The state’s controversial and outgoing chief utility regulator has agreed to remove herself from any decisions during the period leading to her final day in office on October 10.
The announcement by Gov. Ned Lamont’s office defuses threats of new legal challenges from the state’s two biggest utilities, which have opposed Gillett for years — in and out of court — over law and regulatory policy. But it raises more questions about how a leaderless regulatory authority settles questions in coming days that affect electrical, gas and water service rates for tens of thousands of customers.
Eversource and Avangrid delivered letters to Lamont and other state officials this week saying they would go to court to fight any decisions by the Public Utility Regulatory Authority in which Gillett is involved in the days between her announced resignation on Sept. 19 and its effective date Oct. 10.
Gillett’s decision to leave office followed her bruising fight with the utility industry. In the two days immediately before her announcement, PURA belatedly produced email correspondence that the utilities had long sought and that Gillett had testified to the Legislature months earlier did not exist. Acknowledgment that it did exist led to a call for her impeachment and what Lamont characterized as her decision to resign.
In nearly identical letters delivered Wednesday to Lamont and the others, Avangrid and Eversource said they have “significant concerns” about open rate cases pending before PURA and hope “to avoid future litigation by raising its concerns here.”
“First and foremost, it is our position in all such matters that Chairperson Gillett must have no further involvement,” the companies wrote. “Chairperson Gillett’s multiple public statements evidencing bias and prejudgment of issues that she is required by law to adjudicate on an impartial basis are well known and already the subject of pending legislation.”
The companies also said they have “credible concerns about the conduct and bias of other high-ranking PURA personnel” and specifically named general counsel Scott Muska. Over the course of dispute between PURA and the utilities, Muska has denied the existence of internal authority email and text messages that later surfaced or were found to have been improperly deleted.
Among deleted records were text messages that the utilities believe amount to “compelling evidence” that Gillett contributed to an op-ed that a Superior Court judge has said shows a bias against utilities. Muska had asserted for months in a related court case that the records could not be located.
“These concerning actions strongly suggest that any involvement by Attorney Muska in our matters going forward will be legal problems for the agency in the future,” the letters said.
PURA did not respond to questions from the Courant about the letters.
The threats of more litigation are the latest salvo by the utilities in the stormy relationship with PURA that dates to her appointment by Lamont in 2019. Before the resignation, the utilities already were pressing suits accusing Gillett of bias and of trying to conceal steps to make herself the dominant voice in rate making by squeezing fellow — and presumably co-equal — commissioners out of the process.
Gillett has denied concealing records or trying to take sole control of rate decisions. She claimed PURA was protecting customer interests. The industry claims that rate decisions under her chairmanship jeopardize the delivery of reliable electric service. Among other things, the utilities have argued that Gillett departed from law and precedent by limiting their ability to recover through rates the hundreds of millions of dollars they invest annually in their networks.
The abrupt resignation has created confusion about how — and even whether — PURA can proceed with proceedings scheduled over the next six weeks concerning rate increase requests by United Illuminating and Yankee Gas and the impending sale of Aquarion Water to an unregulated owner.
In 2019, the General Assembly enacted a law that expanded PURA to five commissioners, including the chairman, from three. Lamont, until being prodded by the legislature earlier this year, chose not to appoint the additional two commissioners.
With Gillett’s impending resignation and capitulation to utility demands that she recuse herself from further involvement, a question has arisen about whether the remaining two commissioners — Michael Caron and David Arconti — constitute a quorum necessary to carry out PURA business.
An early test will come on Thursday morning when PURA convenes a hearing on its draft decision to deny United Illuminating a $105 million rate increase. UI filed for the increase a year ago after PURA slashed its rate request a year earlier.
There was disagreement Wednesday even among parties to the rate hearing over whether the remaining two PURA commissioners amount to a quorum.
Additional PURA meetings are scheduled on Oct. 28 and Nov. 19 on Yankee Gas and Aquarion Water, respectively.
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Lamont told legislators earlier this year that he would fill all five positions on PURA by year end and his office said he is actively pursuing potential nominees. Others outside his office said he has spoken with Republican Holly Cheeseman, a former state representative, and may be considering Joaquina Borges King, a Democrat and lawyer with experience in the energy industry.
Other prospective appointees being proposed by people outside Lamont’s office include Arthur House, an adjunct professor at UConn who chaired PURA from 2016 to 2019, and Clare Kindall, interim executive director and general counsel for the state Election Enforcement Commission. Kindall formerly represented PURA while working as a senior lawyer in the office of the state Attorney General.
Lamont has said he is having difficulty filling the PURA openings in part because of persistent news reports about regulatory turmoil and lawsuits.
Industry observers have said the turmoil probably will not diminish significantly in the new future.
State utilities are expected to continue to press lawsuits accusing Gillett of bias and PURA of questionable application of regulatory law. Should the utilities prevail, they can use the legal decisions in an effort to undo prior rate decisions contrary to their interests. That would mean a newly appointed PURA would have to deliberate on future decisions while revisiting old ones.
While Gillett’s resignation is creating political and regulatory confusion, reaction on Wall Street has been positive. Eversource stock rose on Lamont’s announcement of the resignation.
Over the last three years, a series of PURA decisions denying utility revenue requests have led to the conclusion among analysts that Connecticut is subject to a hostile “regulatory climate.” That has resulted in a series of credit downgrades of Connecticut utilities, causing borrowing costs to increase.
This week, Moody’s Ratings, which had issued downgrades, told clients Gillett’s departure could result in a more “balanced” regulatory climate in Connecticut.
Moody’s wrote that PURA, under Gillett’s leadership and with the support of influential legislative backers, “has consistently denied multiyear rate plans, authorizing returns on equity significantly below industry averages and extending cost recovery timelines, thereby increasing regulatory lag.”
“The eventual appointment of a new PURA chair, along with the proposed expansion of the commission from three to five members, could foster a more balanced and predictable regulatory climate,” Moody’s wrote. “A broader commission may enhance decision-making consistency and reduce the influence of any single member. However, the extent to which these changes improve credit supportiveness will depend on who Gov. Ned Lamont appoints to replace Gillett, as well as the actions and policy direction of the newly constituted commission…”