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    Sunday, April 14, 2024

    Eversource’s proposed rate hike has local customers on edge

    Mark Kurpaska wasn’t expecting his electric bill to skyrocket when he replaced the oil-fired furnace in his Old Lyme home with an electric air-source heat pump last November.

    In the three months since then, his Eversource electric bill has climbed by an average of 139% a month. His most recent bill was nearly $490. And that’s after he saved $56 by contracting with a third-party supplier offering electricity at a lower rate than Eversource’s standard rate. More about that later.

    Kurpaska’s last bill showed he used nearly three times as much electricity as he had the same month a year earlier.

    “To say I was shocked by the energy consumption of my heat pump system would be an understatement,” Kurpaska wrote in an email response to a query seeking comment on the cost of electricity.

    Nearly a dozen readers responded with outrage over Eversource’s recent announcement that it is seeking a 19% rate increase.

    Eversource, in a Feb. 15 filing with the Public Utilities Regulatory Authority, or PURA, calculates the increase, which would take effect May 1, would add $38 to the typical residential customer’s monthly electric bill. Eversource defines the typical residential customer as one using 700 kilowatt hours of electricity a month.

    “Befuddled is the best way I can explain my thinking on an Eversource rate increase,” Mark Bancroft, of Pawcatuck, wrote in an email. “How is a person to plan a budget for expenditures when the utility company with a monopoly can’t seem to manage its own budget?”

    Bancroft suggested PURA should limit Eversource’s increase to the 2024 cost-of-living increase approved for Social Security benefits, which was 3.2%.

    “It is very difficult to turn my thermostat lower when Eversource Energy's CEO, Joe Nolan, has a total yearly compensation of $12.96 million,” Bancroft wrote.

    Kevin Thompson, an Old Lyme resident who responded to the query by phone, said his latest Eversource bill was about $320 despite his efforts to limit his electricity use. Living alone in an all-electric house, he said he uses as little heat as possible, closing off all but a couple of rooms in his raised ranch.

    Thompson, who works at Electric Boat, said virtually any increase in Eversource’s rates would pose a hardship for him.

    “We can’t keep up,” he said of Connecticut residents. “People are leaving the state because of the cost of living here.”

    Judy MacDonald, of Niantic, said by phone that Eversource bills for her and her husband are about $170 a month. Their furnace burns oil.

    “We run around turning off lights, try not to run the dishwasher and the clothes washer at the same time,” she said. “We changed cable systems trying to get that (bill) down. ... We wash a fair amount of dishes by hand.”

    A woman who declined to give her name and who described herself as “a senior citizen” said she keeps the thermostat in her home on the Stonington side of Mystic at 58 degrees to keep energy costs down. She showers at a daughter’s home and only cooks with a microwave and “still gets an electric bill of $100 a month.”

    “I can remember when it was $16,” she said. “I don’t see where the electricity today is any better.”

    She said Eversource should have to “give us a breakdown” of its proposed rate increase.

    Eversource’s filing

    In fact, Eversource has done that.

    In its filing with PURA, the company said it’s seeking the rate increase to recover $784 million it incurred in connection with mandated “energy programs, policies and initiatives.” The biggest part of the sum, $605 million, primarily stems from the state’s order that Eversource purchase power from third-party owners of electric-generating facilities, primarily Millstone Power Station in Waterford.

    Another $160 million of the total is largely the result of Eversource being barred from cutting off service to customers facing financial hardships and medical issues, resulting in unpaid balances between 2020 and May 2, 2024.

    “The magnitude of the uncollectible bad debt was exacerbated in 2023 when energy supply rates increased due to regional and international energy factors such as the Russian-Ukraine War, natural pipeline constraints in New England and risk premiums used by wholesale suppliers that are outside of Eversource’s control,” the company says in its filing.

    The proposed rate increase has nothing to do with the cost of electricity reflected in Eversource’s standard service rate for residential customers, currently 14.714 cents per kilowatt hour.

    The standard service rate, which is multiplied by the number of kilowatt hours a customer consumes in a month, makes up the supply portion of a customer’s bill. The rest, the delivery portion, includes transmission charges regulated by the Federal Energy Regulatory Commission; local delivery charges related to the cost of building, maintaining and repairing utility poles, lines and meters; and “public benefits” charges that cover the cost of energy programs authorized by the state.

    Eversource’s 19% rate increase would be applied to the public benefits portion of all customers’ bills.

    In a bid to soften the impact of the rate increase, Eversource proposes that it be phased in, with the majority of the increase aligned with “an expected substantial decrease” in standard service rates that will take effect July 1.

    “This alternative proposal would result in a comparatively smaller rate change on May 1, while deferring the remainder of the rate adjustment until July 1 ...,” the company’s filing says.

    Eversource projects that the July 1 reduction in the standard service rate “will materially reduce, if not eliminate” the impact of the 19% rate increase.

    It should be noted that Eversource customers have the option of choosing a third-party supplier that offers electricity at a rate lower than that offered by Eversource. In the aforementioned example, Kurpaska saved $56 on his last bill by choosing Town Square Energy, of Gilbert, Ariz., as his supplier.

    Town Square’s supplier rate of 11.97 cents per kilowatt hour of electricity undercut Eversource’s standard service rate of 14.71 cents per kilowatt hour.

    Eversource delivers the electricity and bills it, regardless of the supplier that supplies it.

    The website of Energize CT, a state-run organization, displays suppliers’ rates on its Rate Board, enabling consumers to shop for electricity and enroll with a supplier of their choice. PowerSetter, which bills itself as the largest digital energy comparison platform, offers a similar service.

    The public option

    Customers of Norwich Public Utilities and Groton Utilities benefit from the substantially lower rates the two municipally owned nonprofits charge.

    A comparison of January bills, for example, shows Eversource, an investor-owned utility, charged a combined residential electric rate, including service and delivery charges, of about 29 cents per kilowatt hour. NPU charged a rate slightly below 23 cents, or 21% less than Eversource. Groton Utilities charged just under 20 cents, or 31% less than Eversource.

    Last year, NPU’s board approved 4.5% rate increases in each of the next three years and also lowered the Purchase Power Adjustment for wholesale electricity and natural gas costs, which reduced the average electric-only customer’s bill by nearly 10% a month, according to Chris Riley, the utility’s communications manager.

    NPU serves about 21,000 customers in Norwich.

    Daniel Bouges, Groton Utilities’ manager of communications, said utility rates are dependent on a multitude of factors that can lead to rate increases.

    “It’s unfortunate, but we understand why it happens,” he wrote in an email. “As a publicly owned utility we are not profit-driven and therefore do our best to mitigate factors that might lead others to raise their rates to uncomfortable levels. While our rates as a matter of course have increased over time we specifically endeavor to minimize steep increases knowing how that can affect customers’ bottom line.”

    PURA invites members of the public to comment on Eversource’s proposed rate increase by emailing PURA.ExecutiveSecretary@ct.gov, referencing Docket No. 24-01-03.


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