Gov. Ned Lamont tried Wednesday to push election year concerns over recent electric rate increases into a larger conversation about Connecticut’s challenges to ensure a sufficient, stable and affordable flow of electricity in an era of increasing demand.
Lamont, a two-term Democrat not on the ballot this fall, said a special session sought by Republicans on electric rate relief prior to Election Day would be unlikely to produce immediate or significant changes in electric rates that typically are among the highest in the U.S.
“There’s no easy, pat answers where, you know, a 12-hour special session will solve these problems,” Lamont said prior to welcoming the Democratic co-chairs and ranking Republicans of the legislature’s Energy and Technology Committee into his office for a closed-door meeting.
“We all agreed that the fundamental problem we have right here is supply and demand in the state of Connecticut,” Lamont told reporters after the meeting. “How can we reduce our demand through efficiency, and more importantly, how do we get additional power generation here in the state of Connecticut?”
The ranking GOP members, joined by Senate Minority Leader Stephen Harding, R-Brookfield, continued after the meeting to publicly press for a pre-election special session to consider, among other things, using unallocated ARPA money, the federal aid provided by the American Rescue Plan Act.
“I have a hard time believing that you could find better priorities than to use it towards paying down some of these rates for the hardworking people of this state,” Harding said.
Lamont said he agreed to an analysis of how much ARPA money might be available with an eye towards applying it to offset some of the $200 million owed to the electric utilities, Eversource and United Illuminating, to compensate them for customer arrearages that blossomed during a long state-ordered moratorium on shutting off power over unpaid bills.
“I don’t want to do something token. I want to do something that’s real. And I think we ended up saying, ‘Let’s do an analysis of what, if any, ARPA money there may be left over we can use to help pay down some of the moratorium shortfall,’ ” Lamont said. “That would help a little bit. We ought to have a better handle on that in about the next 10 days.”
Harding said Republicans estimate there could be as much as $700 million in unallocated funds; the Lamont administration says the number, which must be assessed after an agency-by-agency review, most likely is tens of millions, not hundreds.
Under current law, the governor is obligated to use the first $40 million of unallocated ARPA funds to cover budget shortfalls in higher education. Harding said he prefers that money go to rate relief.
Last month, House Minority Leader Vincent J. Candelora, R-North Branford, proposed using as much as $300 million from last fiscal year’s $1.6 billion state budget surplus to lower electric bills — a plan that would require loosening the state’s budget controls. He did not attend the meeting Wednesday.
The arrearages amassed during a moratorium imposed in the early days of the COVID pandemic are a relatively small portion of what drove the recent rate increases. A bigger factor are the favorable rates paid for the electricity generated by the Millstone nuclear power plant.
Only the distribution of electricity in Connecticut is regulated by the Public Utilities Regulatory Authority. The cost of generating power is set in competitive markets.
Under a law passed in 2017 to stabilize the finances of Millstone, the plant was allowed to sell its power in a more favorable market through fixed power purchase agreements, like those typically used by to buy solar, wind and hydro power.
Millstone had been selling its power in a competitive market where the prices were depressed by cheap natural gas. The low prices contributed to the closure of nuclear plants in New York, Vermont and Massachusetts, and Connecticut lawmakers feared Millstone might follow suit.
The Millstone law was passed prior to Lamont’s election, but he supports the policy as a means to preserve the state’s largest source of carbon-free power.
“If we did not have Millstone, if we did not have nuclear power in this state and in this region, our electricity prices would be much, much higher than they are today. Thank God we have that additional capacity. I wish we could expand on that capacity,” Lamont said.
When the price of natural gas, a fuel used to generate electricity in New England, rose sharply a few years ago ago, the Millstone deal saved ratepayers money. More recently, the marketplace fell below the fixed nuclear price, increasing costs on the utilities that ultimately are recoverable from ratepayers.
Compensating the utilities for the arrearages and Millstone expenses are part of the “public benefits” portion of electric bills. Others are the cost of building out electric vehicle charging stations and offering energy audits that result in efficiencies and lower demand.
Sen. Ryan Fazio of Greenwich, the ranking Senate Republican on the energy committee, said many of those public benefit expenses should be part of the state budget and examined annually. Currently, he said, those costs are buried in electric bills as “a hidden tax.”
Fazio said he counted 41 separate programs funded by the public benefits portion of electric bills.
“Many of those programs should still exist. Some of them should be pared back. But many shouldn’t exist at all going forward,” Fazio said.
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