2 PUBLIC UTILffiES COMMISSION. 12 Divisions General Manager Neil Amwake; Recording Secretary Cynthia Kleist; Public: Steve Gale;

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1 1 ' ' ' ' ~ r - '...,-.-., :> 2 PUBLIC UTILffiES COMMISSION 3 ELECTRIC DIVISION JOHN STREET 5 WALLINGFORD, CT 6 Tuesday, December 6, :30 p.m. MINUTES 10 PRESENT: Chairman Robert Beaumont; Commissioners Patrick Birney and Joel Rinebold; 11 Director George Adair; Electric Division General Manager Richard Hendershot; Water and Sewer 12 Divisions General Manager Neil Amwake; Recording Secretary Cynthia Kleist; Public: Steve Gale; 13 Bob Gross; James Hine; Gina and Larry Morgenstein; Geno Zandri; Rep. Mary Mushinsky; Mayor 14 William Dickinson; Mike Brodenski; John LeTourneau; Patricia Kohl; Matt Zabierek, Record- 15 Journal. 16 Chairman Beaumont called the Meeting to order at 6:30 p.m Pledge of Allegiance 1 2. Discussion and Action: Approval of the Meeting Minutes of November 15, Mr. Birney made a motion to approve the November 15, 2016 Meeting 20 Minutes as amended. Mr. Rinebold seconded the motion. 21 Page 5, line 7, should be "brought" not "bought". 22 Page 7, line 7, add the words at the end of the sentence after the word expansion: "associated 23 with the LS Power Capacity increase." 24 Page 7, line 21, third word "not" should be deleted. 25 Page, line, should be "Southern" New England Telephone; line 20, after reference to Atty. 26 Einhorn, should read "and reviewed this with him." 27 Page 2, line. 21, should be " topographical " survey. 2 Page 4, line 1 should be "not"; line 13, should read "installation of future electrical conduits"; 2 line 31, should be "about". Regular Meeting and El ectric Rate Public Hearing December 6, 2016 Page 1

2 ...,r_, 1 Vote: 3 ayes. ~ ; ~.~:-r-,.; -. :. - 'L, 2 ELECTRIC Discussion and Possible Action: Budget Transfer - Account 55 - Distribution Operations. In his November 2016 memo, Mr. Sullivan noted the Division is seeking a budget transfer for an additional $26,500 for Account #55 - Operations Expense-Street Lights and Signal Systems. He said this account covers repairs to failed street lights including replacement of bulbs and photocells. Mr. Sullivan said in his memo that for Fiscal Year , the Electric Division's original budget included funds to replace existing HPS street light fixtures with new LED fixtures as the existing street lights failed. He said since this plan would involve the installation of new fixtures, labor was budgeted in the Capital Account #373 Distribution Plant-Street Lights and Signal Systems, rather than in Account 55 Distribution Operations - Street Lights and Signal Systems. Mr. Sullivan said the replacement of HPS lights with new LED lights has not yet begun because of delays with the selection and procurement of the LED lights. He said this has meant that the Division has continued to replace HPS bulbs and photocells to repair failed street lights. Mr. Sullivan said a similar transfer was approved earlier this Fiscal Year but additional funds are needed for operations expense Account 55 - Distribution Operations - Street Light and Signal Systems. He said funds are available in Account Distribution Plant-Street Light and Signal Systems because of the delayed implementation of the above described capital replacement. Mr. Birney made a motion to approve FY Budget Transfer to Acct. 55-0perations Expense-Street Lights and Signal Systems. Mr. Rinebold seconded the motion. Vote: 3 ayes. Committee Reports/ Correspondence No reports Mr. Adair noted he provided the PUC with copies of a case before Federal judges regarding the rate of return on equity for transmission projects in the Northeast. Mr. Adair said depending upon the outcome, could have a sizable impact on the rate of return. Mr. Hendershot gave an update on the LS Power program. He said all the design drawings have been reviewed along with the construction specs of which there were no negative comments. He said the test plan will ~e.the last document to ~eview and aprrov~. : '(;'=-t. Mr. Amwake gave an update on the water supply alert which he said was declared on Monday, December 5. He said this alert is an advisory stage prior to the Division's four-stage drought plan. Mr. Amwake said this is a cautionary stage to let residents and businesses know they Regular Meeting ~a~d Electric Rate Public Hearing December 6, 2016 Page 2

