Energy Bill Threatens Connecticut's Economy and Consumers
Hartford, CT - The Connecticut State Legislature should reject faulty legislation that would slam the door shut on the state's burgeoning competitive electricity market and expose ratepayers to potentially large new stranded costs. The legislation, introduced toward the end of the state's legislative session with no public hearing and only 24 hours for stakeholder review or input, represents a dramatic reversal of Connecticut's policy on retail electricity competition. Connecticut consumers have made their concerns with the legislation known by sending over 10,000 e-mails to lawmakers over the past week in support of being able to continue to choose their electricity supplier.
The bill would create wide-reaching energy policy changes without any opportunity for public hearing and participation. "The sponsors have chosen to ignore public opinion in spite of the 88 percent of Connecticut consumers polled this month who said they supported competition in the electricity industry," said Bill Massey, COMPETE Coalition Counsel and former Federal Energy Regulatory Commissioner. "This legislation threatens the significant economic and environmental benefits for consumers that competition is creating."
Competition's benefits are clear in the wholesale electricity market serving Connecticut and the rest of New England. Prices fell in ISO New England by 48 percent in 2009, from $80.54 per megawatt-hour(MWh) in 2008 to $41.99 per MWh in 2009. Thousands of customers now receive their power from a competitive power supplier and today roughly half the electricity consumed is provided by competitive retailers. Connecticut is also now the regional leader for demand response, with 33 percent of all enrollment within ISO-NE. The state has benefited from increased reliability and power sources through $4 billion in regional transmission investment and another $5 billion planned.
The state Office of Policy Management and the Department of Public Utility Control jointly concluded that "most of the provisions of this bill will result in significant increases in ratepayers' costs and will have a considerable state budgetary impact." Ratepayers would be held captive to unchecked rate increase proposals by their incumbent utility if they are ordered to build new generation without competition's incentive to hold costs down.
The legislation also considers withdrawing from ISO-NE in favor of another ISO or a Connecticut-only ISO, a flawed idea rejected as uneconomic by Maine after two years of review. This consideration will create a climate of uncertainty sure to have a chilling effect on energy investment within the state. In addition, the state would be stuck with remaining financial obligations to regional transmission owners for regional assets through ISO-NE without any return on investment.
In competitive markets, power suppliers compete against one another to provide the best possible service at the lowest cost to attract and retain customers. Comparatively, incumbent utilities with monopoly protection have no incentive to innovate or lower costs because ratepayers are captive. Unnecessarily high energy costs imposed on state businesses would then act like a tax, reducing competitiveness and the ability to retain and create jobs.
"Those who ignore history are doomed to repeat it," said Massey, referring to other recent legislative measures limiting competition. "In Michigan, 2008 legislation limited competition to 10 percent of a utility's electricity load. Within a year, the cap had been reached, more than a thousand businesses were on a waiting list for more competition, and electric rates spiked 10 percent. State lawmakers should stand up for their constituents and prevent this outcome for Connecticut consumers."
