A bill introduced late in the session would create an independent quasi-public agency to manage electricity rates that legislators say would lower costs by 40 percent over the next two years.

In a press conference held prior to a Finance, Revenue, and Bonding Committee public hearing, a bipartisan group of legislators expressed support for SB 1560, saying it would help lower electricity costs and address Connecticut’s high electricity prices.

The 80-page bill proposes to create the Connecticut Electricity Procurement Authority (CEPA), which would be an independent, quasi-public agency, to address “structural inefficiencies in the procurement of electricity generation services and the recovery of costs related to transmission and distribution infrastructure and operating costs.”

According to the bill, CEPA would “serve as the state’s central architect for building a more efficient, cost-effective electric system that actively aligns procurement, grid operations and customer behavior with the goals of affordability, reliability, and decarbonization.”

Further, the bill says CEPA will “harness in customer and system load data, assist in developing dynamic pricing and competitive market tools to reduce costs, improve infrastructure utilization through smart electric load growth and lower peak electric demand.”

CEPA would have a seven-member board of directors. It would be charged with developing and implementing a plan allowing for dynamic procurement of electricity, study new electricity procurement, and recommend policies to the Public Utilities Regulatory Authority (PURA) for “time-of-use tariff structures” that would use “time-of-use rates” that penalize energy use during “on-peak hours.” Electric rates would be a minimum of 300 percent higher during peak hours.

During a press conference held prior to the public hearing, Sen. John Fonfara, D-Hartford, said CEPA would be the central architect and implementer of the state’s energy transformation.

Fonfara said Connecticut’s energy infrastructure was “never designed” to handle having 80% of residential customers on standard service. Fonfara said a belief in markets “hasn’t worked” and that the bill would not take away markets but would take a more aggressive and strategic approach for people deciding not to leave utilities for electricity supply.

He described CEPA as taking a much more proactive approach to managing supply and rates than PURA does and pointed to the Connecticut Municipal Electric Energy Cooperative as a model for standard service customers.

Fonfara also said that utility revenues have fallen in the last few years because of solar and because the state doesn’t use it as a resource. He said every house with solar is a “mini power plant” but the energy doesn’t discharge when it is needed. Fonfara said CEPA will change this approach.

The bill also creates an electric rate stabilization fund, intended to reduce volatility in electricity rate changes, and an energy infrastructure transition fund, created to support the rollout of smart meters. The bill also includes a mandate for CEPA to adopt smart meters and directs PURA to create a “customer education and engagement program for the purpose of informing electric distribution customers of the benefits of smart meters and time-of-use rates and encouraging such customers to utilize such meters and such rates.”

PURA has previously pushed to adopt smart meters and signed off on a plan to have Eversource install them for 1.3 million customers in December 2024, but the status of the plan is uncertain. Eversource has publicly disagreed with PURA over rate recovery mechanisms in the past, leading to a delay in the installation of smart meters.

The bill also directs CEPA to create a municipal energy cooperative that would develop a plan for procuring “electric generation services and related wholesale electricity market products in a manner that reduces the average cost of standard service.” The costs of developing that plan would be paid from the Green Bond Fund. The bill makes several changes to the Green Bond Fund, including eliminating the systems benefit charge, part of the public benefits charge, and replacing the dollars with proceeds from the sale of state bonds.

This portion of the bill drew criticism from several groups, including the Sierra Club’s Connecticut chapter, who stated that replacing the system benefit charge with bonding would lead to competition with other programs that must compete with a limited amount of available funding and would make programs less affordable since bonds have interest payments.

The Department of Energy and Environmental Protection (DEEP) also opposed this portion of the bill, citing concern that the costs would exceed funding.

“Section 46 of the bill contains $2.4 billion in new bond authorizations to capitalize the Green Bond Fund. Section 16 limits expenses from that fund to $800 million or less per year. To give a sense of scale, the state’s current borrowing cap is $2.5 million, adjusted for inflation each year. Adding $800 million to the state’s annual bond allocations would be approximately one-third of the total borrowing limit.” DEEP wrote in testimony.

During the press conference, Fonfara’s said replacing the system benefits charge with the Green Bond was modelled after a program in the state of New York.

That was not the only concern DEEP raised with the bill. They also expressed concern that the bill would increase rates for standard service, that the roles the bill assigns to CEPA would overlap with PURA and DEEP, and that this would create confusion and contradictory outcomes. DEEP also raised concerns about how transparent CEPA would be since it does not meet the definition of a state agency and would not be subject to rules for agencies that require stakeholder input, engagement, and the right to appeal decisions.

DEEP further expressed concern that the two funds the bill creates and charges CEPA with administering would not have oversight or transparency.

Testimony given at the public hearing and submitted in writing was overwhelmingly opposed. Environmental groups, solar and energy companies, and other industry groups all expressed concerns with the bill.

Multiple solar companies worried that a section of the bill that would create a credit for energy “procured by a facility and not consumed” to be used against an end user’s supply costs but not against transmission or distribution costs would destroy the state’s solar industry.

“By eliminating the ability to apply credits to delivery and distribution charges, this bill effectively dismantles the economic case for residential solar — especially for working-class and low- to moderate-income (LMI) households.” Nick King of Everlast Energy wrote in testimony. King also called the bill a “backdoor attempt to kill” net energy metering and said it would “discourage homeowners from participating in Connecticut’s clean energy future.”

The view that the bill would eliminate the benefits of residential solar was shared by the majority of solar and energy companies that testified.

Eversource Energy and United Illuminating testified in support of the bill.  Eversource cited the removal of the public benefits charge and use of bonds, as well as the role CEPA would play in purchasing supply. Doug Horton, Eversource’s vice president for distribution rates and regulatory requirements, said he estimated the bill would reduce electric bills by $40 to $50 per month by removing the public benefits charge.

Eversource’s testimony also stated that the bill would “deal with the real culprit of the rising costs.” According to the company’s testimony, electricity sales are declining in part because of increased energy efficiency at the same time that costs for utility companies are increasing, driving up the per-unit cost of delivering electricity. SB 1560 would attempt to solve this by providing a plan for advanced metering infrastructure and promoting electrification, Eversource’s testimony suggested.

United made similar points in its testimony in favor of the bill.

The House Republican caucus has expressed support for the bill. House Minority Leader Vincent Candelora, R-North Branford, said at the press conference prior to the public hearing that the caucus supports the concepts in the bill, was disappointed proposals to address costs put forward by the caucus were not advanced, and looks forward to having a vehicle to bring forward that seeks to address costs.

Rep. Joseph Polletta, R-Waterbury, said the bill seeks to lower electric rates over the next two years. He also referenced the bill’s reduction of the public benefits charge, saying there was no reason residents should be sacrificing groceries every month to pay for it and that it was taking money out of Connecticut’s economy.

Rep. David Rutigliano, R-Trumbull, said the public benefits increase was $70,000 for his business alone and would support “whatever it takes” to lower rates.

Republish This Story

Republish our articles for free, online or in print, under a Creative Commons license.