3 -.:-.r--. "( need to- be water conscience a-nd water a~are. c>f how they are\js1ng heir water. Mr. Amwake said there are two triggers to that can bring about a water supply alert: one being rainfall less than 50% of the average for three consecutive months, or when the Division is less than 0% of the effective impoundment compared to the historical average for that month. Mr. Amwake said measurements are taken every Friday morning and are looked at Friday afternoon and again on Monday morning. He said as of Dec. 2, 2016, we are below the 0% effective impoundment, as compared to the historical average for December. He said the alert stage comprises of a lot of the behind the scene operations within the Water Division of how we are running Pistapaug Water Treatment Plant and how we are running our wells, which wells we are operating and some other efficiencies inside, and alerting the media and the consumers. 11 Mr. Amwake said there is a disengagement policy in place at this time, because we are right 12 below the alert level, approximately 7%. He said in order to leave the alert stage; we must be days above the alert stage. He said he didn't want to pull the consumers in and out. Mr. 14 Adair noted this is the first time during this dry year where we have reached the point in 15 reservoir storage or rainfall which triggered any of this. He said the four-step process looks at 16 the total storage, gross impoundment. He said this is like an early warning. Mr. Amwake 17 explained this water supply alert is based upon effective impoundment which is the amount of 1 water above our intakes whereas gross impoundment is how much water we have within all our 1 reservoirs. Commissioner Birney asked the last time there was an alert. Mr. Amwake said there 20 was an advisory approximately 10 to 12 years ago. 21 PUBLIC QUESTION & ANSWER PERIOD - 6:50 p.m. 22 Patricia Kohl, 50 North Street, read a letter she submitted to the Record-Journal. She noted in 23 the early morning hours of Nov. 27, 2016, there was a massive water main break on her street 24 destroying a large section of the road and a sewer blockage which resulted in water backing up 25 into the basements of half a dozen homes including her own, resulting in two inches of dirt and 26 gravel being deposited on her front lawn. She thanked the Wallingford Water and Sewer 27 Division employees who worked long hours that day. She said all of the workers she had 2 contact with were friendly, approachable and willing to answer the residents questions even 2 alter 12 to 14 hours on the job. Ms. Kohl said the employees also expressed concern and 30 sympathy. She said if it were not for the initiative of one worker who suggested she check to 31 see if her basement was flooded, delayed clean-up would have resulted in damage. She noted 32 that one worker offered his shoulder for her to lean on when she had difficulty walking her dog 33 in the uneven terrain caused by the flooding. She said another worker carried a five-gallon 34 bucket of water to her front door from the hydrant. 35 Ms. Kohl said th'e-sewer lines were unblogked by r:ioor-t-of1ihat day, and water,ser:vice restq~cl. 'I.-,,, : c later in the afternoon. She said on Monday morning, several employees came with a rake, 37 shovel and a vacuum truck to remove the dirt and gravel from her lawn and noted the street Regular Meeting ind Electric Rate Public Hearing December 6, Page 3

4 t,,_.. -..,_.;.....J,"'"_ ~ -... _...,..,... -~-.;. 1 was repaired and paved -~nd re-opened to traffic by the following Saturday afternoon. She said 2 she and her neighbors are appreciative of the excellent work done by the employees. ' ' " 3 Mr. Amwake noted that one of the residents is an artist and provided Jay Pawlowski, Assist. 4 Supt. Water and Sewer Divisions, with a picture of the crew working. He said this was posted in 5 the break room. Mr. Amwake said this was a team effort and said in his career, this was the 6 most significant water main break outside of a break when he was with MDC. He said the area 7 is being monitored. He noted that 1.3 million gallons spilled in two hours from this water main break. Geno Zandri, Balsam Ridge Circle, had a question on the LED light fixtures and their 10 approximate cost. Mr. Hendershot said there are nine different prices because there are 11 different fixtures and quantities. Mr. Zandri asked if there would be less electricity used once 12 the fixtures are installed. Mr. Hendershot said in round terms, they use about half. Mr. Zandri 13 asked if the cost savings would be passed on to the Town. Mr. Hendershot noted that currently 14 there are LED rates in place. He said there are full Rates 6 and 7 for HPS units and a Rate 6 15 and 7 for LED units. He said once the lights go in, the change will be noted and the records 16 updated. 