Full review of electric-rate structure is necessary
Both the state legislature and state regulators have taken steps to address the high cost of electricity in Connecticut and customer dissatisfaction with reliability and the time it takes to restore service after storm-caused outages. They are steps in the right direction.
But also necessary is a thorough re-examination of how electric utility markets operate. It has been 20 years since the legislature enacted partial deregulation. It gives consumers, aside from those served by municipal utilities, the ability to decide from whom they will buy their electricity. This change was supposed to hold down rates and drive innovation. It has not worked.
Last year the state Office of Consumer Counsel found that from 2015 through 2018, state consumers who used these so-called third-party electricity suppliers paid roughly $200 million more than residents on standard service. Standard service is the default price passed along by United Illuminating and Eversource if consumers do not choose an alternative supplier.
Almost one in four consumers choose a third-party supplier. Some are willing to pay more to support renewable energy sources. Still, power prices in Connecticut should be lower overall if competition had worked as advertised. Instead, Connecticut’s rates remain among the nation’s highest.
Currently, the Public Utility Control Authority regulates the UI and Eversource distribution systems. It decides how much of the cost of maintaining and operating them, plus profit, is passed to consumers.
PURA also sets the default, standard-offer price. Other companies seeking to sell power compete against that benchmark. Some consumers who have tried third-party suppliers have complained to regulatory authorities of getting short-term savings through introductory offers, only to later see price spikes.
After 20 years, it is time for the legislature to review whether it makes sense to return to a fully regulated system or to revamp utility policy in some other fashion.
Awaiting that, we were glad to see PURA this week vote to end the practice of letting utilities add 7% to 9% interest on wholesale power purchases, inflating the cost passed to consumers. PURA decided the pass-along expense should be tied instead to the prime rate, now 3.25%.
Meanwhile, meeting in special session in September, the legislature adopted a performance-based system for PURA to use to set rates charged by electricity distribution companies. It will be implemented by 2022. And, due to the changes, consumers will get credits and can seek compensation up to $250 for spoiled food and medicine caused by prolonged outages.
Again, good steps, but only a start.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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