Consumer advocates and members of the legislature’s Energy and Technology Committee used municipal electricity costs to heighten awareness of the state’s energy crisis and to advocate for a bill that they say would lessen the blow caused by the state’s deregulation of the electricity market.
Tom Swan, executive director of the CT Citizens Action Group, said they analyzed electrical bills from 12 towns that had been promised reduced electricity rates if they joined a consortium. What they found was all 12 towns paid higher electrical rates than they would have if they didn’t join the consortium.
See their report.
The total loss for the towns was close to $91,000.
Swan said special interests groups who enticed these towns to join consortiums are modern day “snake oil salesmen” who are working day and night “to further schemes that will only create more middlemen and increase costs for consumers.”
Swan said towns were promised lower prices and less volatility, but in every single case towns paid more and the prices were more volatile.
Energy Committee Co-Chairman Vicky Nardello, D-Prospect, said in the first year of the contract there were a few middlemen, but over the length of the contract the number of middlemen increased from two to five. She said overall there were 15 different categories of charges added to the bills.
“By adding costs through various middlemen they maximize their profits at the expense of ratepayers,” she said.
Both Swan and Nardello said no one should blame the towns. They said the towns signed the contracts thinking they were getting the best value for their residents.
One of the consortiums lobbying towns to sign these types of contracts is Constellation Energy. Click here for their 2006 annual report and check out their profit margins over a five year period on page 5.
According to the report, “An investment of $100 in Constellation Energy common stock on December 31, 2005, was worth-with dividends reinvested-$122.69 on December 31, 2006. Our 23 percent total return to shareholders was in line with the total return of the S&P 500 Electric Utilities Index and was better than the S&P 500.”
Swan said by enacting HB 7098 towns and consumers could begin to assert more control of prices.
Both Swan and Nardello advocated against two Senate bills “>1374
The legislature promised to address the spiraling cost of electricity at the beginning of the year, but it hasn’t.
Swan said he’s afraid much of what’s happening behind closed doors is conversations with special interest lobbyists who helped get us into the current mess.