17 Steve Gale asked about any updates regarding the CMEEC proceedings and a timeframe. Mr. 1 Adair said he is expecting a decision or a ruling based on the most recently filed brief before 1 Christmas. 20 Bob Gross, Long Hill Road, talked about the State granting land lease for solar work at the 21 dump. He asked if the Electric Division or the PUC would be interesting in partnering with the 22 State. Mr. Adair said the RFP is tied to and aimed at UI and Eversource so they will be the 23 customers for this output and sold to them at a price higher than the market price for 24 electricity. Mr. Adair said as far as what the Town's relationship is, he is not aware of anything 25 other than leasing the land. Mr. Gross noted that when WED was involved with CMEEC, they did 26 projects in Wallingford to try to reduce the electric rates. He noted this is a project right in our 27 own backyard and because of subsidies, would make the project profitable. Mr. Gross said if the 2 Town would be proactive and look at this this would help save on electric rates. He noted the 2 upcoming Public Hearing on raising electric rates. Chairman Beaumont said he didn't believe 30 this project would save on electric rates because the pricing will be above market. He said he 31 would not be interested in raising electric rates unless it was necessary. 32 Mr. Gross pointed out that the Town would not be the consumer, but be the investor and be 33 land leases partner. He asked if the Town was looking at this. Chairman Beaumont said the 34 Town isn't looking atthis because the Town has not been approached. Mr. Gross said the T~w11 ::",... _ 35 doesn't have to be approached to be proactive to talk to them. Larry Morgenstein asked if there 36 was anything preventing the Town from looking into this. Mr. Adair said WED has no plans to 37 participate in this endeavor or risk taking. Chairman Beaumont said if there was a renewable,. Regular Meeting and Elec'tric Rate Public Hearing December 6, 2016 Page 4

5 1 -portfolichitandarcj:applicable to munidpalit1es whicn. t h~ t_~.i? 110. in t I State, WED would look 2 at this because WED would have to have a certain amount of renewables in its portfolio. He 3 noted that any of the renewables are more expensive than more traditional types of generation 4 and as a result it would be highly questionable if this would be in the best interest of the rate 5 payers to do this. Mr. Gross said this doesn't make sense not to look. 6 PUBLIC QUESTION & ANSWER PERIOD CLOSED AT 7:03 p.m. 7 CHAIRMAN BEAUMONT OPENED THE PUBLIC HEARING ON THE PROPOSED ELECTRIC RATES AT 7:04 p.m. Mr. Adair gave an overview. He noted the July 1, 2016 public hearing when the proposed rates 10 were discussed for fiscal years ending 201, 201 and He said the rates proposed tonight 11 and discussed at the recent workshop, are identical to those proposed in July 1, but for two 12 differences: the amount by which the commercial/industrial customers are subsidizing 13 residential customers under the proposed rates would drop to 4% of the original subsidy 14 amount. He said the power costs built into the rates and rate of return varied slightly. Mr. Adair 15 said the same goals exist. He noted Rate 13 has had removed from it, certain charges which 16 now appear in standard form of pole attachment license agreement which the PUC approved on 17 Nov. 15. He said from the standpoint of wholesale power costs, everything is literally the same. 1 Mr. Adair said the consultant made a considerable effort along with staff to revamp the rate 1 classes to accomplish this. 20 Geno Zandri, Balsam Ridge Circle, asked if all the utilities in the State get the same rate 21 increase. Mr. Adair explained all the utilities have to pay capacity costs and all will see the costs 22 more than double as of June 1, 2017 and rise about 25% around June 1 of 201 and drop back 23 down slightly below the first year levels in 201. Mr. Adair said WED is affected by the same 24 market costs. He distributed data from the American Public Power Association who got it from 25 the United States Energy Information Administration, which compares electric rates for 26 residential/commercial and industrial customers in Connecticut as of Mr. Adair said this is 27 the average revenue per kilowatt He said WED 12. cents per kilowatt hour for all residential 2 customers and includes all-in charges. 2 Mr. Zandri wanted to know if the new rates being charged are equitable across the State. Mr. 30 Adair said every utility will pay increased capacity charges and noted WED is charged $6 million 31 a year currently for capacity and this figure will rise to approximately $13 million in He 32 said generation is trending down. Mr. Hine asked if the bar charts included the service charges. 33 Mr. Adair said these bars include total revenues divided by total kilowatt hours. Mr. Gross asked 34 if the.wholesale cu~to m e r rates we r~ figured into these _c o~ts, citing N~COR as ~n ex~mple. Mr. 35 Adair said these rates are just for-residential. Mr. Hendershot noted that NUCOR was not a 36 good example because a lot of their load is special contracts. Mayor Dickinson pointed out the Regular Meeting and Electric Rate Public Heari ng December 6, 2016 Page 5

