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Why is Connecticut No. 1 in the cost of electricity among the 48 lower states? Here’s 7 reasons.

Source: 
Hartford Courant

Connecticut’s electricity prices are the highest among the lower 48 states, exasperating consumers and business owners and hampering economic development.

Jet engine manufacturer Pratt & Whitney, for example, cited lower electricity costs when the subsidiary of Raytheon Technologies Corp. announced last year it will build an energy-devouring manufacturing plant in North Carolina rather than in its home state of Connecticut.

In 2019, the most recent year for which data are available, electricity in Connecticut cost about 18.7 cents a kilowatt hour, according to the U.S. Department of Energy. It’s cheaper than what residents of Alaska and Hawaii paid, but is more than double the price in Idaho, Louisiana, Montana, Nebraska and elsewhere.

Cold winters, end of the line and zero-carbon power

Cold winters drive up demand — and the cost — of natural gas to fuel power plants; being at the end of natural gas pipelines adds to transit costs; and public policy is boosting costlier low- or zero-carbon power such as solar and nuclear. That’s only the start.

Ironically, electricity is increasingly expensive as wholesale prices fall due to lower demand, improved energy efficiency and rising use of renewable energy such as solar power. Transmission costs have soared more than six-fold between 2004 and 2019, according to the New England Power Generators Association.

Costs related to the electricity transmission and distribution systems that connect power plants with consumers are for construction, which is higher in the Northeast where land for generators is costlier and the price of labor is higher; operation and maintenance that includes repairing damage related to accidents or extreme storms; and improving cybersecurity, the power generators group said.

Another cited by the state Department of Energy and Environmental Protection is that federal energy regulators allow an “unreasonably high” return on equity — a measure of the profitability of a corporation relative to stockholders’ equity — for transmission costs, ranging from 10.5% to nearly 12%.

Transmission costs in New England have risen from $869 million in 2008 to $2.3 billion a decade later, DEEP said.

In addition, electricity customers pay for transmission congestion that cost $205 million from 2015 to 2019, said Amy McLean, Connecticut director and senior policy advocate at the Acadia Center, a clean energy advocacy group.

Located between two much larger “load zones” — Boston and New York — Connecticut is subject to transmission constraints makes kilowatt hour more expensive, she said.

Natural gas and winter price spikes

Natural gas accounted for nearly half of New England’s fuel mix in 2019, the largest component, according to ISO-New England, the region’s grid operator. Nuclear accounted for 31% and renewable energy such as wind power and solar panels were the source of 11% of the region’s energy produced by generators.

The sizable share of natural gas has helped reduce the region’s carbon footprint as generators shifted from oil. But it leaves New England vulnerable to price spikes during the winter, according to Eversource and UI, Connecticut’s dominant publicly traded utilities.

“New England has a gas supply problem,” said Jim Shuckerow, director of electric supply at Eversource Energy. “There’s a limited amount of natural gas pipelines.”

During winter cold spells, the first users are home heating and industrial customers and whatever remains is for natural gas generating plants, leading to rising prices, he said.

The Public Utilities Regulatory Authority said it explains “why the supply charge on customers’ bills is always higher” from Jan. 1 to June 30 than during the second half of the year.

Pat McDonnell, vice president for regulatory affairs for Connecticut at UI, said “gas constraints,” or the lack of capacity on pipelines, drive costs higher in New England than in neighboring states. Customers in Danbury pay 6 cents a kilowatt hour more than electricity users across the state line in Brewster, New York, “just because you’re in the New England pool vs. the New York pool,” he said.

The Connecticut Department of Energy and Environmental Policy said the region’s wholesale market’s “overreliance on natural gas generation” are partly to blame for putting Connecticut ratepayers at risk of “paying unreasonable and duplicative costs for energy supply.”

Connecticut vs. the regional grid

DEEP says ratepayers pay twice to receive the same service: once for Connecticut’s share of the costs of markets within ISO and again through a component of United Illuminating and Eversource Energy distribution rates for clean energy that Connecticut contracts with to adhere to the state’s laws and requirements, DEEP says.

