Thursday, May 30, 2024

Electricity Rates Still a Charged Issue

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Source: Trica Ennis, Connecticut Investigator; Ownerly; Hartford Courant; Jan Ellen Spiegel, CT Mirror;

Connecticut residents paid some of the highest amounts for electricity in the United States, second only to Hawaii, according to a new analysis from Ownerly.

The report analyzed electricity price data from the Energy Information Administration to determine which states saw the greatest price increases in 2022. In total, they discovered that 18 states, including Connecticut, saw increases of at least 10%.

Connecticut, specifically, saw an increase of 10.4% overall, and average Connecticut electric consumers spent $173.16 per month. Hawaiians spent more than $200 per month after their electric bills increased by an average of $40.

The rest of New England fared slightly better, though Maine saw the highest increase in the nation, as bills went up 31.26%. Still, Maine residents paid some of the lowest dollar amounts in the region, with average monthly bills of $126.

Vermont saw the lowest electricity costs with an average monthly bill of $114. Massachusetts, New Hampshire, and Rhode Island customers, meanwhile, spent between $130-147 per month.

According to Ownerly, “inflation, a rebounding economy, and fuel-related repercussions from the Ukraine conflict” all contributed to a 40-year high in energy prices across the country last year.

Those factors don’t seem to be lessening any time soon. On January 1st of this year, customers of both Eversource Energy and United Illuminating saw a doubling of electric supply rates which will remain in effect through the end of June. Those rate hikes will result in an average bill increase of 40%, which amounts to an extra $80 per month for the average consumer.

Energy costs are likely to be a hot topic during the recently convened legislative session, as residents feeling the pinch from increased monthly expenses put pressure on Representatives to do something about it.

Connecticut’s first-ever Comprehensive Energy Strategy (CES), released 10 years ago, was built around natural gas. Gas was cheap, plentiful and cleaner than oil or coal. It was touted as a bridge from those fuels to renewables for electric power, and better than oil for heating. The CES set out to convert hundreds of thousands of homes to gas heat.

But that strategy came with a big red flag, now all too familiar.  “The interstate pipeline system that supplies Connecticut’s natural gas is already constrained, and there is limited liquified natural gas (LNG) capacity in Connecticut. At current use rates, there will not be enough interstate pipeline, storage, or peaking capacity to serve a large-scale addition of new customers,” the CES said. “Underestimating and purchasing too little capacity could lead to reliability issues (i.e., a shortfall in supply during peak winter season).”

And that is precisely what happened. Ten years later we are facing another winter of price-spiking, hand-wringing and finger-pointing over the current shortfall.  Only this time it’s worse, thanks to a cutback in fuel production during the pandemic and Vladimir Putin’s invasion of Ukraine.

If there were any doubts, just look at what happened over the extremely cold Christmas weekend. During peak hours on Christmas Eve, some power generators experienced outages. Expected imports of power — apparently from Canada — were unavailable. ISO-New England, which runs the regional grid, had to declare an energy alert and for a short time wholesale energy prices on the spot market hit more than $2,800. Prices above $100 are considered elevated.

At a nearly three-hour public meeting on January 3d conducted by PURA to address increases in Eversource electric rates.  The utility operates in Connecticut, Massachusetts and New Hampshire and has announced the doubling of rates from 12.05 cents per kilowatt hour to 24.172 cents in Connecticut as of January 1st.  Officials from Connecticut, Massachusetts and New Hampshire, representatives from Eversource and about 160 others, began discussing the energy price crisis — which is region-wide — and looking for ways states can pool efforts to find solutions, especially when it comes to procuring energy.

But with different procedures and energy policies in each state, a common solution was not apparent. And, even if reached, still wouldn’t address the longstanding supply problem.

Additionally, the Public Utilities Regulatory Authority(PURA) has opened an inquiry into the Eversource price increases, hoping to better understand how the utility sets and alters its supply rates.

In November, Gov. Ned Lamont announced a short-term relief plan that would give Eversource customers a monthly credit of about $10. Also, the legislature has planned to give an additional $30 million to the federally financed Low Income Home Energy Assistance Program.

Another way to assist would be by “diverting some money from other sources,” Martin  Looney, President Pro Tempore of the Connecticut State Senate, stated. “And I think that when something like this happens and creates a hardship and a crisis for customers, Eversource has a responsibility to use some of its own resources, its own reserves, perhaps have their shareholders participate in the relief a little bit more than they are.”

He said “one of the things that always disturbs me” is that Eversource acts like a private company in a competitive market, when in fact it has no competition and its profits are guaranteed.  “The world in which they live is a cushioned and protected one, dependent upon the public, and they should recognize that more than they do,” Looney said.

The rate increase applies to Eversource’s standard offer, not to rates customers receive when they get their electricity through third-party suppliers, but about 90% of customers in Eversource’s coverage area take the standard offer.

United Illuminating, which covers 17 towns and cities in New Haven and Fairfield counties, also will increase its rates by about 100%. Monthly charges will average $85 for Eversource customers and $80 for UI customers.

Eversource spokeswoman Jamie Ratliff issued a statement in which she said, “We understand and share the concerns over the volatile and historically high fuel prices caused by global events and demand.  “We’re always ready to work with state agencies, lawmakers and other key stakeholders across our service territory, and look forward to all opportunities to provide objective analysis,” Ratliff said.

Ratliff pointed out that the increase in 2023 is caused by the cost of natural gas and conditions in the market “that we do not control and is having a significant impact on customers in all New England states. … We do not earn a profit on the cost of electricity.”

The Senate’s Democratic caucus sent a letter to Gillett November 25th, saying members were “profoundly disturbed” by the increases and asking for the interstate hearing.

“This hearing should encompass the process by which Eversource procures energy, how it forecasts natural gas and other fuel source rates and if it is providing their ratepayers with sufficient protections from excessive increases such as we have just seen proposed,” the senators wrote.

Small municipal electric companies have kept rate increases to about 20%, the senators wrote, “How is Eversource, with large economies of scale available to it, unable to compete with small municipal electric suppliers? The obvious answer to this question is simple: greed.”

The letter also criticized Eversource executives, who “are paid millions of dollars. They are paid to do a good job and to deliver for ratepayers — over which they have a monopoly and a guaranteed source of income.”

Instead, profits go to shareholders and do not benefit ratepayers, while executives become “fabulously rich,” they wrote.

Eversource, UI will cut electric rates for some, but not until 2024.

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