6 .,...,:,..... _'-, red bars ~n -.th~ ~hart are ~s ~f 2615.but n'ot~d ~~ ~~:, ~f.th~ blu ~b ars ' ar~ prospective and said some of the red bars will increase. Mr. Gale said he would like to see the PUC not approve the rate increases and send it back and reduce the customer service charges to be more in line with other municipalities. He noted WED has the second highest customer service charges in the State. Commissioner Birney asked what comprises the customer service charge for WED. Mr. Hendershot said it is a portion, but not all of WED's fixed costs, i.e., reading meters, billing, maintaining services, wires, poles, trucks, tools etc., things we have to have regardless how much electricity WED does or doesn't sell. Commissioner Birney asked Mr. Hendershot to explain why all of the fixed costs are not included in the customer service charge. Mr. Hendershot said there are fixed costs which are addressed through WED's variable income of energy sales. Commissioner Birney asked if WED included all of their fixed costs in the customer service charge, the charge would be significantly larger. Mr. Hendershot explained the kilowatt hour charge would come down slightly. Mr. Adair said of the three divisions, WED is the only purely fixed costs operation we have. He noted with the Water Division, there are variable components, i.e, chemicals consumed, processing of sludge and pumping. Mr. Brodenski spoke about the rate study that he was sent on Nov. 2, and asked if he had current information. He noted page 5. Mr. Adair said he was provided what he requested and said the information had been updated and the info Mr. Brodenski received was out of date. Mr. Adair noted Mr. Brodenski requested a specific rate study. Mr. Brodenski said he requested the specific rate study and all the updates to this. Mr. Adair said he didn't recall this. Mr. Brodenski said he was sent some updates and he thought what he received was current. Mr. Brodenski said the information at one point in time indicated that capacity compared to FY ending 2016 and going up to Fiscal Year ending 201, was 20% of the bill roughly $17 million. He asked at what date this information became obsolete. Mr. Adair pointed out Mr. Brodenski still has good information. He said Mr. Brodenski is looking at capacity costs on page 5. Mr. Brodenski said he has, on page 5, is a chart which gives absolute numbers and percentages for capacity, energy, transmission, other, local distribution. Mr. Adair emphasized that nothing has changed. Mr. Brodenski asked about rate requirements and asked if WED has to get revenues of approximately $3 million at the end of He asked if Mr. Adair's number totaled approximately $3 million. Mr. Adair said his number is approximately $5 million. Mr. Brodenski said he printed 220 pages of his rate study he was sent believing it meant something. Mr. Adair said he believed the updates Mr. Brodenski received were a series of PDF's which were attached from s from the rate consultant. Mr. Brodenski asked when this information became wrong and asked how he could receive the updates. Mr. Adair said a copy of the recent information could be provided immediately. Mr. Brodenski said he wasted a lot of time on bad numbers. He asked if the rate revenue requirement covered all of the costs that WED is trying ''. Wallingford.Public Utilities Commission Reguiar Me.etlng ~nd Electric Rate Public Hearing December 6, 2016 Page 6