ISO said a concern about paying twice has been lessened partly because several hundred megawatts of renewable energy procured by the states — solar and wind power — have received credit through 2021. And it could grow when large-scale offshore wind power is bought. The projects have not yet been built and consumers are not paying twice, ISO said.

Environmental policies

Environmental policies established by states also are responsible for higher costs.

“Where we are seeing a major shift is the drive for decarbonization,” said Dan Dolan president of the New England Power Generators Association. “It’s seen as appropriate public policy goals because we’re looking to decarbonize.”

Doug Horton, vice president of distribution rates and regulatory requirements at Eversource, said public policy in New England recognizes the “importance of those reducing greenhouse gas emissions and prioritizing that, acknowledging there’s a cost to do not doing anything.”

“It just may not be that same priority elsewhere in the country,” he said.

The Millstone power plant

Another factor cited in higher electricity prices in Connecticut is a 10-year contract with the Millstone Power Station in Waterford required by state law. The General Assembly and Gov. Ned Lamont approved the deal in 2019 after Millstone’s owner, Dominion Energy Inc., lobbied to compete with wind and solar energy for state power procurement. Nuclear plants also struggled to compete with natural gas.

Rep. David Arconti, House chairman of the legislature’s energy and technology committee, criticized the deal that leaves Connecticut to solely bear the cost of the deal.

“No one else in New England has to support that contract,” he said. “It should be a regional solution.”

Connecticut environmental officials said the state “reluctantly entered into a 10-year contract” backed by Connecticut ratepayers to prevent Millstone from shutting before the end of its operating licenses in 2035 and 2045. “No regional ISO-NE mechanism” was available to keep Millstone operating and it “was imminently at-risk of retirement,” the state said.

ISO said Dominion did not submit an application to retire the plant and the ISO was not directly involved in negotiations between Dominion and the state.

What’s next?

Arconti, a Danbury Democrat, said new policies by the state Public Utilities Regulatory Authority will lead to rate approvals based on performance rather than the utilities’ cost to provide service, he said.

Customers’ bills are separated into two components, supply and delivery, but over time electric bills have expanded to reflect other cost drivers that leave customers confused. The state Public Utilities Regulatory Authority has directed its staff to submit a redesigned electric bill by Sept. 30.

If there’s a consolation, other New England states are not far behind Connecticut in electricity prices.

“It’s a very, very close race,” said Shannon Laun, staff attorney at the Conservation Law Foundation, an environmental group.

Still, Connecticut’s rank as No. 1 is a “dubious honor,” she said.

Stephen Singer can be reached at ssinger@courant.com.

___

(c)2021 The Hartford Courant (Hartford, Conn.)

Visit The Hartford Courant (Hartford, Conn.) at www.courant.com

Distributed by Tribune Content Agency, LLC.

Discussions

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Mark Silverstone's picture
Mark Silverstone on Apr 16, 2021

Another factor cited in higher electricity prices in Connecticut is a 10-year contract with the Millstone Power Station in Waterford required by state law. The General Assembly and Gov. Ned Lamont approved the deal in 2019 after Millstone’s owner, Dominion Energy Inc., lobbied to compete with wind and solar energy for state power procurement. Nuclear plants also struggled to compete with natural gas.

I wonder how much of a factor this is? It is no coincidence that the highest electric rate in the lower 48 is also where nuclear provides a huge proportion of the power. In any case, it should dismiss any notion that nuclear is competitive in the marketplace. 
It is to be hoped that wind projects come online soon and allow the speedy end of the Dominion contract to put the public out of this misery.

Bob Meinetz's picture
Bob Meinetz on Apr 19, 2021

It isn't a factor at all, Mark, just renewables and pro-gas activists trying to pass the buck for their exorbitantly expensive, intermittent electricity:

"Dominion Energy, which owns the Millstone Plant says Eversource is not telling the whole story. 

In an email to Channel 3, their spokesperson said, "The power is being sold at a flat rate of 4.999 cents per kilowatt hour, the lowest price for carbon free resource in Connecticut published to date and 32 percent lower than the lowest standard offer price ever from Eversource, which is roughly 7 cents per kilowatt hour. This contract went into effect in October 2019, nine months before Eversource's latest rate increases. It was vetted and approved by all state energy regulators." 

