This story is part of CT Mirror Explains, an ongoing effort to distill our wide-ranging reporting into a "what you need to know" format and provide practical information to our readers.

If you’ve taken a detailed look at your Connecticut electric bill over the last year or so, you probably noticed that it’s broken down into four sections: supply, transmission, local delivery and — to the confusion and ire of many — a section labeled “public benefits.”

While the first three charges represent the cost to purchase and distribute electricity that customers expect out of their utility company, the last charge is less familiar to many even though it has existed in some form for over two decades.

The charge’s existence has become more widely known due to the recent debate about Connecticut’s electric prices, which are some of the highest in the country.

As of the most recent changes to electric rates that took effect May 1, public benefits charges account for roughly 20% of the typical Eversource customer’s bill. For United Illuminating customers, it is just over 18% of the overall bill.

What’s in the charge?

Simply put, the public benefits charge is a collection of state and federally-mandated initiatives that include energy efficiency and electrification programs, assistance for low-income customers and contracts to purchase power from specific sources, such as nuclear power plants. It also includes costs associated with the operations of ISO-New England, the nonprofit charged with overseeing the regional grid.

The price tag for each of those programs are paid by the utilities, who then pass along the costs to their customers through the public benefits charge.

The charts above show the relative costs for all the various components of the public benefits charge in 2024. Current rates are determined both by last year’s costs and estimates for 2025.

The process for determining how much each customer of the state’s two investor-owned utilities must pay for those charges is more complex.

Public benefits charges are assessed a per-kilowatt-hour rate, meaning a customer will end up paying more as they use more electricity.

Each spring, the companies make a filing with the Public Utilities Regulatory Authority showing what their actual costs were to offer previous year’s slate of programs, along with their estimates for what those programs will cost in the upcoming year. The rate, which must be approved by regulators, is calculated using those estimates along with any overcollection or undercollection of costs from the previous year.

“A significant portion of the Public Benefits charge in rates effective May 1^st comes from last year’s under-recoveries — which occur when the actual costs the electric companies spent don’t match what they expected so rates are adjusted to fill that gap,” the Office of Consumer Counsel said in a statement this week. “While the companies track costs in detail, they do not measure these gaps on a per program basis. OCC believes it is important for consumers to be able to pin-point what drives both costs and the over or under-recoveries on a per program basis. We are currently advocating at PURA for improvements to both the companies’ accounting methodologies and the [rate adjustment mechanism] process as a whole.”

Last year, the biggest portion of the public benefits charge came from a collection of hardship programs such as Operation Fuel and the low-income discount rate that are intended to help certain customers pay for their utility bills. Another portion of the charge comes from unpaid bills that the utilities have deemed “uncollectable” — and which they are allowed to recoup from the rest of their customers.

Unpaid bills can accumulate during the winter, when Connecticut law prohibits utilities from cutting off heat to low-income customers. State regulators also paused shutoffs during the COVID-19 pandemic.

Together the cost of hardship programs and unpaid bills accounted for nearly a quarter of Eversource’s total public benefits charge and more than 45% of the charge for United Illuminating.

What about Millstone?

Another slice of the public benefits charge that had received heavy scrutiny is the state’s decadelong contract to procure power from the Millstone Nuclear Power Station in Waterford.

Under that deal, the utilities are required to purchase half of Millstone’s output at the set price until 2029. The deal was made after the plant’s owner, Dominion Energy, threatened to shut it down due to competition from cheaper natural gas plants.

When the price of natural gas rises — as it did at the start of Russia’s 2021 invasion of Ukraine — the utilities can sell the power back to the grid at a profit that gets passed along to customers through a credit on the public benefits charge. When gas is cheaper, however, that power is sold at a loss that ends up costing customers more.

Eversource has previously stated that the Millstone contract was responsible for the large majority of a spike in the public benefits charge that hit its customers last summer. Since then, however, more favorable economic conditions have lowered the impact Millstone has on customers’ bills.

Late last month, the PURA approved an adjustment to the public benefits charge and other transmission-related charges that are expected to collectively lower bills by about $13 a month for the average Eversource customer and $3 for the average United Illuminating customer.

Why were so few people aware of the charge before?

The public benefits charge existed mostly in obscurity — lumped in as part of the larger delivery component of most bills — until 2023, when lawmakers passed legislation requiring utilities breakout the cost of the public benefit charges through a line item on customers’ bills.

As it would happen, the bill redesign took effect just before a spike in the public benefits charge last summer and a subsequent heat wave that sent customers’ bills soaring.

Anger quickly rippled across social media, newspaper editorials and into the halls of the state Capitol, where some politicians seized upon the issue in an election year.

Republicans is the legislature pitched a plan to shift the cost of the public benefits charge onto state coffers, calling it a “hidden tax” on utility customers.

Democrats and Gov. Ned Lamont have for the most part rejected that idea, arguing that the costs of those programs — nearly $1 billion in 2024 — would be difficult to squeeze into the budget without raising taxes or cutting spending on other programs.

The co-chair of the Energy and Technology Committee, state Sen. Norm Needleman, D-Essex, said this week that he is in the process of drafting legislation that would propose borrowing money to pay off a portion of the public benefits charge like uncollectables and energy efficiency investments, while leaving the rest of the charge in place. A copy of that legislation is not yet available to the public.

What do the utilities say about the charge?

Because they make minimal profits off programs within the public benefits charge, the stance from utilities has ranged from ambivalence to frustration that customer anger is directed at them, rather than at policymakers who created the programs in the first place.

“It’s not for us to say if Public Benefits costs should be on a customer’s energy bill,” Eversource spokeswoman Jamie Ratliff said in a statement. “That’s a public policy decision.”

Ratliff went on to say that the the utility supports Connecticut’s decarbonization efforts — many of which are funded through the public benefits charge — and that other programs “provide critical value” to customers.

“However, we do recognize that having the costs of those state-mandated programs on an energy bill is regressive for lower income customers and removing that charge from electric bills and paying for it through a more progressive system would reduce an average residential customer’s bill by up to $43 per month,” Ratliff said, referring to the amount paid by a standard service customer using 700 kilowatt-hours a month of electricity.

Sarah Wall Fliotsos, a spokeswoman for United Illuminating, sent a similar statement this week pointing out that the public benefits charge stems from programs that were put in place by legislators.

“We encourage our customers to contact their elected officials with any questions or concerns regarding this portion of their energy charges,” Fliotsos said.