7 ~ to captur e. Mr. Ada Ii said this would be the total amount. Mr. Brodens i asked \Vhat the 0 increase was from to and asked how many rate/billing levels there were. Mr. Hendershot said there were 10 different types of customers. He said they are different because of their usage and size. He said the consultant makes allocations based upon the data and experience that he has with customer costs. He said WED provides him with its books so he can see what is spent. Mr. Brodenski said based upon the bad numbers he received, the rate revenue requirement went up 16% over three years. He said according to this, WED had to find 16% more revenue, but the costs for capacity, energy, transmission, are bought in bulk and WED doesn't receive 11 separate bills. He asked how WED decides how Rate 10 costs are different from Rate 11. Mr. Hendershot said the consultant has allocation factors and he also has the WED budget. Mr. Brodenski said the consultant decides how much of the operating budget, which he noted according to his figures, was 1% of the bill. He said he believed there wasn't a way to track the costs which appear in the rates. Mr. Hendershot noted WED has $ million of depreciation which is collected in the rates each year. Mr. Brodenski said what he is doubting is traceable to the costs. Mr. Hendershot said 314 of the bill is based upon the capacity WED is going to sell. Mr. Brodensky asked about 25% of the bill. Mr. Hendershot said that is power supply. Mr. Brodensky asked why a large user is charged a different amount, than a residence, not based upon allocation. Mr. Hendershot said large customer's charges are much larger, noting Rate 5 customer charge is approximately $272 a month, but noted his is $1 a month. Mr. Brodensky asked Mr. Hendershot to identify the costs. Mr. Hendershot said the large customers' needs more of the physical capacity. Mr. Brodensky wanted to know where the new rates will be posted. Mr. Hendershot said the requirements are the rates are published in the local paper more than 30 days before they go into effect, once they are adopted. Mr. Brodensky said if someone wanted to come to a public hearing and get specific, they would have to come to the WED first to get the information. Mr. Adair said this is the procedure..._ Commissioner Birney asked Mr. Adair how many workshops the PUC had leading up to the tonight's Public Hearing, noting the rates were available during all of the workshops as well Gina Morgenstein, S. Main Street, said if she was to look at the same chart for all the other rates, is there such a thing made for their rates. Mr. Adair said APPA publishes these rates. Ms. Morgenstein said the public has been told that a big impetus besides the costs going up for this adjustment is the business owners, commercial/industrial, and we as residential customers, are being asked to pay our fair share. She said if one were to look at the graph for commercial/industrial would it mirror this. Mr. Adair spoke about cost of service and noted it isn't about what WED charges for a given rate class compared to what others charge. Mr. Adair provided Ms. Morgenstein with a graph highlighting the different percentage increases all the customers would see Ms. Morgenstein said when she looks at the numbers, she wouldn't agree they trend the same way. She said by evening us out, the public is having an increase and a small drop and the commercial/industrial is having an increase, a bigger drop and possibly another increase. Mr. Regular Meeting and Electric Rate Public Hearing December 6, 2016 Page 7

8 ;,~:-.,. ~- ~; - Ad~i; ;,~~ --R~t~ i ~hi~h - ls ~ 't:e;i~~'tia1; ~ifi, go ' up- by.' 67~ a ncfan othe r 3.1%anc( -o p4%;- Rate,. ~,..,. 1-r.. ' 2 4 large commercial will see an.2% increase, a 1.2% and a 5.3% decrease. He noted that 3 while they all are being affected by the same market costs, WED is reducing the overcharge to 4 commercial/industrial and moving it over to residential. He said if the PUC gave permission to 5 WED to use cash beginning in July, one would see lower increases. Ms. Morgenstein said 6 residential customers are being told the Town markets to businesses to come to Town to enjoy 7 lower electric rates and residential customers need to better subsidize commercial/residential customers. Mr. Adair emphasized that WED at no time is there no plan to incentivize, guide, shape or alter 10 the behavior of commercial/industrial customers. He said the only basis for any change in the 11 structure of the rates is based upon the findings of the rate consultant in doing a cost of service 12 study. He said this is the same report WED had five years ago. He said over the years, in other 13 municipalities, there seems to be a tendency in putting costs higher than they should be, on 14 commercial/industrial, to spare the residential customers. He said he took exception to this and 15 stated again there is no plan to shape rates and alter behavior to attract businesses. 