To be expected, it's another lie in the unending stream issuing from the Church of Solar and Wind. That should dismiss any notion that renewables are competitive in the marketplace, shouldn't it?

https://www.wfsb.com/news/eversource-state-approved-power-deal-with-millstone-to-blame-for-higher-bills/article_3c12f458-cf8f-11ea-9f84-13200c4ee5b3.html

Mark Silverstone's picture
Mark Silverstone on Apr 19, 2021

Nonsense.  It´s another case of nuclear not being able to compete in the marketplace.  If old nuclear can´t compete, they´re going to have to come up with something quite different if new nuclear stands a chance. 

Admit it:  Old nuclear is dying a death.  New nuclear will have its chance, maybe, in about 2030.  And it stands a good chance  of playing a role if they can prove that they can keep a promise.  I hope they can, though I am skeptical.

Bob Meinetz's picture
Bob Meinetz on Apr 19, 2021

Mark, I realize facts conflict with your worldview, but the answer is not denial. It's a fact that Millstone is providing Connecticut with electricity for $.05¢/kWh - 32% cheaper than renewables.

Renewables can only compete in the marketplace because of tired, anti-nuclear attitudes - holdovers from the 1970s. It's a bright new world out there, and there's every indication nuclear energy will be the dominant force in clean energy. Whether you admit it or not is, as always, your choice.

Mark Silverstone's picture
Mark Silverstone on Apr 20, 2021

As with Vermont Yankee, the fact is that New England has all of the nuclear it could want, and then some. You are so out of touch! Millstone´s days are numbered.

“The March 2019 decision made to prop up Dominion Energy’s Millstone Nuclear Power Station guaranteed revenue to the utility, even though stakeholders, consumer advocates and environmental interests warned it would increase rates,’” Snitchler said.

Millstone said it needed broader access to energy markets to help it compete with natural gas, which had fallen in price and became an increasingly attractive energy source. Millstone pointed to nuclear plants that closed and said it could face the same fate without favorable legislation.

Critics called the deal a subsidy, even as Millstone denied it.

Todd Snitchler, president and chief executive officer of the Electric Power Supply Association, said Connecticut consumers should be paying far less due to low-cost natural gas and renewable energy. He said “legislative meddling and utility deception have created a nonsensical situation where more expensive power has been subsidized” in a deal that drives up prices and undermines competition.

“The March 2019 decision made to prop up Dominion Energy’s Millstone Nuclear Power Station guaranteed revenue to the utility, even though stakeholders, consumer advocates and environmental interests warned it would increase rates,’” Snitchler said.

Tricia Modifica, a spokeswoman for Eversource, said the utility cannot sell the power it buys from Millstone to customers because Connecticut’s energy system is deregulated. Eversource is required by state law to buy power from Millstone and sell it back into the market at about half the cost.

The balance is added to a federal charge that Eversource said is boosting customer bills. The line item associated with the legislated support of Millstone is the largest increase, she said.

Threats, backroom deals, subsidies.  Sounds familiar.

Bob Meinetz's picture
Bob Meinetz on Apr 20, 2021

Thanks for discrediting your conclusion with your own link - you make it easy. You're out of touch with your own reference:

Rep. Holly Cheeseman, R-East Lyme, said the claim by Eversource that the rate increase is due to Millstone is a “totally erroneous assertion.”

“I welcome a public hearing and look at a very granular level how Eversource attributes their costs,” she said.

“This is an excellent power purchase agreement, and the state locked in at such a low rate,” said Rep. Kathleen McCarty, R-Waterford. “There’s a lot more to this than pointing to Millstone.”

Denial - it's never pretty.

Mark Silverstone's picture
Mark Silverstone on Apr 22, 2021

The deal will not stand because it is crooked and it is getting exposed.  The only question is who, if anyone, is going to jail.

