The new electricity bill passed June 4 jolted previous efforts at deregulation in Connecticut, allowing the state”™s two transmission utilities the opportunity to buy power generation units if no other buyers can be found and to submit proposals to build plants if no other viable options appear.
Connecticut Light & Power (CL&P), a Northeast Utilities subsidiary that is the dominant utility in Fairfield County, said it is still reviewing the legislation and cannot yet comment on how it will respond to the new rules.
If only the latest attempt to improve Connecticut”™s electricity infrastructure, it also marked a significant reversal from the state”™s landmark 1998 law that shifted power generation away from utilities.
Congress kicked off the deregulation movement in earnest in 1992 with the National Energy Policy Act, which allowed power generators to compete selling electricity to utilities. In 1996, the Federal Energy Regulatory Commission ordered utilities to let competitors use their transmission lines.
Connecticut deregulated the electricity market in 1998; the following April, Fairfield County”™s second utility, United Illuminating Co. sold off its Bridgeport Station power generator.
The Rowland administration and the Connecticut General Assembly concurred that the newly competitive environment would ensure that power plants would be built as needed. But against a backdrop of fluctuating fuel prices and community opposition to new generators, plants were not built even as southwest Connecticut”™s burgeoning economy strained grid resources.
In January, electricity rates increased between 25 percent and 75 percent in Fairfield County and other territories covered by CL&P and United Illuminating, due primarily to higher costs for natural gas and to new federal tariffs intended to spur the area into building new infrastructure. While several companies offer savings off those rates to commercial customers, residential consumers have had little alternative but to foot the bill.
In an effort to encourage the installation of additional power generators, ISO New England Inc. last year adopted a “forward capacity market” plan to predict power generation needs across the region three years in advance, then allow companies to bid to build plants.
Connecticut Municipal Electric Energy Cooperative is currently preparing a Wallingford plant mothballed in 2000 to reopen in the next round of bidding.
ISO New England is focused on adding more “peaking” plants that are fired up only on hot days when air conditioners suck up available electricity, threatening power outages, and when power lines are strained.
With new transmission cables already coming online in southwest Connecticut this year and next, lawmakers hope the new legislation will similarly lead to new peaking plants in Fairfield County. CL&P said it is spending $30 million on upgrades throughout the state in preparation for the summer, including installing additional transformers in a half-dozen Fairfield County municipalities.
In its annual review of the region”™s market released in mid-June, ISO New England stated:
Wholesale electricity prices fell 5 percent throughout the region thanks to a decline in the price of natural gas, but prices were highest in Connecticut;
Overall consumption fell 3.2 percent in 2006, due primarily to mild weather and conservation programs; and
Peak summer electricity consumption increased 4.6 percent.
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