16 Larry Morgenstein, S. Main Street, said the consultant has some measure in this, but we don't 17 hear what the measures are and what drives the criteria and what the basis is. Mr. Adair said 1 the consultant discussed this at earlier workshops during the year. Mr. Hendershot said there 1 are experts in this field and they have to be trusted at some point. He said all this information is 20 based upon data, noting there are 24,500 customers in WED, 21,000 of them are residential. 21 He said there are costs to serve these people. Mr. Morgenstein said this still has a vagueness to 22 it that doesn't make it definitive or hard. He said if we engage someone else with a different 23 model, would it show something different. Mr. Hendershot said in minute details, it could be 24 different. He said in the grand scheme it wouldn't be because the data is all the same and 25 WED's activities are all the same. Mr. Adair said WED has two consultants independently looking 26 at the same data and arriving at the same results so there is no reason to suspect or throw out 27 the results here. 2 James Hine, 342 S. Elm Street, asked how long the residential subsidy has been in place. Mr. 2 Hendershot said this problem has come up for the 12 years he has been With WED. Mr. Hine 30 asked would it be fair to assume this subsidy began before this and how long has the 31 consultant been recommending to even out the rates. Mr. Hendershot said it might have been 32 with the previous consultant. Chairman Beaumont said it might have been 10 years ago. Mr. 33 Adair said in 2007, WED was putting together new rates. He said these subsidies have crept 34 into the rates. Mr. Hine asked if this issue had not been addressed until recently. Chairman 35 Beaull)qnt said he believes this is the third time we have been heading in this direction in terms -~ "'~"""'\" r : :-... ~r..:... -; t!:l.::;f"'-.~. :~ -"';.. ~ ' ~~. -- "!~. ~,:., l' ",...,..;:::f.:c:..r...:"'";:rj of reducing any subsidy. Mr. Hendershot' said' his reco1lec:tr6n is that we nibbled at the problem 37 and shaved some of the edges off but hasn't taken the big bite of the apple. r Regular Me~ting and Electric Rate Public Hearing December 6, 2016 Page

9 1 M ~. H1ne aski{ about the shaving off du1'ing dt time,.and.,wonde1 ed if the i/jed ever,. n- into- a 2 revenue shortfall. Mr. Adair said the overall rates still capture the proper revenues. Mr. 3 Hendershot noted that right before Mr. Adair became Director, cash reserves went down quite a 4 bit. Mr. Hine asked why WED feels they have to take this big step now to reduce subsidy, 5 noting there were no issues in the past. Mr. Hendershot said the question seems to hint the 6 Division needs to collect more funds than needed which isn't the case. Mr. Hine said there 7 haven't been issues in the past, even though the subsidy has been in place for 11 or 12 years. He asked if a business ever approached WED and said they would move out of Town because the rates were too high. Mr. Adair there is no proponent here whatsoever to try to shape 10 anyone's behavior. He said fairness, proper accounting and proper cost allocation which is 11 fundamental to the business and what we strive for. 12 Mr. Hine asked if this proposed movement to reduce the subsidy wasn't being proposed to 13 address a particular problem in shortfall of revenue, it is just a matter of fairness as to why the 14 residential rate is increasing more than the commercial. Mr. Adair said this is the need to reduce 15 the subsidy which produces this. 16 Geno Zandri asked about the adjustment on the subsidy. He said if it weren't done, it would 17 increase the commercial/industrial rates higher than proposed. He asked if 1 commercial/industrial would still be paying less than in the State. Mr. Adair said as a class he 1 believe so but noted it was speculation. Mr. Zandri said it shouldn't be speculation, but fact and 20 noted if WED didn't increase the residential to make up this subsidy, this would go back onto 21 the commercial and industrial, and we should know what that dollar amount is and if they will 22 pay more or less. Chairman Beaumont referred to the bar chart on page 4-. He said as of , it shows what the rates were. He said the only case in which we are higher than anyone 24 else is in respect to Bozrah who charges their one huge industrial customer a lot less. 25 Mr. Zandri said if nothing is changed, than the customers who are commercial/industrial will be 26 paying less than Bozrah. He said he would like things to stay the way there are. He noted the 27 residents of Wallingford own this Division. He said he doesn't hear any complaints and people 2 are happy to have these low rates. Mayor Dickinson noted the bar chart noting this is not 2 comparing WED 2020 with South Norwalk. He says the government gets criticized all the time 30 for not attending to things that are honest and fair and dealing with things properly. He said 31 standards of ratemaking state there should be movement and noted WED is not going the % which it ought to be, we are going 50% moving in a direction that is fair. Mr. Zandri said 33 the residents should get the benefit of ownership. He noted there are no commercial/industrial 34 customers in this room saying they want this to go through. Chairman Beaumont said WED is 35 required by law to make between 5% and % return on investment and WED doesn't aim for 36 the %. 