’s to lower the water company’s financial outlook to “negative” amid a regulatory environment it called “unpredictable.”
A spokesman for Aquarion, Peter Fazekas, said at the time the change from a stable to negative outlook “poses significant risks for Connecticut customers as they will pay more for the necessary infrastructure for the reliable delivery of high-quality drinking water.”
United Illuminating’s appeal
Electric utility United Illuminating Co. (UI) also has appealed a rate decision by PURA. UI requested a $131 million revenue increase over three years. PURA approved a $22.96 million increase.
UI requested a 10.2% return on equity, which PURA lowered to 9.1%. Until certain performance issues identified by PURA are addressed, the return on equity will be 8.63%.
That case is pending in New Britain Superior Court.
UI, based in Orange, is a subsidiary of Avangrid and serves more than 341,000 customers in Connecticut
Small wins for Aquarion
In the Aquarion case, the court sided with the utility on several issues. It remanded a recalculation of Aquarion's state and federal tax expenses to PURA, after PURA conceded during an oral argument.
Also, the court agreed that PURA applied the wrong legal standard in denying portions of Aquarion's legal and other expenses related to this case. The court remanded the matter to PURA for reconsideration according to state statutes.
In Count 12, Aquarion challenged PURA’s treatment of excess
accumulated deferred income
taxes (EADIT funds) held by Aquarion as a result of a reduction in the
corporate tax rate under the 2017 Tax Cuts and Jobs Act. PURA ordered Aquarion
to carry the EADIT funds at the weighted average cost of capital (WACC) rate
until the money is returned to customers.
However, the court found that the WACC rate requirement was “arbitrary and capricious,” and remanded the issue to PURA.
Response
A spokesperson for Aquarion said he had no comment other than that the company is reviewing Tuesday’s decision.
PURA, meanwhile, said it was pleased with the decision.
“Since the appeal was remanded back to PURA, we are limited in what we can comment on,” PURA spokesperson Joe Cooper said. “But the Authority appreciates that the court thoroughly considered the record and applied both long-standing and recent legal precedent that recognizes the Authority’s statutory obligation and broad authority to balance the important interests of all stakeholders in rate proceedings.”
Here's how one West Hartford company finds new energy in old landfills
WEST HARTFORD — When employees at one West Hartford-based company see a landfill, they don't just see a dumping grounds for old trash. They see an opportunity for new energy.
Verogy, which works with all things solar energy, has a knack for turning landfills no longer fulfilling their original purpose into renewable energy.
"All the landfills we’re using are what are called closed and capped," said Brian Fitzgerald, the company's director of development. "They’re no longer accepting any bulky waste and trash."
It's one of the many ways Verogy uses land creatively to build solar facilities. In Glastonbury, it plans to use to sheep to maintain 15 acres of farmland for a solar facility there, a concept that has been proved successful at its facilities in East Windsor, Bristol, and Southington.
Fitzgerald said many municipalities have these closed and capped landfills. At the same time, those communities might be looking for space for solar. That's where Verogy comes in.
"They’re looking around in the search for real estate to host solar. There’s really no better land type than a closed and capped landfill," Fitzgerald said. "Now you get to utilize it to produce renewable energy."
In February, the firm received permits from the state's Department of Energy and Environmental Protection to do just that at sites in Middletown, Montville, and Deep River. In West Hartford, while they haven't transformed any landfills, they have done solar projects at King Philip Middle School and Town Hall.
Ron Wedeking, Verogy's vice president of strategic markets, said the transformation is a cost-saver.
"What I love about using landfills for solar is that it takes something that for 20 years has been a cost for the municipality. It's a true cost," Wedeking said. "And we’re turning it into a profit center for them. In some cases, they can add one or two more workers with the dollars they receive through the lease. It's very exciting to see the benefits to the cities."
In total, the three projects will be able to produce over 2,600 megawatt hours of zero-carbon clean energy each year, which would be enough to power 252 homes.
To do that, though, Verogy first comes up with plans that will ensure no long-term damage to the landfill, which company officials said is often unique to that specific landfill's own history.
"Every capped closed landfill has a set of plans to which the landfill was capped by," Fitzgerald said. "Our engineers will review that and bring in third-party engineers to help in the review and make sure we’ve got everything covered so that our design won’t pose any issue. It’s really that initial diligence. Landfills do come in different shapes and sizes. It’s rare to see the same landfill."
Once completed, Fitzgerald said, a municipality should start seeing savings on its energy bills. In Middletown, that eventually will be turning the 2.5-acre and 80-foot-high landfill at the Middletown Transfer Station that was closed in 1991 into something more beneficial for the city, he said.
"Middletown is one where we’ve identified electric accounts and we’re going to be sending credits to those accounts," Fitzgerald said. "You can think of it as the project on the landfills collecting energy, going to the grid, and we’re sending it to Middletown accounts so they’ll be seeing savings on its bill."
Ansonia could soon own vacant contaminated downtown properties
ANSONIA — The city could soon own a pair of long-vacant contaminated downtown properties totaling more than 40 acres — and not a moment too soon, according to officials.
