As Connecticut regulators mull a request from Northeast Utilities to hike rates for customers of its Connecticut Light & Power division, lawmakers pushed through a budget bill and energy bill that would do the same.
In the last days of the session, the Connecticut General Assembly passed Senate Bill 493, which would reorganize the Connecticut Department of Public Utility Control, and implement an artificially low rate for low-income families.
The bill would also launch a solar generation program and would allow distribution companies to manage a portfolio of generation assets that would provide some of their energy supplies.
“On the legislative front, we”™ve had a busy spring in Connecticut,” said Chuck Shivery, CEO of Northeast Utilities, in a conference call with investors this month. “While the bill does not appear to have an adverse financial impact on us, we are concerned that certain elements ”“ particularly the solar mandate ”“ would increase customer prices.”
At deadline, Gov. M. Jodi Rell had yet to indicate whether she would sign or veto the bill; Democrats in the legislature hold sufficient votes to override a gubernatorial veto, but have not always been able to do so owing to defection by some Democrats on hot-button issues like taxes.
Rell and Democrats reached a compromise on an overall budget bill, which includes a surcharge on customer electricity bills to underwrite the cost of $956 million bond issuance to plug a budget gap. On average, CL&P”™s support of the bonds will be about $108 million annually.
Shivery said the company is “disappointed” in the new levy, but added that it is better than an earlier proposal that would have had CL&P picking up $180 million of the cost of new debt.
Kevin Hennessy, a staff attorney with the Connecticut Business & Industry Association, termed it an “eleventh hour” bill that will lead to higher costs for both business and residential customers, and increase the role of state government in the energy marketplace.
“Also incredible is that the legislation will make new energy companies in the state that are helping thousands of customers save on their electricity bills undergo stricter administrative standards,” Hennessy stated. “It”™s the kind of needless government intervention that could drive away competitive businesses from Connecticut.”
Northeast Utilities”™ revenue was down nearly 16 percent in the first quarter of 2010 to $1.3 billion, with both the economy and mild weather to blame for the cut in electricity consumption.
The recent moderate winter excludes the Nor”™easter that struck in March, resulting in nearly $8 million in estimated damage in Fairfield County ”“ a figure that does not include costs to Northeast Utilities that could in time be recovered from variety of sources, including insurance policies and money collected from customers.
Leon Olivier, chief operating officer of Northeast Utilities, said the company absorbed $45 million in additional costs from the March Nor”™easter and one in February that struck New Hampshire, where it also does business.
“It was a sinister and sneaky storm that no one really expected,” said Stamford Mayor Michael Pavia, speaking to members of the Stamford Chamber of Commerce this month, recalling the night of the storm. “As I looked around the Stamford skyline, the sky was lit up with yellow, orange, blue, green ”“ transformers.”
Whereas Rell lashed out at CL&P and scheduled hearings on the company”™s response, Pavia had a different take from the storm center ”“ he called the company”™s response “a remarkable accomplishment,” including the decision to embed repair crews with police units being dispatched to various sections of the city to more rapidly deal with downed wires.
“While we believe we responded well to these extreme weather events, we always try to identify operating and communications lessons (to be) learned (which) we will factor into the next storm recovery process,” Olivier said.
