The start of a new year brings a new promise for a reset, progress, and change — but for Connecticut electricity customers, I see a return to our steady and unfortunate habit of high energy costs and a less-than-reliable electric grid.
A year ago, when the price of electricity supply surged, Connecticut policymakers acknowledged the matter was the result of the decades-old decision to deregulate the energy market, which forced utilities to sell off their generation assets, leaving consumers vulnerable to price spikes and the whims of energy markets. We live in this respect with one of the ghosts of Enron Corp., which successfully supported deregulation in roughly half of the U.S. before collapsing into bankruptcy and a series of criminal trials.
Curiously, policymakers in the Connecticut General Assembly last year only targeted the tiny part of the electric bill that utilities still administer: distribution. That’s the costs of the poles, wires, transformers, and substations that deliver electricity to our homes and businesses — which have always been fully regulated and transparent.
The costs represent roughly a third of our bills, aren’t subject to volatile price spikes from energy trading markets and are only allowed with the input and approval of the Public Utilities Regulatory Authority (PURA).
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Yet the only major energy legislation to pass in the General Assembly in 2023, Senate Bill 7, ignored every real driver to Connecticut’s high energy costs, focusing instead on the most controllable fractions of utilities’ costs. This is jumping over dollars to chase after pennies.
With the new year and legislative session unfurling, there’s little indication much, if anything, has changed in the Land of Steady Habits. Policymakers keep talking about the many factors contributing to high energy costs in Connecticut and the Northeast. But the focus remains on utilities, which is kicking the dog to the detriment of consumers, who pay some of the nation’s highest rates for reasons all but unrelated to distribution costs.
State Sen. Norm Needleman, co-chair of the legislature’s Energy & Technology Committee, recently summed up how much of our electric bills come from a utility’s costs: “Look at just the pure distribution charges. It’s seven or eight cents a kilowatt hour out of 23 cents in total. So money is going other places.”
PURA Commissioner Michael Caron traced high costs all the way back to the deregulation of energy supply: “It blew all the component parts of [the energy system] far and wide. So the utility was no longer responsible for integrating everything. I think that caused costs to rise.”
The issues raised by state policymakers have one important thing in common — not one will be solved by targeting utilities and the portion of the bills regulators already oversee. Nascent proposals and other creative initiatives that could actually lower costs, such as fixing the supply market or expanding natural gas pipeline capacity to mitigate winter price spikes, have been set aside or ignored.
This short-sightedness is expensive. Connecticut residents and businesses will keep facing painfully high energy bills, since the main drivers of those costs continue to go unaddressed and keep the state’s average electricity rates among the highest.
There is another cost, too, in terms of Connecticut’s electric grid, which will be deeper and longer-lasting. An underfunded grid will not be ready to bring on more renewable sources of electricity that could help control costs, nor will it be able to meet consumers’ increasing demands for modern, resilient, and reliable power — especially as more people use electricity for heating and transportation.
The market forces that control energy supply compound the problem even further, since power plant owners are not incentivized to ensure efficiency, modernization or bringing on new energy sources. They are motivated by intent and market structure to turn a profit, which they secure as long as they dispatch electricity when called upon to do so.
By hampering utilities’ ability to deliver low-cost energy and maintain a strong grid, policymakers are maintaining an unfortunate status quo of stubbornly expensive electricity and a decaying, soon-to-be obsolete energy system. None of this bodes well for Connecticut’s customers nor its economic competitiveness.
Connecticut residents and business owners deserve better. It’s time for policymakers to take on the actual issues that will deliver real savings and solutions, instead of just kicking the dog.
Bryson Hull of Milford is Connecticut Director of the Consumer Energy Alliance.