37 Mr. Gross asked how much of the usage (consumption), is attributed to the 3 commercial/industrial customers. Mr. Hendershot said residential customers are projected to Regular Meeting and Electric Rate Public Hearing December 6, 2016 Page

10 ... ''( purchas~ 37 1f2 '<l;o-of 'the e1.1ergy in Fiseal {b/i./. he Said gove rnment is iriduded in th,e 62.5%. '.'.,~ that is everything else. Mr. Gross asked if the 62.5% included the two customers that are off line but bring power into Town. Mr. Hendershot said this was not the case and costs are being fairly allocated among all the rates. Mr. Gross asked if commercial/industrial capacity charges have been out of whack the past 10 to 12 years. Mr. Adair said lower load factor customers will now pay more than higher load factor customers. Mr. Hendershot said the arithmetic amount of the increase over the next three years is in capacity charges which is being charged and passed on to all of WED's load. He noted that capacity charges per se weren't out of whack in previous years, it was overall revenue collected from customers compared to the costs associated with those customers. He said capacity charges are power supply costs and are collected from residential customers purely on a kilowatt hour basis. He noted residential customers incur capacity costs but are not collected directly because a demand meter is not put on their houses because of the price of the meter Mr. Zandri noted that commercial/industrial customers have a way to recoup their costs increase but residents have to suck it up noting that any increase will hurt them. Mr. Gross said commercial/industry can recoup costs by write-offs. Mayor Dickinson noted that when one departs from principle, they end up rationalizing results. Mr. Morgenstein said he understood there was a creep over time and they saw the disparity. He said what other people pointed one is looking at people in different capacities and their ability to pay and how it will affect their lives. He said this rate change won't make a big difference to him, but are looking at people who this will make a difference to. He said he couldn't stress it enough, that this will cause hardship to a certain amount of people. He asked WED to try to mitigate this rate increase or not do it at all. Ms. Morgenstein said for 10 years it was slid down the road, but now it is a necessity. She said she deals with people every day who have to choose between food and medicine. Rep. Mushinsky asked WED to be more aggressive on outreach with alternative energy, insulation, energy efficiency as other utilities are doing and to target people with fixed incomes. She said many people come to the redemption center to cash in their bottles and cans to pay their electric bills. She asked WED to ramp up its pitch to these folks on how they can save - electricity. Mr. Hendershot said a slow month for HES is 30 to 40 homes. He said WED spends every penny of the energy conservation. He noted last budget year, WED went two times to the PUC to move money out of reserves back into the account because of underspending in the previous years and overspent the budgeted amount last year and had to bring it out of reserves. Mr. Hendershot said thousands of HES's had been done :~:<Rep. Ml!ls-hinskyasked ab0ut money tied up with CMEEC which could be used.towards.this...,.. ~;,_,,,.,...,. _, 36 process. Mr. Adair said CMEEC is withholding approximately $100,000 a year for revenues they 37 receive from the forward capacity market, and noted previously WED used those funds as they Regular Meeting and Electric Rate Public Hearing December 6, 2016 Page 10

