Outraged by a recent increase in the fixed cost paid by residential utility customers, a handful of state lawmakers are looking at legislation to cap that fixed amount.
At a Capitol press conference, state Rep. Lonnie Reed, co-chairwoman of the Energy and Technology Committee, said capping the fixed rate is only one piece of the puzzle, but it’s something lawmakers will look closely at during the 2015 legislative session.
Regulators recently approved rate hikes for Connecticut Light & Power and United Illuminating, the two biggest utility companies in the state.
She said it’s not fair to charge electricity customers a fixed rate for something they can’t control. She said public policy should reward customers for conserving their electricity or using renewable energy.
Reed alleged that Connecticut Light & Power, the largest utility in the state, pursued the fixed rate increase “in order to compensate for a reduced demand in electricity consumption….This is a punishment fee and it’s a fee for all ratepayers.”
Earlier this month, regulators allowed CL&P to increase its fixed fee from $16 per month to $19.25 per month. The utility had requested a $25.50 per month increase.
Reed and a handful of lawmakers said they support legislation that would cap those fixed fees for CL&P and United Illuminating Co. at $10 a month. She was uncertain about whether the legislation would apply to the smaller municipal utility companies. She said municipal utility companies have done a good job of holding down the rates, but didn’t want to pre-determine any legislation.
A spokesman for CL&P said they requested the fee increase to help operate the system and make timely investments in infrastructure.
“Utilities, like many other service companies, have a combination of fixed and variable rates which are based on how much it costs the company to operate,” Mitch Gross, a spokesman for CL&P, said. “Capping the fixed rate would negatively affect our ability to do the upgrade work at the high level that is needed and it would result in a rise in variable rates, which are linked directly to how much power is used. We look forward to working with state leaders on this issue and remain committed to making our system more reliable and efficient for our customers.”
Reed said she doesn’t believe people should be punished by a fixed rate for using less electricity.
However, CL&P points out that 88 percent of a customer’s’ bill is based on the variable rate, which is something customers can control. The fixed rate only accounts for about 12 percent of the bill.
Asked if she would support an increase in the variable rate, instead of the fixed rate, Reed said she would have to take a look at how it’s factored into the rest of the rate setting equation.
“I’m not going to give a one-off answer because it’s part of a whole constellation of decisions that have to be made,” Reed said.
William Dornbos, executive director of Acadia Center, said there are other states with subsidiaries of Northeast Utilities, the parent company of CL&P, with lower fixed charges and “they’re doing just fine with their business model.”
“If there’s going to be a revenue increase, and of course I wouldn’t agree to that until I saw what it was for and if it was justified, we’d rather have it on the portion of the bill that you can control versus the portion you can’t,” Dornbos said.
Reed said it should be possible to customize a ratepayers relationship with the grid and it should be taken into consideration how much a person takes away from the grid and how much they give back to the grid, if they’re using a renewable.
“Right now it’s just a wholesale charge that punishes everybody,” she added.
The press conference Monday was organized by the CT Roundtable on Climate and Jobs—a group that advocated against the rate increase that regulators approved earlier this month.