"According to Tricia Modifica, a spokesman for Eversource, “The biggest factor is the state energy policy that was passed by the state legislature in 2017 that requires Eversource and United Illuminating to purchase power from Millstone Nuclear Power Plant at higher cost for the next 10 years to keep Millstone running.”

You obviously have no idea of the history of Connecticut politics.  Have a look at this.  The only good thing one can say about it is that the corruption is highly multipartisan.    The nuclear industry sniffs out crooks and gets in bed with them. But, they are getting better at covering their tracks. If you take comfort in that, you are complicit.

 

Bob Meinetz's picture
Bob Meinetz on Apr 22, 2021

Mark - facts are facts. Call it corrupt, or crooked, or whatever you like, but Connecticut consumers are getting a terrific deal with a 10-year PPA, for reliable, baseload electricity, procured at a wholesale price of $.05/kWh.

But I don't have no more time to argue with someone who doesn't want to learn. Have a Nice Day.

Mark Silverstone's picture
Mark Silverstone on Apr 23, 2021

You "don't have no more time"? Ahem!

Too bad Connecticut consumers are not getting that sweetheart deal.  That is a fact.  In the meantime, see the following from the Washington Post by a former NRC Chairman. Among other issues regarding safety, this refers to the two Georgia plants:

"The danger from climate change no longer outweighs the risks of nuclear accidents."

"History shows that the expense involved in nuclear power will never change. Past construction in the United States exhibited similar cost increases throughout the design, engineering and construction process. The technology and the safety needs are just too complex and demanding to translate into a facility that is simple to design and build. No matter your views on nuclear power in principle, no one can afford to pay this much for two electricity plants. New nuclear is simply off the table in the United States."

Yep. Facts are facts.

Bob Meinetz's picture
Bob Meinetz on Apr 23, 2021

OK, you got me. I always have time to respond when someone pulls nutcase Gregory Jaczko out of their bag of dated, anti-nuclear parlor tricks. And though you didn't want to name him, I knew instantly who wrote the hysterical diatribe you unfortunately consider "facts".

Maybe you didn't know Jaczko was fired (or in DC-speak, he "resigned") from his job as NRC commissioner? Turns out his colleagues on the commission had had enough of dealing with a misogynist / nutcase for their chairman. Besides being a jerk, they didn't want a crazy man regulating nuclear energy. Who would?

A report by Nuclear Regulatory Commission Inspector General Hubert T. Bell accused Jaczko of "strategically" withholding information from his colleagues in an effort to keep plans for the Yucca Mountain nuclear waste repository from advancing.

In October 2011, all the other four NRC commissioners—two Democrats and two Republicans—sent a letter to the White House expressing "grave concern" about Jaczko's actions at the NRC. On December 14, 2011, Commissioner William Ostendorff, a Republican, told a House oversight committee that Jaczko's "bullying and intimidation... should not and cannot be tolerated."

At a House Government Reform and Oversight Committee hearing on December 14, 2011, NRC Commissioner William Magwood, a fellow Democrat, testified about what he called Jaczko's abusive behavior towards employees, especially female subordinates. “One woman told me that she felt the chairman was actually irritated with someone else, but took it out on her,” Magwood said. “Another said she was angry at herself for being brought to tears in front of male colleagues. A third described how she couldn’t stop shaking after her experience. She sat, talking with her supervisor until she could calm down sufficiently to drive home.”

It's not new nuclear, but Gregory Jaczko who is off the table - and good riddance. One less nut standing in the way of progress! 🤪

Mark Silverstone's picture
Mark Silverstone on Apr 26, 2021

Always, when lacking facts, attack the speaker´s character. Old trick. Doesn´t work. 

Bob Meinetz's picture
Bob Meinetz on Apr 26, 2021

What "speaker"? We're talking about a commissioner for the Nuclear Regulatory Commission who was an inept, incompetent psychopath/misogynist and was fired for it.

Worked for the Dept. of Energy, didn't it?

 

Mark Silverstone's picture
Mark Silverstone on Apr 27, 2021

Apparently.  Only one nuclear plant commissioned since 1996 (Watt´s Bar). Sixteen shut down since then. More on the way out.  Way too expensive, dangerous toys.

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