Eversource has solutions to stabilize rates for customers
Last week, our electric company, Connecticut Light & Power, filed with state regulators for an increase in rates that was largely avoidable. Avoidable — through leadership, cooperation and wellaligned regulatory policies. But you won’t hear that from those seeking to misdirect public opinion, painting the electric utilities as the source of the problem, rather than acknowledging the facts.
The rate increase is tied to two big-ticket items mandated by state law, each showing up on customer bills as “Public Benefits.” First, electric supply costs. Eversource is required by law to purchase electric supply — and is barred from generating electricity for sale at a profit. To stabilize electric supply costs for Connecticut customers, Connecticut locked into fixed-price contracts with the Millstone and Seabrook electric generating stations, benefiting customers in periods of high supply market volatility. When supply market prices are high, contract revenues are applied as credits to those high supply costs, paring down customer bills. Second, unpaid “financial hardship” customer balances. Under Connecticut policies, Eversource is barred from attempting to collect overdue balances from hardship customers. All customers pay the bills for customers who cannot or do not pay.
Our analysis shows that the public policies driving these costs are reasonable and beneficial to customers. However, when rate-making is not aligned with legislative policy, and the schedule for paying these costs back to the utilities is not correctly or reasonably administered, customers will experience rate shock. And that’s what is happening now. For the past year, my colleagues and I have explained to Connecticut policymakers that changing the way these costs are accounted for in rates, and pushing costs off to future periods, will ultimately lead to customer rate shock. Our recommendations were ignored, leaving Connecticut’s hand resting on a hot stove.
Under Connecticut policies, Eversource is barred from attempting to collect overdue balances from hardship customers. All customers pay the bills for customers who cannot or do not pay.
Eversource has an obligation to customers to provide safe and reliable power. We strive every day to take a leadership role in our reliability of service, storm response and customer care. We welcome the accountability that comes with our job. But we struggle when the regulatory objective is consistently to deny the financial support necessary to meet our obligation. In this model, the rate shock showing up in customer bills is no surprise. Given where the situation is landing, the public interest demands a fair and informed account of what is driving customer costs, along with consensus work toward a solution — not false narratives and rhetoric.
The average person doesn’t have any information or familiarity as to how their electric, gas, or water rate is calculated. Understanding how utilities operate and why utilities rely on the pay back of costs to get cash to pay for other costs for customers is a black hole to most people. We know that. More transparency is undoubtedly a good thing. That’s why we worked collaboratively with the state’s regulators and
public officials to redesign the electric bill so that customers have transparency about the costs they pay. This new transparency will highlight the cause of this increase. That is, these are Connecticut costs — arising largely from rate-making decisions that dictate how the utilities are paid back. Without collaboration, customers will see the “Public Benefits” section of the bill skyrocket on May 1, from about $7.50 per customer per month to about $44 per month.
We have solutions and we are ready to provide rate stability to customers. Over the past several weeks, we’ve met with officials from Gov. Ned Lamont’s office, the Office of Attorney General William Tong, the Department of Energy and Environmental Protection, the Office of the Consumer Counsel and Connecticut Industrial Energy Consumers. As executive branch leaders and consumer advocates, we are encouraged by their willingness to seek solutions for customers, rather than focusing on headlines. They recognize that rate shock will occur without intervention, and they understand that continually pushing costs off to the future is a costly trap for customers.
The stakes are high. Collaboration will be critical to the clean energy future, helping Connecticut reach its goals to fight climate change, while providing safe and reliable power to customers. We can get there working together from the facts and a common set of goals. Let’s start now.