Few, if any, electric utility customers in Connecticut have been spared from the recent rate hike. Customers of the state’s two largest utilities are grappling with electric generation rates that, for some, have increased by more than 100%.
At the root of these incredible cost increases is the basic operation of the energy grid in New England, one that is highly reliant on natural gas for electric generation. In our region, 20 years ago, natural gas produced 13% of our electric power. By the first nine months of 2022, that number had risen to 53%.
As electric generation became more reliant on natural gas, New England became more exposed to dramatic changes in natural gas market prices, including those we’ve seen recently driven by demand, and world events such as the war in Ukraine.
In New England, we are at the end of natural gas delivery pipelines, and there are no realistic plans to build more to increase access to more gas, whether for heating or electric generation purposes. Electric customers in Connecticut are ultimately at the mercy of these dynamics, which is how families and businesses end up facing skyrocketing electric bills.
The situation is frustrating – and expensive – for many, but there are concrete, near-term actions that policymakers can take to help more Connecticut energy customers free themselves from seemingly endless price hikes.
By making modest changes to how commercial solar energy is regulated in the state, policymakers could help Connecticut businesses, organizations, and municipalities take control of their energy costs, claim their independence from wildly unpredictable global gas markets, and fight climate change, all at the same time.
A critical reform within lawmakers’ grasp would be to make commonsense adjustments to the Non-Residential Renewable Energy Solutions (NRES) Program which aims to make it easier for businesses, organizations, and municipalities to adopt renewable solar energy.
The NRES program includes a “virtual” credit allocation mechanism which allows utility bill credits to be delivered to accounts that are not physically located at the site of the project. Unfortunately, only municipal, state, and agricultural customers can currently benefit from this program. By broadening the definition of “beneficial accounts” to include all commercial utility customers, all businesses would have the opportunity to adopt solar and save money on their energy costs.
Additionally, as currently constructed, the NRES program restricts the ability of a business owner to use their land for solar based on the business’ annual power usage. This means that even if the business has a large parking lot or open space adjacent to their building, they would be restricted from using that area in the NRES program if the project’s production exceeds the on-site utility consumption. This restriction places an artificial, unnecessary cap on the amount of clean energy that can be generated in Connecticut.
Another key area of improvement would be clarifying an existing tax exemption to ensure qualification for NRES projects, this would make solar more affordable, while creating tax certainty for businesses and organizations installing solar arrays.
Lastly, and perhaps most importantly, policymakers should require the state’s utility companies to develop a fair, cost-effective, and expeditious process to allow solar projects to connect to the grid. Interconnection is a major impediment to the growth of clean energy, with about 700 GW nationally of proposed solar projects waiting to be interconnected. New England also struggles with getting solar connected to the grid, with an estimated 3,940 MW of solar projects pending in ISO-New England’s interconnection queue.
By enacting these reforms, policymakers could deliver impactful, near-term benefits to energy customers in our state. Importantly these reforms would also help the state get closer to meeting its goal of achieving net zero greenhouse gas emissions by 2050.
Energy is an incredibly important issue for consumers across our state, and state policymakers cannot be expected to counteract every dynamic, from unpredictable national fuel markets to global turmoil that affects our energy and its cost. Policymakers still, however, have the ability to take near-term actions that will have a meaningful impact in helping energy customers. Making reforms to Connecticut’s NRES program will go a long way in helping more energy customers in our state tame their energy costs and contribute to the fight against climate change.
William Herchel is Co-Founder and Chief Executive Officer of West Hartford-based Verogy.