CCAG Supports House Bill 7098

"AN ACT CONCERNING CONNECTICUT'S ENERGY FUTURE"

We must decide whether to continue pricing electricity based on the highest cost the markets will bear or whether to move to a system that gives control back to the state by requiring prices to be based on the cost to produce the electricity and a reasonable profit.

Refusing to make a decision supports the current system that is not working and leaves control in the hands of generators, hedge funds & retailers.

House Bill 7098 .. (click to read more)

Moves to a system that exerts more state control over the generation of electricity by requiring the electricity from all new plants built to be sold based on the cost of the electricity plus a reasonable rate of return
Moves away from a system that cedes control over rates to the federal government through markets governed with little oversight by the Federal Energy Regulatory Commission
Allows for utilities to own peaking and baseload power plants, which will provide a cheaper cost-based alternative to the current market based plants, forcing them to compete and lower their prices
Benefits ratepayers because the lowest cost proposal gets chosen between cost of service and market based plants
Modifies the way we purchase electricity to give greater flexibility in the hope of lowering costs
Increases the transparency in the way we purchase electricity. Secrecy hurts consumers
Creates an energy planning process, which considers conservation measures first, and ensures we build plants before there is a shortage
Has efficiency programs that are evaluated for effectiveness
Exempts schools and towns from being placed on the standard of last resort service, which has volatile pricing and is more expensive, thereby saving towns money
Exempts towns and schools from mandatory time of use rates, which will save them money because they are currently unable to shift their electricity usage to evening hours, and therefore are paying more
Fixes provisions in the current DPUC RFP for new plants to make sure that they sell their energy for the benefit of customers at the cost to produce it plus a reasonable profit
Requires the DPUC to make a cost comparison and to make sure that bids awarded for new plants are the least expensive option
Protects residential customers from being forced onto time of use rates and preserves the discounted electric-heated home rate

Senate Bill 1374 .. (click to read more )

It takes the state in the wrong direction by relying solely on market mechanisms and retail competition to lower prices when it has been documented that wholesale electricity markets are dysfunctional and do not operate in a competitive manner due to the nature of the electricity. Other states that have deregulated are moving away from the market to get lower prices
Has millions of dollars in additional costs to ratepayers, which will increase rates
Spends millions on efficiency programs outside the current framework for review, evaluation and accountability, despite the fact that we already have an efficiency program that is recognized as one of the best in the country. Reduces standards for ratepayer-funded efficiency programs by allowing a 2-to-1 payback instead of the current 4-to-1.
Sets aside $90 million per year for the benefit of specific companies through energy efficiency partnerships paid by ratepayers
Forces consumers to underwrite unproven technologies. These risks are questionable when rates are already so high.
Expands retail competition, when it has been proven not to lower prices for residential and small business consumers in any state
Does not allow for utility owned generation, which is necessary to inject true competition into the wholesale market by forcing independent power producers to bid against utilities to provide the lowest cost for ratepayers
Creates the opportunity for market manipulation by allowing outside suppliers who sell electricity in the market to manage the standard service portfolio and control rates. This is a huge conflict of interest, which will hurt ratepayers.
Encourages people to leave standard service, unnecessarily creating volatility and raising rates for everyone left on standard service.
Creates an opt-out program for municipalities to aggregate residents, despite the fact that towns have no experience in energy purchasing and will need to work with a supplier (who will add middleman costs)
Towns have lost money in the aggregation contracts they have already signed

Office of Consumer Counsel Comparison of HB 7098 and SB 1374

Principle	Reflected in House Bill?	Reflected in Senate Bill?	Discussion
A restoration of some direct state control over energy costs	Yes.	No.	Section 58 of the House Bill would require that some new power plants be built and compensated according to cost of service principles as determined by the Department of Public Utility Control, including a reasonable profit. Both utilities and non-utilities can build these plants and take advantage of this opportunity.
Allow some peaking power plants to be owned by the traditional utilities to reduce market risks.	Yes.	Yes, but in a way that leaves the utilities with risks but no rewards.	Section 54 and Section 58 of the House Bill would allow the utilities to own some peaking power plants to mitigate price spikes in the summer. Senate Bill Section 24 would allow the utilities to own power plants but would not offer then a reasonable profit to do so, while leaving them with the risk of cost overruns. Because there is no upside but only downside for the utilities to build, the Senateâ€™s approach is not a realistic proposal to achieve some utility-owned generation that would reduce market risks for customers.

Principle	Reflected in House Bill?	Reflected in Senate Bill?	Discussion
Maintain oversight of conservation dollars under the auspices of the successful Energy Conservation Management Board (ECMB).	Yes.	No.	The House Bill maintains ECMB oversight over conservation and energy efficiency measures, which has proven to be a successful model. Section 2 of the Senate Bill creates an electric efficiency partner program with only limited input and no oversight by the ECMB. The ratepayer contribution is up to 90 million dollars a year. If all goes well, then the ratepayers will get a return on that investment. However, to avoid customer confusion and duplication of effort, the dollars would be better added to the existing Conservation and Load Management Fund overseen by ECMB.
Avoid burdening customers with payments for new equipment without a DPUC analysis of the costs and benefits.	Yes.	No.	Section 7 of the Senate Bill would require the installation of advanced electric meters for all customers on an aggressive schedule without an analysis by DPUC as to whether the benefits will outweigh the costs. CL&P has estimated in DPUC Docket No 05-10-03RE01 that full deployment of this system would cost $255 million dollars, plus the cost of stranding the investment of existing meters of an estimated $25 million a year for ten years. There is no evidence to date that the meters will benefit most customers or cause them to significantly shift their usage.

Principle	Reflected in House Bill?	Reflected in Senate Bill?	Discussion
Achieve a low standard service price that can be enjoyed by residential and municipal customers.	Yes.	No.	Section 55 of the House Bill creates a procurement plan that, in conjunction with the other House provisions discussed above, will stabilize and ultimately reduce the standard service price. Section 23 of the Senate Bill has similar planning provisions but contains other provisions that will actually raise the standard service price. For example, Section 13 of the Senate Bill would subsidize retail suppliers and removes rules that prevent retail suppliers from using schemes to pull their customers onto and off of standard service. The Senate Bill appears to create migration risks that would actually raise the standard service price for all customers. The Senate Bill creates artificial competition for competitionâ€™s sake, whereas the House Bill seeks to establish the lowest standard service price for residential and municipal customers.
Avoid disincentives to building new electric infrastructure.	Yes.	No.	Section 1 of the Senate Bill would require the electric distribution companies to submit a plan to the DPUC to sell off part of the high-voltage transmission lines that they are building in order to support other goals such as demand response. This would send the wrong message to others that take on the risk of building infrastructure. To achieve the worthy goal of fostering more demand response, it should be funded directly.

Principle	Reflected in House Bill?	Reflected in Senate Bill?	Discussion
Restore some robust planning processes.	Yes.	Yes, but with more limited options and with less effectiveness than the House.	As discussed above, Section 55 of the House Bill and Section 23 of the Senate Bill, along with other provisions of both bills, will restore some needed planning processes for the essential product of electricity. However, the Senate Bill does not have a realistic proposal for adding some utility-owned peaking power plants to mitigate our market power risks and ensure reliability, which limits our planning options. Also, the Senateâ€™s efforts to push customers onto retail choice may well make supply planning more difficult and less effective.

CCAG Supports House Bill 7098

Office of Consumer Counsel Comparison of HB 7098 and SB 1374

Events

February

Upcoming Events

CFHC Foreclosure Manual

Connect With CCAG

Get Involved

Reports

Featured Video

Partners and Campaigns