11 1 1 ave re_ ~y?g _ t ~ryl e ~ a i WEtJ ast L! a t h s fu ds in Vne.. 1 ~ reee: e $3, -0 t- '~-- < "",., - 2 noted these funds typically have been used towards r~n e\nable projects. 3 Mayor Dickinson said this state needs to change what is being done, calling the electric market 4 a joke. He said we are hostage to an electrical system which holds everyone hostage. Rep. 5 Mushinsky said if more renewables are done here in Wallingford, we can offset the system. 6 Rep. Mushinsky spoke about rooftop solar. Mr. Adair noted there is $300,000 available with only 7 one or two residential takers. Mr. Gale said the customer service charges have gone up 0% over the past five years. Chairman Beaumont said this is a matter of where the allocation is. Mr. Gale said with WED putting in the fixed charge there is no recourse. Chairman Beaumont said 10 this has become a fixed cost business. 11 CHAIRMAN BEAUMONT CLOSED THE PUBLIC HEARING AT :52 P.M Discussion and Possible Action: Electric Division -Approval of Electric Rates 13 Commissioner Birney stated on the record that on July 1, 2016, based on his belief that there 14 should be fairness amongst rate classes and equitable allocation amongst rate classes, he was 15 prepared that night to vote in favor of reducing the subsidization through the three-year rate 16 period. He said as a result of valuable public input that night, he was one of the Commissioners 17 who urge the PUC to take a fresh look at this concept of subsidization and whether there was 1 any possibility that we could reduce the amount of the subsidization. Commissioner Birney said 1 six-months later, an exorbitant amount of time and effort from staff as well as costs of our 20 consultant, we have done exactly that. He said in his view, we have created a bit more fairness 21 and a bit more equity amongst the rate classes by reducing the subsidization to 4% over the 22 three-year rate period. He said he was very comfortable with this and would be prepared to 23 support that this evening. 24 Mr. Rinebold asked if the motion would be with the PCA being applied with cash. Chairman 25 Beaumont said the rates would have to be set and the PCA would be addressed in May. Mr. 26 Adair said this is the set of rates provided to the PUC as written. He said by so doing, this is the 27 rate structure. He suggested in June, as more information about future power costs is compiled, 2 staff will be able to provide the PUC with a very good estimate of what the PCA would be for 2 the upcoming period. He said the real task is the structure itself. 30 MOTION: Mr. Birney stated that for the reasons stated in the Director's Memoranda 31 dated June 2, 2016; August 1, 2016; October 25, 2016 and November 30, 2016, 32 regarding the development of the rates; the multiple workshops held by the PUC; 33 the Public Hearings held on July 1, 2016 and December 6, 2016 including Public 34 Comment during those Public -Hearings, as well as a 224-page report entitled 35 "Financial Forecast, Cost of Service Study", and "Recommendation - Retail Rates FY ", dated November 2016, he made a motion to approve Rates 1-13 as Regular Meeting and Electric Rate Public Hearing December 6, 2016 Page 11

12 - ~ provided to us arid.'provided in fhe -:package thi~ eve"n1ng for all three rate ye~rs arid Mr. Birney noted this was his intent. Mr. Rinebold seconded the motion Mr. Rinebold thanked everyone who came to the Public Hearing and said he appreciated the comments on some of the effects the residential rate payers will bear. He said he didn't believe this was significant based on the rates, but moreover, what is important is the proper allocation, the objective allocation of the cost to the rate classes without subsidy either way. Mr. Rinebold said if he were to be asked to provide a subsidy, he didn't know at this point in time, whether the subsidy would have to be higher or lower. He said there were good comments from the public to leave things alone but wouldn't support this, because he wouldn't know if it were too high or too low. He said we are in a better position to move forward with fair and objective allocation. He said the WED should continue with active engagement of the conservation load management program to ease the pain for any or all who request this. He said he was prepared to vote for this. Chairman Beaumont said he agreed with Commissioner Birney's comments on behalf of staff efforts. He said it isn't a matter of changing some cells in a spreadsheet. He said this is heading where it should be and supports this because he believes in fairness. Vote: 3 ayes Chairman Beaumont thanked everyone who came to the public hearings, noting he was happy to see the involvement. Adjournment Commissioner Birney made a motion to adjourn the Meeting at p.m. Commissioner Rinebold seconded the motion which passed unanimously Respectfully submitted, Cynthia A. Kleist Recording Secretary Respectfully submitted, Joel Rinebold Secretary.....;.,.,~ Regular Meeting a:nd Electric Rate Public Hearing December 6, 2016 Page 12