"In the relative near past we've had some incidents including an oil leak on the property that the present owner has been nonresponsive and unaccountable for and a fire that occurred on the Liberty Street parcel just about a month ago that was the result of arson," John Marini, the city's corporation counsel, told a judge during a March 18 foreclosure hearing asking for the city to be given title to the land owned by the Ansonia Copper and Brass Company. "The city is looking to progress this matter to its conclusion and take possession of the property so it can secure it and move forward."
The city filed a foreclosure lawsuit in 2022 seeking the properties on Riverside Drive and Main Street following years of wrangling and unfulfilled promises. Neither the company nor its last chief executive ever responded in court.
Judge Jason Welch continued the hearing two weeks to see if the city could obtain a release of a federal lien connected to the property. Marini said afterward he didn't anticipate any problems prior to the next court date.
The company is not represented by a lawyer in the lawsuit, and its last chief executive, Ray McGee, could not be reached for comment.
While the sprawling complex on the eastern bank of the Naugatuck River once employed workers day and night, any value the land has is outweighed by the millions required for environmental cleanup as a result of its industrial past, according to appraisals on file in court.
Marini said the ballpark cleanup cost is $10 million above the ground alone, without addressing many areas of concern identified in environmental impact reports on the property.
Nevertheless, Marini said the city has received "a lot of interest from some very credible and even globally known firms" interested in developing the property. He said that there's "plenty of funding in the wings for remediation."
The total cost of environmental cleanup at the property would depend on its ultimate use, Marini said, identifying "industrial and commercial end users with focus on job generation and revenue for the municipality and its education system" as potential buyers.
"There is also a need to reconstruct the bridge that serves as the main commercial entrance that we’ve already obtaining Federal funding for, and also a plan to construct an access road to Route 8," Marini said.
Jack Walsh, the former president and chief operating officer of the Valley United Way, which used the company's former offices on Liberty Street, said the metals business was already in trouble in the late 1980s.
"The foreign competition was just killing them," Walsh said.
Industry once dominated the city, with Ansonia Copper and Brass and Farrel Corporation employees providing a steady flow of customers to city businesses.
"That whole area was thriving," Walsh said. "They had three shifts. It was just around the clock. And hard work, very hard work. It wasn't easy work but it paid very well at the time. It was such a loss when they had to close."
"Let's hope the future looks brighter than it does now," he said. "It would great to see some new jobs back in there."
Downtown Meriden bridge reopens, another section of Harbor Brook uncovered
MERIDEN — The Cedar Street bridge has reopened to downtown motorists after reconstruction, and workers have uncovered another section of Harbor Brook.
But as the city moves toward expanding the Meriden Green to Cedar Street to create a sensory park, it is stymied by a lack of funding after several failed attempts to secure $5.5 million in state grants.
The work is part of a complex flood control project, a multi-faceted plan to eliminate serious flooding from Harbor Brook in the downtown area.
The flood control project included bridge replacements on Cooper Street, Cook, Perkins, Coe and Bradley avenues and Cedar Street.
Underground, the work included widening and deepening channels and eliminating choke points in the system of culverts. The most visible part of the project was daylighting Harbor Brook at the Meriden Green. The last and final bridge to be rebuilt is on Center Street.
“The bridge is done,” said City Engineer Brian Ennis. “When we do the green expansion, we’re going to daylight the entire section. Right now. we’ve uncovered the box culvert, at the bottom and sidewalls. We’ll take the concrete out and make it a natural channel.”
Like many of the other bridges, the Cedar Street bridge was too small to contain a 100-year heavy rainstorm, Ennis said. Water was backing up into the Carabetta apartments upstream. The reconstruction will remove the Carabetta properties from the flood plain.
Workers also had to protect wood turtles from harm and relocate them to safety during the construction phase. The species was identified by a wildlife expert as living in the area in need of protection.
The bridge was extended from 35 feet to 55 or 60 feet and the road pavement raised six inches. The brook flows downstream from Brookside Park, under 691 and behind the Meriden Enterprise Center at 290 Pratt St. The city received a $3.8 million grant to pay for the bridge work.
The channel expansion will continue to the Center Street bridge where the rebuild is more involved and will likely take longer. There is considerably more utility work on that site that needs to be completed before construction begins.
The park proposal involves daylighting more of the brook and
building a sensory park on the site. Mill Street will eventually be
eliminated.
The city has applied several times for state monies and wasn’t considered.
Ennis said there are several more application rounds left.
“We didn’t get any of them, Ennis said. “Eventually, we will get that covered. The design is in place. “That (grant) is going to cover construction, features and sidewalks.”
Mill Street will not close until the green expansion begins.
Completing the Cedar Street bridge project before starting on the larger Center Street project also facilitates a smoother transition while that roadway is closed.
Ennis said the Center Street project involves moving underground and overhead utilities, including electric and gas lines, of which the Cedar Street project involves significantly less. “It’s the last bridge we have to do,” said City Councilor Michael Rohde, who also chairs the city's Flood Control Implementation Agency, adding that storms have grown more severe, putting more of a strain on outdated infrastructure.