Energy bill sought by Malloy wins final passage

In a bipartisan vote, the House of Representatives gave final approval Tuesday night to a complex bill sought by Gov. Dannel P. Malloy and negotiated by his environmental commissioner to remake how Connecticut procures and regulates the generation, purchase and delivery of electricity.

The legislation approved 138 to 9 both refines and expands a sweeping energy bill passed last year on the final day of the session on a partisan vote, only to be vetoed by Malloy’s Republican predecessor, Gov. M. Jodi Rell.

It creates a highly centralized power authority in a Department of Energy and Environmental Protection to be overseen by Commissioner Daniel C. Esty, who appears destined to become the most powerful state official outside the governor.

“We’re going from one extreme to the other, from a disjointed system to a very centralized one,” said Rep. Sean Williams, R-Watertown, a member of the Energy and Technology Committee.

Following a unanimous Senate vote Monday, the final action Tuesday is a vote of confidence in Esty and an expression of the willingness by politicians to accept a radical change in the hopes of lowering the cost of the most expensive electricity in the continental U.S.

The legislation delivers on a promise by Malloy, the first Democratic governor in 20 years, to modernize and expand the state’s regulatory structure into an agency that can shape and quickly adapt to energy markets.

“We started off with a governor who made energy the focal point of his administration, and clearly he wanted an energy bill,” said Rep. Vickie Nardello, D-Prospect, the co-chair of the Energy and Technology Committee. “He’s the first governor in my 17 years here to make energy a priority.”

It was passed with a broad, if tentative, consensus reached by the administration, Democratic and Republican legislators, and the electric industry, including Connecticut Light & Power and United Illuminating.

One industry source said the bill appears to be a thoughtful, balanced approach, but the sweep of its reach and the centralized power in hands of one commissioner inevitably leaves the various players unsettled.

“We have indeed centralized the agency. The commissioner has a great deal of authority, and with that goes a great deal of responsibility,” Nardello said. “It’s going to be our job as a legislature to ensure that authority is used properly.”

Esty, 51, an energy adviser to Barack Obama’s presidential campaign, is a Yale professor and author of nine books, including a volume that marked him as an environmentalist attuned to economics. Malloy named him commissioner the same day he proposed the new department.

Republicans were skeptical about some of Esty’s energy market theories at his confirmation hearing, but the ranking Republicans on the Energy and Technology Committee, Rep. Laura Hoydick of Stratford and Sen. Kevin Witkos of Canton, praised his handling of the negotiations that produced a consensus bill.

House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, said in a partisan year, the energy bill “was a refreshing respite. It was a classic example of what you can do when you sit down with people on all sides of an issue.”

Expectations will be high for the new agency. Connecticut has been a loser in the era of deregulation, when electricity became a commodity set by market price under a dizzying set of state and federal rules.

The state’s two utilities, CL&P and UI, no longer generate power. They sold off their generating stations and now are simply a delivery system. They provide “standard service,” competing with smaller companies that buy electricity and deliver it via the grid maintained by CL&P and UI.

The hope for the new energy authority is a nimble bureaucracy that can set policy and quickly react to market changes to help procure electricity at the best possible price. The old paradigm was reliability and stability over all else.

“It’s just not part of the mission,” Rep. Peter Tercyak, D-New Britain, said of lowering energy costs. “It’s been about avoiding brown outs. Success should be a higher bar than that.”

Electricity was purchased through a so-called “laddering system,” an overlapping series of contracts. The new system allows shorter contracts, presumably allowing the state to capitalize on market changes.

The bill abolishes the five-member Public Utility Control Authority, the body that oversees the Department of Public Utility Control, and creates a three-member Public Utilities Regulatory Authority that will be part of the Department of Energy and Environmental Protection.

The legislation restructures and expands the Clean Energy Fund and adds a new funding mechanism: the Clean Energy Finance and Investment Authority. The fund will look beyond rebates for solar energy to energy efficiency, electric vehicles and natural gas infrastructure.

Last year, the bill heavily favored solar as an alternative energy source for residential users. The bill passed Tuesday encourages energy sources that produce low or zero emissions, regardless of the technology.

Its final passage was applauded by business groups and environmentalists.

Joseph Brennan of the Connecticut Business and Industry Association said the group’s members were optimistic that the new agency would help bring down energy costs.

“The passage of this bill begins to bring Connecticut’s energy policies and infrastructure into the 21st century,” said Charles Rothenberger, staff attorney for the Connecticut Fund for the Environment. “With the establishment of the DEEP, the state will be able to develop a real energy strategy for the first time.”