Thursday, December 07, 2006

Blumenthal Calls for Utilities to Cover Rate Increase

Attorney General Richard Blumenthal is calling for a windfall profits "refund" and a postponement of rate increases until at least January 1st:
Urging reform of the electricity system, Attorney General Richard Blumenthal asked state utility regulators Thursday to require the two biggest power companies in Connecticut to absorb the cost of delaying upcoming rate increases.[...]
"The rate increases should be deferred at least until the system is reformed with a windfall profits refunds and a Connecticut Electric Authority that will return money to consumers and effectively eliminate these unfair rate increases," Blumenthal said.
[...]
Gov. M. Jodi Rell made a similar request to the DPUC earlier on Tuesday. She asked regulators to defer any rate increases until the General Assembly has had a chance to work on reform when the legislative session opens Jan. 3. (AP)

Wow, deregulation is working great. Now both the electric companies and the consumers are over a barrel.

A "Connecticut Electric Authority" sounds like another terrible idea, however. What, exactly, would it do that DPUC can't?

Is there a way out of this? Do we need to build more power plants? Is this a symptom of the northeast's antiquated power grid? Rising oil costs? All of the above?

Source
"AG wants utilities to bear the cost of deferred rate increases." Associated Press 7 December, 2006.

21 comments:

GMR said...

Is there a way out of this? Do we need to build more power plants? Is this a symptom of the northeast's antiquated power grid? Rising oil costs? All of the above?

According to the US Department of Energy's EIA, Connecticut's average price for a KwH of electricity in August 2006 was 15.49 cents. However, in Illinois, it was only 7.78 cents, or about half as much. North Dakota is only 6.5 cents. Go to Wyoming and you'd only need to pay 5.37 cents. But go to Texas, where there's a lot of oil, and you'd pay 11.15 cents.

So the price of oil may have an impact from one year to the next, but there are a lot of other factors at play. It shouldn't be that much cheaper to get oil into North Dakota than it is to get it to Connecticut. And why is North Dakota cheaper than Texas?

I don't think the grid is the problem. We have a pretty bad grid, but that should really only matter in summer.

I think the real problem is simply one of capacity. However, that doesn't mean that if Connecticut decided to build more power plants, our electric rates would fall all that much. This is because the surrounding states also have very high electric rates -- 16.19 in Massachusetts and 15.19 in New York (and I'm sure that Westchester and surrounding counties are higher). So if new power plants were built in Connecticut, there's no assurance that that power wouldn't be sold into the grid and exported. The power plants are going to sell to the highest bidder. Rather, there needs to be a coördinated effort to get all Northeast states to build more power plants.

It's a difficult political issue to build a power plant: everyone in the Northeast wants power, but they don't want power plants. And since Connecticut is small, what happens in surrounding states can have a big impact on our electric prices.

Anonymous said...

New power generation is being fueled by natural gas. This generally burns cleaner which is positive for our environment but we relying on limited infrastructre to bring the gas into CT. Generators are reaping huge profits because of how we pay for electric production especially during high demand periods. Low cost generators receive a hugh rate bump whenever demand is high. Some generators are earning returns of 40% to 50% so the windfall-profit tax might be the way to go. It will be difficult to turnback the deregulation clock in the short-term. The real crime is that those at DPUC knew this was coming and did little to try and mitigate this problem. The big hits will also be on the large employers that are facing 56% hikes in the UI areas and 18.9% in the CL&P areas. You would be crazy to grow your business in this state.

Anonymous said...

Pick a product or service: electricity, heat, gas, oil, water, housing, grocery, car washing, etc., ad nauseum.

Then ask WHY is it always more expensive in Connecticut than the rest of the country? WHAT IS WRONG IN CT?

Anonymous said...

To Blumenthal: Too little, too late. I've written to you about this years ago. Why did you let it get this far?

Fuzzy Turtle said...

"some generators are earning returns of 40% to 50% so the windfall-profit tax might be the way to go"
IAWTC..absolutely. And the fact that it got to this point (and I DO FAULT RELL FOR THIS.. WHAT IS SHE ASLEEP, AGAIN???) is disgusting.

our politicians just do not give a crap, at all. And as for growing new business in the state.. you're right. It's all part of the equation.

bluecoat said...

Allstate is going to write anymore homeowners insurance policies in CT and a number of academic have just dissed the FERC Broadwater report - see today's NHR. The reason electricity is so high in CT is because the power companies duped the legislature. There are a few govt. authority electric companies in CT - Norwalk as I posted the other day but others too; Wallinford may be one - that buy their electric power generated on the open market but don't charge as much to get it to the consumer. I fail to understand why we need more power plants except for capacity reasons - from everything I have seen in CT the capacity problem is transmission not generation.

Anonymous said...

