Utilities’ Conn. price hike will be painful

Nothing unites politicians from opposing parties like utility rate hikes. Republican leaders, as one might expect, criticized planned rate hikes from Eversource and United Illuminating this winter as if they were the product of state government leadership. But the state’s actual leaders, including recently reelected Gov. Ned Lamont, were just as harsh in their criticisms. “This is a massive increase that will be unaffordable for many Connecticut families and businesses,” Attorney General William Tong, also reelected earlier this month, said.

The outrage is warranted. On Thursday, Eversource filed for new electricity supply prices from power suppliers that could add an extra $85 to the average residential customer’s monthly bill. United Illuminating, which serves a smaller group of customers, mostly around Bridgeport and New Haven, is projecting an average increase of $79 a month for its customers.

The issue is limited supply, with the utilities worrying that a cold snap could send demand soaring and prices up at the same time. A warmer-than-usual winter would benefit customers (even as it might be worrying for other reasons).

Some of this is simple supply and demand. There’s not as much natural gas available, so the price goes up. That’s Econ 101. But what’s harder to understand, even after so many years with this protocol in place, is how the system works at all.

Eversource and United Illuminating are not publicly run.

They are (or are subsidiaries of ) profit-making companies, with shareholders to worry about and a bottom line to protect. But they don’t function like most companies — it’s not like a competitor can jump into the market and string up its own power lines. Consumer choice is severely limited when it comes to turning on the lights.

So how can power companies serve shareholders and the public good at the same time? The answer, as we’ve seen whenever there’s a natural disaster and the power is out for a week, is clear — they can’t.

The system we have is a product of deregulation that took many previously public functions out of the government’s purview and into the hands of the market. But in the case of electricity, it’s a hybrid system. The competition that’s supposed to keep down prices doesn’t really exist, but the profits to shareholders are very much real.

It’s a system we’re stuck with, because, as politicians have found in the past when they’ve looked at alternatives, the price to start over is prohibitive. The best we can do in the short run is make sure the companies are properly regulated and give customers help when it’s possible.

That’s what state leaders have pledged.

“Programs are available for those who need support paying their electric bills this winter, including our energy efficiency programs, which we’ve kept funded and provided supplemental funds to in order to help those most in need,” Lamont said in a statement.

Along with a plan to continue the gasoline tax holiday through the winter, these programs will help people stay whole through the coldest time of the year.

It’s not a perfect solution. It’s likely, however, the best we could hope for from an imperfect system.

The competition that’s supposed to keep down prices doesn’t really exist, but the profits to shareholders are very much real.