CL&P rate hike plan is poor policy
Connecticut Light & Power is seeking a rate increase that is excessive, would hinder economic growth and discourage conservation.
Most alarming is the utility's request to boost the customer service fee - the payment every customer pays regardless of their electric use - upping it from $16 to $25.50 per month, a 60 percent increase. A similar fee hike on small business customers would increase their fixed monthly charge by 45 percent, according to the governor's office.
This fixed fee increase would generate the bulk of the increased revenues CL&P seeks. An average residential customer, for example, could expect to see an increase of $150 annually in their electric bills due to the CL&P rate hike, with $114 coming from the higher fixed rate, the rest from a higher usage charge.
In its filings, CL&P contends the fixed customer service fee provides the revenue reliability it needs to maintain the system, while user rates can fluctuate.
That may be true, but the fixed fee hits those least able to afford it the hardest. The senior citizen living in a tiny apartment on a fixed income pays the same fixed fee as a high-income professional living in a huge, energy hungry home.
Looking at it another way, the overall rate increase sought by CL&P is 6.3 percent. But a low-use residential customer in that tiny apartment, using 100 kWh a month, would see a 30 percent increase, due to the shift to the fixed-fee charge.
The proposal also discourages conservation. If usage fees go up, a customer can utilize conservation efforts to lower his or her bill. But if the bulk of the increase is based on a fixed fee, no amount of conservation can drive it down.
We agree with state Consumer Counsel Elin Swanson Katz, who is asking the Public Utilities Regulatory Authority to lower the customer service fee to $11.63, not increase it. This is hardly an outrageous proposal. Customers of Boston Edison pay a $6 fixed fee. Tying revenues primarily to usage shifts the burden to those who use a lot of electricity, while rewarding those who conserve.
We also question the need for CL&P to boost its revenues by $232 million annually. Some of that increase is already baked in, about $115 million to pay for recovery costs due to the rash of storms in the last few years and improve the system's resiliency.
But much of the rest is driven by the desire to generate greater profit. CL&P wants the utility regulators to boost its rate of return from 9.4 cents per dollar to 10.2 cents. A greater return requires higher fees. We just don't see the justification.
As the company that maintains the poles and wires over which electricity flows, CL&P remains a monopoly and so regulated. The deregulated part of the market allows customers to choose their electric provider. That competition, along with other market factors, has driven down electric costs in the state. Despite that progress, those rates remain among the highest in the nation. Allowing CL&P to pass along this big rate increase, particularly for the fixed rate, would be a step backward from that progress.
A CL&P rate increase would not affect customers of municipal electric utilities - in this area Groton Utilities, Norwich Public Utilities and the Jewett City Department of Public Utilities.
The regulatory authority will hold a local public hearing on the rate increase at 6:30 p.m., Sept. 3 at New London City Hall. It provides a chance to be heard.
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