The higher electric rates that have been in place since July 1 certainly has affected residential customers throughout Connecticut. But for businesses, large and small, the impact is starting to hit the bottom line.
For some businesses, they have seen their United Illuminating bills nearly double. The culprit is the public benefits charges portion of the bill, which has been put in place to pay for energy programs authorized by the General Assembly, the Conversation and Load Management Fund, the Millstone nuclear power plant power purchase agreement, renewable programs and income loan programs.
“Public benefits charges represents 60 percent of our electric bill,” said Heather Cavanagh, president and CEO of the Stamford Chamber of Commerce. “A fixed cost like this is challenging.
“I understand this deal (for Millstone) was approved several years ago. But several years ago, we didn’t have the inflation we now have. And then there was the costs related to the pandemic.”
In a deal struck in 2017 between the state and Dominion Energy, owners of Millstone, the state agreed to help keep Millstone open for at least another decade and in return ratepayers would have another source of energy in the deregulated market.
The deal has allowed utility companies UI and Eversource to recoup money lost when Millstone energy costs became untenable and it lost customers. Starting on July 1, a 10-month payment period began that ratepayers would pay for through public benefits charges. The twist on the payment is that it is tied to the ratepayer’s usage, meaning the amount will fluctuate each month.
That and other state legislation that called for customers to start paying an additional $3 per month over the next year to pay for an electric vehicle charger program are now included in the public benefits charges.
PURA explanation
“What happened on July 1? What were the primary cost-drivers?” said Marissa Gillett, chair of the state Public Utilities Regulatory Authority (PURA). “Overwhelmingly, the primary driver was the 77 percent of the increase was attributable to the Millstone Power purchase agreement (of generated power) that should be paid over a 10-month period.
“Another driver for July 1 that I believe is unwarranted was because of our neighbors who could not pay their bills during Covid. The Covid moratorium was not debt forgiveness. Now that the moratorium has been lifted, they need to repay those bills during payment arrangements.”
Gillett, who made those comments during an online discussion sponsored by the Connecticut League of Conservation Voters, pointed out her opposition to a PURA vote in December related to the higher public benefits charges.
“My dissent on PURA’s (2-1 vote in December) on the recoupment of the costs of over 10 months that would weigh heavily not just on small businesses and businesses overall is a matter of public record,” she said. “The most prevalent complaints I am hearing is the volatility of the rates we are facing and that customers need a level of predictability and stability in the rates they are facing. That’s a difficult thing to achieve, especially on the supply side.”
In the PURA vote, the regulator failed to approve a plan to spread the repayment plan over 22 months, which would have lessened the burden for ratepayers.
Gillett believes there are actions PURA can take to decrease the volatility of the rates. And she expects that will be subject of future PURA proceedings, where she hopes to hear from small businesses.
Cavanagh, who has operated the Stamford chamber for six years, is worried about how that volatility affect the chamber.
“It makes business unpredictable if we continue down this path,” Cavanagh said about the high electric rates. “If we see this expense continue to grow, what can a business do.”
She mentioned that with all the overhead a small business has, having a fixed cost that a business can’t control could force that business to cut costs, such as employees.
The politics of it all
State Republicans have been making hay about doing something about unwinding the Millstone agreement this summer and even getting rid of the public benefit charges. They shared a petition that calls for new legislative action and calls for a special session to have Gov. Ned Lamont address the issue.
“It is truly shameful that Governor Lamont and Democrats in Hartford are too afraid to do their jobs and go into Special Session to address the ever-rising public benefits charges on our electric bills,” said Republican Chair Ben Proto.
The petition calls for the following actions:
- Move “Public Benefit Charges” permanently off ratepayer bills.
- Provide immediate electric rate relief by reallocating unobligated end-of-year American Rescue Plan Act (ARPA) funds and re-examining budgetary options that could make available additional dollars to (a) cover the portions of rate increases associated with the moratorium on electric service shutoffs and the costs associated with electric vehicle charging programs and (b) provide additional rate relief to ratepayers to the maximum extent possible as funds allow.
- Cap all future Power Purchase Agreements to no more than 150% over the wholesale electric market price.
- Redefine Class I renewable energy sources to enable competition to lower the cost of these energy sources.
- Restore the independence of the PURA, by separating it from the Department of Energy and Environmental Protection (DEEP).
Republicans are saying Lamont and Democratic leaders are putting of any special session until after the November elections. They are asking residents to call Democratic leaders to sign the petition calling for a special session.
Lamont told Fox61 in late August that “short-term subsidies are not the answer to the problem.”
“The answer to this problem is get more supply of energy to bring down the price for everybody,” he said. He also said a special session is not likely.
Meanwhile, small businesses such as the Stamford Chamber of Commerce are faced with a state energy policy that can cause economic disruption to their long-term viability.
“What I am hearing is let’s take a look at Connecticut’s energy policy in context of today’s world,” chamber President and CEO Cavanagh said. “What can we do to lower these costs? It’s not like you’re a restaurant and can shut off the AC. People won’t come in there to eat.
“We need to work towards a short-term solution as well as something for the long term.”
