Utilities need real regulation
It was satisfying to read the long- overdue, full- scale treatments by Bill Cummings and Claire Dignan in their reports detailing consumer abuse by Connecticut’s “regulated” electric utilities, Eversource and United Illuminating ( Connecticut Post, Feb. 28).
The pattern of apparently intentional utility irresponsibility with respect to the woefully inadequate responses to the series of windstorms over the past decade is glaringly obvious to regulators, consumers and even the utilities themselves, despite self- praise for failed efforts to maintain and restore electric power in statewide outages, as the following excerpts from the report indicate:
From Eversource, in regard to the latest widespread, protracted power outages following Tropical Storm Isaias in August 2020: “We recognize that a multiday power outage is challenging for customers.” From UI, also for Isaias: “Tropical Storm Isaias was … a most devastating event.”
From customers: “There were trees down and some property damage, but nothing warranting seven to eight days to restore power”; “The way UI handled the recent power outage in Fairfield was terrible. … It was impossible to get through to UI. For some, it took a week- plus to get power back.”
PURA is scheduled to issue a report and draft decision on utility responsibility and possible penalties on March 19. But it must be noted that PURA has acted to allow Connecticut’s utilities to avoid penalties over repeated failures to safeguard consumer wellbeing over the past decade and has granted essentially all requests for rate increases and special charges to consumers over the same period.
From Attorney General William Tong ( regarding, specifically, Eversource, but also, implicitly UI): “PURA should find that ( Eversource/ UI) ( were) imprudent in ( their) storm preparation and response — most notably in ( their) failure to protect public safety and communicate effectively.”
But the purpose of this commentary is not to simply reiterate the terrific reporting, it is to ask the essential question: Why does Connecticut have the highest energy/ regulated utility costs in the United States?
According to WalletHub, the average Connecticut household monthly cost for all energy is $ 372, with $ 169 just for electricity, making Connecticut the highest- cost state for all types of energy.
This is for no logical reason. Our price differential with other states is not accounted for by any combination of taxation, regulation, geography or demand. Indeed, we are the lowest- performing state economy in the United States, which is reflected in our energy demand, which should be reflected by our energy pricing.
Since we are considering regulated utility costs, which apply to regulated monopolies that are guaranteed only “normal profits” ( no other type of business is guaranteed any profit), we should see consumer utility costs ( for all types of utilities) that reflect the “normal” costs of doing business, in the context of inflation and interest rates/ money costs, such that after- cost profits for the regulated monopolies in question are statutorily limited to typically under 10 percent.
Not in Connecticut. Eversource reported profits of 33 percent for 2020.
A business and its shareholders — especially a monopoly — cannot reasonably be expected to be self- regulating ( as profits are pursued) such that it charges reasonable prices even as it provides superior, reliable service/ product. So, it is no mystery why Connecticut has ridiculously high utility prices and unreliable, often poor service from its regulated utilities. It is because Connecticut’s “regulated” utilities are not being regulated.
Connecticut’s utilities have been given free rein by state government. This has been especially true since the departure of U. S. Sen. Richard Blumenthal from his position as Connecticut attorney general. The situation has been exacerbated by the creation of super- agency DEEP by Gov. Dannel Malloy, which is of sufficient complexity to obfuscate the relationships and conflicts of interest between PURA, the government and the “regulated” utilities, such that, in reality, the latter are allowed to function unregulated.
I would admonish Gov. Ned Lamont, the Legislature, Tong and members of PURA to take a giant step toward restoring the Connecticut economy by tightly reining in all of the public utilities, including the enforcement of statutory profit levels. And I would admonish Connecticut voters to reward or punish our elected officials based on their fidelity to their constituencies in this regard.