UI and CL&P argue that their profits are to be reinvested in transmission infrastructure upgrades. If this is true, does a windfall profits tax make sense? Anyone know?

bluecoat said...

go to their websites or the comment I did the other day to see that they are double talking with half truths.

Anonymous said...

bluecoat, do you remember which post?

FrankS said...

What's wrong, is that electric power has become a commodity, unless you live in Vermont.

Public Authorities can make a difference, if they have the leadership.

We in Connecticut seem to lack the will and leadership to take such opportunites.

bluecoat said...

the honest answer 12:41 is NO, but I took a guess and found it under the Thoughts on Regionalism piece a couple of posts back.

Anonymous said...

Blumenthal has been one the biggest obstacles in the state to energy infrastucture upgrades.
As for turning electric power supply over to a State run power authority, just pray they remember to hit the "send" button.

bluecoat said...

My beef with Blumenthal is that he has more than once blocked the aquisition of UI and CL&P by bigger players who would deliver electricity at lower costs if he weren't so damn suspicious of profits and big companies. SBC bought SNET then they bought AT&T and used their name - in the process my telephone service has only improved at no appreciable rate increase that I have ever discerned. Private sector utilities can do the job quite well at a decent cost - as long as they don't own the legislature through their lobbyists who write the energy legislation - can anybody say DicK Cheney Democrats!!!

bluecoat said...

Oh, and please when you talk about public authorites in CT, let's use the CRRA as a model...NOT!!!!As far as I am concerned we do need a public transportation authority but most elsewhere we have too damn much government.

wtfdnucsubsailor said...

I am not sure that a windfall profits tax will find any profits to tax. The major generator in CT, Dominion, is HQ in VA. The power generated at Millstone is contracted for on long term contracts that are probably lower than the spot market costs. We made our bed when we deregulated generation but kept the distribution regulated. To get price of generation down, you need more generators or better distribution. The citizens of CT are fighting the improvement of distribution, especially in SW CT where it is needed the most, and regulation and permitting costs make it unprofitable to build any new base generators in CT. I guess that legislation could be written that would make a CT Power Authority with the same powers and capabilities as the seven municipal power authorities. This power authority could then sell its power to CL&P and United Illuminating for distribution to CT ratepayers. Theoretically, this might lower the cost of electricity in CT. Then, again, it might not. Maybe we could make CMEC the CT Power Authority and they would purchase power for all of CT and not just the municipal power authorities. I just hope the legislature and the governor think through the process when they pass an energy bill this year.

FrankS said...

Look at the major energy projects in CT, The Cross Sound Cable, in 2005, carried 1,195,895 megawatt hours (MWh) of electricity to Long Island – enough to power 127,000 average residential customers – saving the Long Island Power Authority (LIPA) approximately $17.5 million in energy costs." Savings that were lost to Connecticut ratepayers.

While power plant siting in Meriden, Oxford and Middletown are approved, the new faclities to expand generation aren't built.

Tim White said...

By no means is this a quick fix, but this may help address both the generation and distribution questions:

http://www.energy.gov/news/4503.htm

"U.S. Department of Energy (DOE) Assistant Secretary for Energy Efficiency and Renewable Energy Alexander Karsner today announced that with DOE funding, a concentrator solar cell produced by Boeing-Spectrolab has recently achieved a world-record conversion efficiency of 40.7 percent, establishing a new milestone in sunlight-to-electricity performance. This breakthrough may lead to systems with an installation cost of only $3 per watt, producing electricity at a cost of 8-10 cents per kilowatt/hour, making solar electricity a more cost-competitive and integral part of our nation’s energy mix."

I don't see anything though on possible timeframes for nationwide household use, other than the year 2015.

Bo ItsHaky said...

Here’s a link to an inspiring story aired by ABC news on October 20, 2006:
http://abcnews.go.com/WNT/story?id=2592352
This man became a self made energy independent individual – where’s our Local, State & Federal governments problem-solving ingenuity?

GMR said...

saving the Long Island Power Authority (LIPA) approximately $17.5 million in energy costs." Savings that were lost to Connecticut ratepayers.

I don't think it's that simple. If at some point Connecticut had excess power, it would make more sense to ship it to LI than to not use it. Also, doesn't Connecticut import electricity from other states?

Anonymous said...

"effectively eliminate these unfair rate increases"

The cost to generate power increases and we somehow expect our electric bills not to rise as well?

Sounds like pretty unreasonable attitude to me considering what is used to fuel the electric plants.

bluecoat said...

NU is, or at least was, an owner of the Cross Sound Cable; make no mistake about it - CT ratepayers subsidized LIPA. LIPA is a well run Authority but there is a lot more to their story; they were formerly the much hated LILCO - Long Island Lighting Company - and LIPA is an interim step to get back to power being provided by the private sector if you know much about LIPA.....