Regulators Say Electricity Consumers

 Should Prepare For Deregulation

By Andrew Gorosko

In the coming months, electric suppliers are expected be contacting electric customers in the area, offering lower electric generation rates than now available, as a result of the state’s deregulation of the electric utility industry.

The Connecticut Light & Power Company’s  (CL&P) current electric generation rate is 5.5 cents per kilowatt hour. With the advent of electric utility deregulation, electric suppliers may offer electric generation rates of 4.9 cents or 4.7 cents per kilowatt hour, said Joe Wood, a consumer education specialist with the state Department of Public Utility Control (DPUC).

Mr Wood and his DPUC colleague, Donna Devino, Tuesday explained the intricacies of electric utility deregulation in Connecticut to about 25 people at a Newtown Woman’s Club program at Booth Library.

Electric competition in the state was to have started in two phases, the first beginning last January 1 and the second starting last July 1. But the transition from a monopoly electric supply to multiple suppliers has taken somewhat longer than planned.

“We’re trying to break up a monopoly, so it’s taking a while,” Ms Devino said.

“This is a 100-year monopoly that we’re trying to unravel here,” Mr Wood added.

For decades, CL&P and United Illuminating (UI) have dominated the electric utility industry in different parts of Connecticut, functioning as monopolies in their respective areas. They are regulated by DPUC.

State legislation approved in April 1998 allows Connecticut electric customers to a have choice of electric suppliers, in view of Connecticut’s electric rates being among the highest in the US.

 “Competition in other industries has often resulted in lower prices and additional products and services. Electric competition should benefit the environment because new facilities being built are cleaner and more efficient than older plants now in use,” according to DPUC.

Only the “generation” or production of electricity will be open to price competition. The “transmission” of electricity via cross-country high-tension lines, and the “distribution” of electricity to homes and businesses via utility poles and wires along streets, will still be provided by CL&P in the Newtown area. The prices for electricity transmission and distribution will continue to be set by the DPUC.

Electric customers have until the end of 2003 to choose their electric supplier, Ms Devino said. If individual customers do not make a choice by then, CL&P will make that decision for them, she said. The firms that CL&P chooses to provide power to electric customers will not necessarily be the companies with the lowest rates, she added, stressing the need for customers to arm themselves with knowledge about the implications of electric deregulation.

 

New Billing

In the past, CL&P combined the various component costs of providing electricity to consumers in its customer bills.

In the new world of deregulated electricity, those component costs are itemized on electric bills, providing consumers with detailed information on the elements which are combined in formulating an electric bill, Ms Devino said.

The new electric bills split the costs of providing electricity into seven components. Only the electricity generation component is subject to price competition.

Under the deregulation plan developed by DPUC, consumers will still receive only one electric bill, issued by CL&P, she said.

So far, the DPUC has licensed seven firms to sell electricity and is considering applications from five other firms, Ms Devino said.

Also, the DPUC has approved eight “aggregators” and is considering applications from two other aggregators. Aggregators are entities licensed by DPUC which bring together a group of consumers to buy energy in bulk.

Mr Wood said the DPUC does not expect that Connecticut will experience the problems that California experienced after that state deregulated its electric industry. The California electric price increases that followed deregulation stemmed from a different set of circumstances than those at play in Connecticut, he said.

The new electric suppliers for Connecticut have not yet set their electric generation rates, Mr Wood said.

The firms are still developing billing systems and service agreements, Ms Devino added.

 Several new power plants have been approved for construction in Connecticut; some proposed plants have been rejected, and other power plant construction proposals are pending, according to Mr Wood.

Of the difficulty of building new power plants, he said, “Everybody wants power. Nobody wants [a power plant] in their backyard.”

Consumer rights and protections have been extended to cover the new electric suppliers, according to DPUC. These include: termination of service rights, payment arrangements, protection against having electric suppliers change without notice, and energy assistance programs for people who qualify.

Under electric deregulation, CL&P will still own and maintain electric transmission and distribution equipment and will continue to respond to power outages, according to DPUC.    

Electric customers who want information on electric deregulation may contact the DPUC toll free during business hours at 888/922-3782. The DPUC Internet Web site address for information on electric deregulation is: www.dpuc-electric-choice.com. The e-mail address is info@DPUC-electric-choice.com.