Political honesty might cut electric bills real fast
Only one practical proposal has been offered for immediate reduction of Connecticut's electricity prices, the highest in the continental United States. But the practical proposal is the least publicized one.
The practical proposal is not the legislation offered by state Rep. Christine Conley, D-Groton, to give the General Assembly the authority to decide on rates charged by electric and natural gas utilities. Under political pressure, such a system would become the expropriation of utility companies, requiring them to sell their products below cost.
The current rate regulation system, operated by the Public Utilities Regulatory Authority, puts some distance between rate setting and politics, on the premise that the public interest requires keeping utility companies financially sound.
If the legislature is to set utility rates directly, the only fair way of doing it would be for state government to purchase and operate the utilities. That would not be cheap.
Connecticut's largest utility company, Eversource Energy, is a public company with a market capitalization of more than $29 billion. Not all of that value arises from Connecticut, since the company also serves Massachusetts and New Hampshire. But the fair market value of the Eversource operations in Connecticut is certainly well above $10 billion and acquiring them would require state government, already the highest indebted per-capita, or close to it, to make a bigger mess of its finances and debt burden.
Even then anyone might guess what would happen: State government would start transferring electricity costs and hiding them in other accounts in the state budget to camouflage its inability to control costs any better than the former utility companies did. Indeed, even under the current system of purportedly nonpolitical rate regulation, state government long has been shifting its own costs into electric rates.
That's where the one practical proposal for an immediate reduction of rates comes in. It was made by state Sen. Tony Hwang, R-Fairfield, in a recent essay in Connecticut's Hearst newspapers.
“A fresh look at the various camouflaged costs on our monthly utility bills is in order," Hwang wrote. "A significant portion of those bills does not actually pay for electric generation and distribution.”
That is, state government has enacted various social and environmental policies and programs that have substantial costs but has shifted those costs to the electric companies, which add them to customer bills. The companies get the blame for these costs and elected officials take the credit for whatever good the policies and programs accomplish.
United Illuminating, Connecticut's second largest electric utility, declines to discuss the camouflaged costs, apparently fearing political retaliation. But, when pressed, Eversource has estimated them as constituting as much as 20% of electric bills.
That is, if Connecticut electric customers had a clue about this cost shifting, they could be lining up behind -- or preferably in front of -- the teacher unions and other special interests at the state Capitol that are clamoring for a share of the state budget surplus Governor Lamont and many legislators boast about. If electric rates are really as burdensome as the governor and legislators contend, why aren't they taking state government's costs out of electric bills and moving them into the state budget where they belong?
The governor and legislators are ignoring Hwang's hint because they don't want to lose the political advantages of shifting and camouflaging costs and blaming the utilities for costs that are really the government's own -- and not just the costs of state government's policies and programs but also government's impairment of domestic energy production.
This racket could end sooner if journalism ever exposed it.