Connecticut”™s energy costs rank among the highest in the nation. For the first four months of 2013, electricity in Connecticut averaged 15.64 cents per kilowatt hour versus 9.70 cents per kilowatt hour nationally.
But new data from the U.S. Energy Information Administration show Connecticut”™s energy costs during the first four months of the year declined slightly compared with the first four months of 2012, while the national average increased.
Notably, Connecticut was the only state in New England to see its average electric rates drop both in April and for the first four months of 2013, according to the EIA report.
State officials credit efforts at the government level and within the private sector to push for the development of more renewable sources of power generation.
The Malloy administration in July rolled out a state-run solar leasing program for homeowners and businesses backed by $50 million in private financing to complement the state”™s acclaimed Zero-Emission Renewable Energy Credit/Low-Emission Renewable Energy Credit (ZREC/LREC) program. Recently, the administration unveiled state funding for a microgrid pilot program aimed at boosting reliability for critical sites and town centers.
The Business Journal recently sat down with Daniel C. Esty, commissioner of the state Department of Energy and Environmental Protection, to hear about new developments.
Business Journal: The state will fund nine microgrids as part of the pilot program. What”™s the ultimate goal?
Esty: “It is a strategy of diversification, of creating a little bit more of a portfolio approach to electric supply that doesn”™t have as much reliance on one big grid and a few power stations, that when they go down, create chaos for the whole state.”
Are there any risks with investing in microgrids?
“There are issues to work out. We very much need to ensure that the engineering of these microgrids is done in a way that allows them to integrate with the big grid most of the time, separate when needed.
“The biggest challenge is to do this in a way that”™s cost effective. I think many people are willing to pay a bit of a premium for distributed generation because it is insurance against pain and suffering when the grid is down. But we want to make sure to do it in a very cost-effective way.”
When it comes to reliability, there has been a push by certain environmental groups to close the Bridgeport Harbor Station coal plant. However, representatives of the plant say keeping it open helps to ensure grid reliability. Where does the Malloy administration stand?
“One of the big challenges in terms of managing Connecticut”™s energy future is how to deal with peak load electricity demand, and that”™s usually the 10 or 12 hottest days of the summer, and right now we pay triple the price on those hottest days. When we kick on the dirtiest old plans ”” like the coal plant in Bridgeport harbor ”” the kilowatt-hour price we have to pay to get that power generated is very high. In addition, we have to pay a so-called capacity payment to that plant to sit around waiting to produce for those few days a year. And those are our highest air pollution days of the year, so we pay a price with public health problems.
“So my goal over time is to have Connecticut”™s portfolio of power generation evolve toward cleaner options, and that”™s why the renewables are exciting, that”™s why the (Dominion/FuelCell Energy) project in Bridgeport is exciting, and frankly that”™s why we”™re going to ramp up our purchase of renewables out over time across the region, and why the governor has insisted we bring more hydropower in from Canada.
There has been resistance to the state”™s plan to bring in New England or Canadian hydropower to help utilities meet quotas under Connecticut”™s renewable portfolio standard. Is there no better Connecticut source of renewable power?
“Grid-scale projects are few and far between in the state of Connecticut. We are really focused on regional options for clean power that are also cost competitive.
“There was an idea when the renewable portfolio standard was launched 15 years ago that the best way to encourage technology development was to give a protected place in the market for certain technologies. ”¦ Over 15 years it was not wind power or solar power that was getting supported by our renewable portfolio standard, (but) as much as 85 percent of the renewable energy credits lodged in Connecticut were for biofuel projects, which were not new, not very clean and certainly not cutting edge.
“That”™s what the governor insisted that we do in revamping our renewable portfolio standard: to reframe it so as to produce more incentives for cutting-edge renewables to emerge, including wind (and) solar, but also recognizing there has to be a role for hydro. ”¦ So that”™s what our revamping of the RPS does. It says that existing renewables ”” the cutting edge ones, not biomass ”” get first crack at meeting this target of a rising level of renewables. If (utilities) fail over time to meet that target and to bring projects into the marketplace at good costs, then we have an opportunity to bring hydro in to fill the gap and to bring competition to spur them on.”
Despite the state”™s best efforts, the cost of energy is still high relative to the rest of the region and the U.S. as a whole. What is being done to reduce rates?
“There have been a number of policy changes made to help reduce the relative burden of electric rates in the state of Connecticut. The Competitive Transfer Assessment, the CTA, which was being extended by the prior governor and the legislature, (was) taken out. Policies have been put in place that (support the) building of transmission and infrastructure, which have reduced congestion charges particularly in southwestern Connecticut in a very significant way.
“We are creating a more diverse portfolio of generation options, which gives us access to lower cost power.”
Comments 1