Some electric customers may never have to pay surcharge
Connecticut’s largest electric utility company believes the state’s budget signed into law earlier this month leaves their 1.2 million customers picking up the tab to close the budget hole.
Meanwhile, some other utility customers may never be hit with the surcharge of some $3 a month, or may pay for a much shorter time, said Tanya Meck, spokeswoman for Connecticut Light & Power Co.
“It’s not fair to have one company’s customers paying the brunt of this debt,” she said. CL&P supplies electric to almost 75 percent of the state’s customers.
And a key lawmaker doesn’t dispute CL&P customers might be left footing the bill.
“Is it possible the municipal utilities will not have to chip in? Yes, absolutely. I don’t think there is anything wrong with that,” said Rep. Cameron C. Staples, D-New Haven, co-chairman of the legislature’s Finance, Revenue and Bonding Committee.
The way the budget is written, the 74,500 customers served by municipal utility companies may never have to pay the new monthly surcharge CL&P customers are due to begin paying Jan. 1. And the 325,000 United Illuminating customers will likely pay less then CL&P customers–the question is how much.
In the $19.01 billion budget Republican Gov. M. Jodi Rell signed into law earlier this month, UI customers are scheduled to begin paying the surcharge in January 2014 and the six municipal utility companies in January 2018. Collectively, this surcharge is expected to generate $903.2 million now to plug the upcoming year’s budget hole.
Non-CL&P customers are exempt from paying the surcharge until years down the road because they are still paying a separate surcharge tied to a state-ordered deregulation in 2000.
“The intent was to make the utility tax equitable, but they have not identified how they intend to do that,” Meck said.
Because CL&P customers will begin paying two years before any other utility company, they will carry most of the load. Both Meck and Staples said it’s a real possibility the economy will rebound over the next few years, allowing the state to pay off the debt earlier and further reducing the burden on non-CL&P customers.
If that happens, Staples said, municipal utility companies may never have to pay the surcharge.
“I think there’s a very distinct probability that we pay off this debt early. If you look at our state’s history of coming out of recessions, we have been very robust on other occasions,” he said.
In fact, the state borrowed money using Economic Recovery Notes in 1991, 2002 and 2003. Each time the state paid the debt off two years early.
Staples said if the debt is paid off early and the municipal utility companies are never are hit with the surcharge, “that will be a nice problem to have.”
State lawmakers and Rell were quick to reject having the surcharge tacked onto everyone’s electric bill at the same time come Jan. 1. Instead they opted to retain a percentage of an expiring tax from the state-ordered deregulation in 2000. However, the tax expires for the companies years apart.
“This was never about parity, it’s always been about looking for hidden money,” Julie Cammarata said, a spokeswoman for the municipal utilities. “If these bills are paid off early, I can only hope they don’t make us settle it up. It may not be equitable, but none of this is justice or fair for anyone.”
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